The type 2 diabetes market is undergoing a paradigm

Transcription

1 Elsevier Business Intelligence PRESCRIPTION PHARMACEUTICALS AND BIOTECHNOLOGY July 16, 2012 Founded 1939 In A Changing Diabetes Drug Market, Who Will Come Out On Top? Jessica Merrill j.merrill@elsevier.com The type 2 diabetes market is undergoing a paradigm shift, as treatment diversifies and moves further upstream ahead of insulin. Large companies, worried about balancing the costs required to maximize such a potentially huge global market, are re-aligning to share risks of full-scale investment. Nothing highlights the opportunity and challenges more than Bristol Myers Squibb Co. s and AstraZeneca PLC s joint plan, announced on June 29, to buy Amylin Pharmaceuticals Inc. for $7 billion ( AstraZeneca, BMY To Target Disease Management And Primary Care Synergies With Amylin Acquisition The Pink Sheet DAILY, Jul. 2, 2012). The independent maker of the first glucagen-like peptide-1 (GLP-1) agonist therapy to reach the market is being sold for seven times 2012 sales or two to three times projected peak sales for Amylin s key drug a hefty valuation by many accounts, but one that Wall Street, by and large, views as manageable. The buyers are adamant that they can expand sales of Amylin s GLP-1s, in particular its recently launched onceweekly formulation Bydureon (exenatide extended release) far beyond any results the biotech could have achieved on its own. But the effort will be costly and for that reason, the companies, which already have an ongoing alliance in diabetes, chose to work together once again [See Deal]. Other drug makers, also jostling to get into the action, are taking a mix of go-it-alone and partnering strategies as they scramble to compete. One of the longtime market leaders, Eli Lilly & Co., teamed up with Boehringer IngelheimGMBH in early 2011 an event which precipitated Amylin s ultimate sale. That s because Amylin, then partnered with Lilly, did not take kindly to the tie-up, which it saw as competition for Lilly s resources ( Amylin, Lilly End Exenatide Tie-Up, Marking End To Litigation The Pink Sheet DAILY, Nov. 8, 2011). Sanofi SA and Novo Nordisk AS which have built multi-billion dollar businesses on the back of insulin are taking a go-it-alone strategy to commercialization, although Sanofi has teamed up with Zealand Pharma AS for development of its own GLP-1. Newer entrants like Johnson & Johnson and GlaxoSmithKline PLC are elbowing their way in. Although the field is getting crowded, an attitude of the more the merrier still prevails since, in the words of David Solomon, CEO of Zealand, You can quibble over which is the better drug, but diabetes is a global pandemic. Success will largely depend on the safety and efficacy of up and coming agents and eventually results of their long-term cardiovascular outcomes trials, due to start reporting out in 2014 and beyond. But in such a competitive market, commercial strength also takes center stage notably first-tomarket advantage, ability to convince constituents of dosing and administration benefits, and sheer resources committed. The diabetes leaders a decade from now will be those that can execute on multiple fronts at attractive economics. Given the significant investment required to penetrate the important primary care market for diabetes drugs, successful players will have to maintain margins that make the expense worthwhile. The Bristol/AstraZeneca/Amylin deals highlight advances in newer classes of medicines, namely GLP-1 agonist therapies and, by dint of their potential to end run GLP-1s, sodium glucose co-transporter type 2 (SGLT-2) inhibitors. New kinds of standard insulins and fixed-dose s of various drugs are also in development and will drive growth in diabetes and changes in treatment. Type 2 diabetes patients start treatment with diet and exercise; then, if those fail to control blood glucose levels, they migrate to generic oral metformin. The next step is oral DPP- 4s like Merck & Co. s Januvia (sitagliptin), followed eventually by insulin. But patients are increasingly using injectable GLP-1s before moving to insulin, driven by the drugs demonstrated benefits on blood glucose control and weight loss. SGLT-2s, despite a mixed development track record, also could soon be on the market. Johnson & Johnson recently filed a new drug application for its SGLT-2 canagliflozin and reported positive Phase III data including improved glycemic control in type 2 diabetics versus Januvia ( J&J s Canagliflozin Positive Phase III Data In The Limelight At ADA The Pink Sheet DAILY, Jun. 10, 2012). The positive data suggest a potentially rosier outlook for the class, which has had expectations dampened by the overall modest efficacy Reprinted with Permission from The Pink Sheet. Please see Copyright Notice on the end page

