Eli Lilly and Co. (NYSE LLY) said on Friday that U.S. regulators will require a new three-year clinical trial for its investigational diabetic eye treatment, leading the company to weigh the feasibility of continuing development.

The drug maker said such a study of the treatment, called ruboxistaurin mesylate, would take up to five years to compete. The drug treats a common effect of diabetes in which leaky blood vessels in the eye can lead to blindness.

"It is disappointing, because it was going to be a novel drug for a new indication," said Heather Brilliant, who covers the sector at ratings company Morningstar Inc., and had predicted sales could reach $1 billion by 2015.

Other analysts predicted a market for the drug, which had the proposed trade name Arxxant, as half that size.

Lilly's decision about whether to go forward with the drug, which it has been studying in humans for a decade, would be based on its own market projections, Brilliant said.

The U.S. Food and Drug Administration asked the company for additional effectiveness data before it will consider approving the molecule for the treatment of moderate to severe diabetic retinopathy, Lilly said.

The company only submitted one major trial in its application to the FDA, which is unusual and made its approval riskier than is typical, analysts said.

Last month, Lilly said it received a so-called "approvable letter" from the FDA, rather than approval of the drug outright.

"We still believe that ruboxistaurin has potential as a treatment for diabetic eye disease and are exploring the feasibility of further development of this molecule," Dr. John Lechleiter, Lilly president and chief operating officer, said in a statement.

Lilly said ongoing clinical trials for ruboxistaurin will continue while Lilly evaluates options for its further development.

Lilly shares fell 48 cents, or 0.8 percent to $56.84 on the New York Stock Exchange in midmorning trading.