Johnson & Johnson on Wednesday said its epilepsy drug Topamax was not effective as a treatment for obesity and diabetes.

J&J, which earlier this year received a letter from U.S. regulators warning the company to stop circulating promotional material that failed to disclose serious risks associated with the drug, said it won’t continue to develop Topamax for these conditions.

Topamax, which is approved to treat epilepsy and prevent migraines, has annual sales of $1.4 billion. Johnson & Johnson said its decision to abandon its study of the drug in obesity and type 2 diabetes, the most common form of the disease, came after it examined the results of a mid-stage, or phase II, clinical trial.

The company said the study, which tested a controlled-release version of the drug against the existing immediate-release version, showed no significant advantage for patients taking a controlled-release version.

The company had previously tested the immediate-release version in obesity patients but stopped because of unfavorable side-effects.

“We do believe that discontinuing development of Topamax for obesity is a slight negative, as it was one of the more promising drugs in the pipeline, with $1 billion commercial potential in obesity alone,” said Glenn Novarro, an analyst at Banc of America Securities in a report.

Dropping the program also puts the company at greater risk of generic competition, analysts said. The patent on the drug is currently set to expire in September 2008, about the time the controlled-release version was expected to reach the market.

“The company will now turn its focus to other life cycle strategies, including possible combination products, though with 4 1/2 years remaining, it’s getting tight,” said Mike Weinstein, an analyst at JP Morgan, in a report.

J&J said its decision to drop the program was not based on any new safety data and said it does not impact use of the drug in any currently approved uses or other clinical development programs.