2 demonstrated in clinical trials and a side effect profile that includes genital infections and potentially a cancer signal. FDA in January rejected Bristol/AstraZeneca s SGLT-2 candidate dapagliflozin (Forxiga) because of concerns about increased risk of bladder and breast cancer, but Europe s CHMP cleared the drug in April ( AstraZeneca/BMS s Dapagliflozin Needs European Epidemiological Study, But Headed For Strong Label The Pink Sheet DAILY, Apr. 23, 2012). J&J has not reported any cancer signal in Phase III studies of canagliflozin, however. And given that SGLT-2s are an oral medicine, they could, over time, be used ahead of injectable GLP-1s if the safety and efficacy hold up in the real-world setting. The Elusive SGLT-2 Opportunity For now, investors are still hedging their bets when it comes to SGLT-2s. Credit Agricole Cheuvreux believes SGLT-2s could pose a major risk to the GLP-1 class, given their oral administration and efficacy similar to DPP-4s, which are, so far, the preferred option in the U.S. post metformin or in with MET. We currently assume $8.5 billion for GLP-1s in diabetes in 2020; this could be halved in case of full commercial success for SGLT-2s, analyst Laurent Flamme wrote in a recent report. But others are less optimistic. Wells Fargo Securities Analyst Larry Biegelsen, who covers Johnson & Johnson, projects sales of $600 million for canagliflozin in Our model assumes that the higher infection rate will be a hurdle to broad adoption and expects this mechanism of action-related adverse event to be a class effect. The market research firm Decision Resources projects SGLT- 2s will generate sales greater than $4.5 billion by 2020 in the seven major markets, making the class the third-highestselling behind DPP-4s and GLP-1s. The number of patients prescribed the drugs could actually be higher than patients taking GLP-1s, but GLP-1s will cost more and thus generate higher sales. The lower cost of SGLT-2s in comparison to the GLP-1s will be another major reason for prescribing these drugs ahead of the GLP-1s, pointed out Decision Resources analyst Kate Sullivan. Nonetheless, investor confidence is riding much higher on GLP-1s, given that they have already demonstrated success. In Diabetes, Who s Got The Full Package? A Look At Big Pharma s Diabetes Drug Portfolio And Late-Stage Pipeline Drug Manufacturer Drug Mechanism Of Action Development Stage AstraZeneca PLC/Bristol-Myers Squibb Co. Onglyza (saxagliptin) DPP-4 inhibitor Marketed Kombiglyze (saxagliptin/metformin) DPP-4 inhibitor/metformin Marketed *after Amylin deal Bydureon (exenatide) once-weekly GLP-1 inhibitor Marketed *after Amylin deal Byetta (exenatide) once-daily GLP-1 inhibitor Marketed Dapagliflozin SGLT-2 inhibitor Registration Boehringer Ingelheim GMBH/ Eli Lilly & Co. Trajenta (linagliptin) DPP-4 inhibitor Marketed JentaDueto (linagliptin/metformin) Fixed dose DPP-4 inhibitor / metformin Marketed Dulaglutide once-weekly GLP-1 inhibitor Phase III empagliflozin SGLT-2 inhibitor Phase III Trajenta/empagliflozin DPP-4 /SGLT-2 inhibitor fixed-dose Phase III LY novel basal insulin Phase III LY Insulin glargine biosimilar Phase III Eli Lilly & Co. insulins including Humalog/Humulin short-acting insulins Marketed

3 Drug Manufacturer Drug Mechanism Of Action Development Stage GlaxoSmithKline PLC* Syncria (albiglutide) once-weekly GLP-1 Phase III Johnson & Johnson Partnered with Mitsubishi Tanabe Pharma Corp. Canagliflozin SGLT-2 inhibitor Registration Merck & Co. Januvia (sitagliptin) DPP-4 inhibitor Marketed sitagliptin/atorvastatin DPP-4 inhibitor/statin Phase III MK-3102 once-weekly DPP-4 inhibitor Phase II Novo Nordisk AS insulins including Levemir and NovoLog long-acting and fast-acting insulins Marketed Victoza (liraglutide) once-daily GLP-1 inhibitor Marketed Tresiba (insulin degludec) long-acting insulin Registration Ryzodeg (insulin degludec/insulin aspart) IDegLira (degludec/liraglutide) long-acting/fast-acting insulin insulin/glp-1 inhibitor fixed-dose Registration Phase III Novo Nordisk AS (cont.) Semaglutide once-weekly GLP-1 inhibitor Phase II Tresiba (insulin degludec) long-acting insulin Registration Sanofi SA Lantus (insulin glargine) long-acting insulin Marketed Lyxumia (lixisenatide)* once-daily GLP-1 inhibitor Registration Lantus/Lyxumia insulin glargine/glp-1 inhibitor Phase II new insulin glargine Improved formulation of insulin glargine Phase III Roche Tofogliflozin SGLT-2 inhibitor Phase III Takeda Pharmaceutical Company Ltd. Alogliptin DPP-4 inhibitor Registration TAK-875 GPR40 agonist Phase III SYR-472 DPP-4 inhibitor Phase II *Partnered, in case of GSK with Human Genome Sciences Inc.; in case of Sanofi, with Zealand Pharma. Source: Company reports Novo s once-daily Victoza (liraglutide) leads the market, followed by Amylin s exenatide franchise consisting of twicedaily Byetta and newly launched once-weekly Bydureon but they re about to face an influx of competition. So far only about 6% of the diabetes market uses GLP-1s, which leaves a substantial opportunity for growth. Most of the current use comes from endocrinologists, however, so Bristol and AstraZeneca, as well as others, see tapping the broader health care market, namely primary care doctors, as critical to the growth of the class. 1, 2, 3, 4 Classes Of Medicines Major diabetes players are working at fever pitch to get into the GLP-1 or SGLT-2 space or both. Many are betting that having a broad portfolio of drugs that hits across the entire spectrum of disease will give them a competitive edge. Lilly/ Boehringer and Bristol/AstraZeneca are pursuing this direction, albeit through substantial risk-sharing partnerships. Bristol executives cited the breadth of the portfolio as a key reason for acquiring Amylin. It s really key to be able to

4 offer patients and physicians multiple therapeutic options as the disease progresses, and I m proud of the fact that if this deal is closed, the alliance will have the unique differentiation of having three of the major modern mechanisms to offer patients, either in sequence or perhaps in, Bristol Chief Scientific Officer Elliott Sigal said during a July 2 conference call outlining the acquisition. In addition to Byetta, Bydureon and the pipeline drug dapagliflozin, the partners also market the DPP-4 inhibitor Onglyza (saxagliptin).they don t have an insulin, however, a therapy that is expected to remain a mainstay of the diabetes treatment market in the years ahead, and refused to discuss whether they plan to tap into that opportunity as well. Only Lilly is on track to bring to market drugs in all four therapeutic classes, some with partner Boehringer Ingelheim. Our strategy is to meet the diverse needs of people with diabetes, and we believe to execute that, we should pursue a broad portfolio of treatment choices, said Lilly Diabetes President Enrique Conterno in an interview. Lilly, long a leader in short-acting mealtime insulins, with its Humulin/Humalog franchise, is making a significant push to move into the long-acting insulin market and worked with Amylin for years on developing and marketing exenatide. That partnership combusted in May 2011, after Lilly signed its diabetes deal with Boehringer and shortly before the EU approved Bydureon [See Deal]. In return for its sacrifice, Lilly got access to Boehringer s DPP-4 inhibitor Trajenta (linagliptin), which the partners have since launched, and an SGLT-2 inhibitor empagliflozin. Lilly s contribution to the partnership included a novel basal insulin and a biosimilar version of insulin glargine, Sanofi s market-leading Lantus. Lilly is also developing separately a once-weekly GLP-1 candidate, dulaglutide. [Editor s note: This story was updated to include a correction that dulaglutide is owned solely by Lilly. A previous version said it was jointly owned with Boehringer Ingelheim]. Whether Lilly comes to regret its decision will depend in part on how Bristol/AstraZeneca s deep pockets propel Bydureon sales, and the performance of dulaglutide as a late-to-market entrant. But the sacrifice won t be without its economic benefits, since Amylin agreed to pay its former partner handsomely for regaining rights to its drugs: 15% of its total global revenues, up to a cap of $1.2 billion an obligation its acquirers have agreed to assume. The decision to return exenatide rights to Amylin represented a bet on dulaglutide, Conterno acknowledged in a recent interview. Phase III studies on dulaglutide are expected to read out later this year, but in Phase II studies, the drug has demonstrated promising benefits on blood glucose control and weight loss, and a favorable tolerability profile, the exec said. Lilly hasn t disclosed any details on the delivery device, but Conterno classified it as a significant step forward versus anything that is out there today. That contrasts with Bydureon s currently cumbersome delivery device and the fact that it has to be reconstituted before administration, modest drawbacks that could hold back its uptake and penetration into the primary care market. Amylin has plans to file for approval of a dual-chamber pen formulation in 2013, around the same time that Lilly plans to file dulaglutide. Lilly is also aggressively moving forward the development of Trajenta in with empagliflozin. First-In-Class And Best-In-Class Are Best Other pharmas favor a best-in-class approach, encouraged, in part, by Merck s enormous success with Januvia ( Januvia: Defining Primary-Care Success and Risk IN VIVO, March 2007). Sales of Januvia and Janumet (sitagliptin/metformin) were $4.68 billion in 2011, and competitors are having a tough time gaining traction, despite a market size that implies room for two or more similar options. Sales of Bristol/AstraZeneca s Onglyza, the second DPP-4 to market, were only $473 million in Lilly/Boehringer haven t disclosed sales of Trajenta, which launched in mid- 2011, but Conterno acknowledged formulary access has proved challenging in the U.S. We are seeing increased access, but it is taking us a little bit longer to get the access that we expected, he said. Trajenta has roughly 40% access when it comes to U.S. plans. Barclays Bourdot said Merck s successful experience with a single product is an exception that others are finding hard to replicate. I do think it is important to offer a range of treatments because it makes for greater sales force efficiency, he said. Sanofi is taking a different tack with its diabetes strategy, putting emphasis not only on drug development, but on becoming a full diabetes solutions provider, supplying new tools and services such as blood glucose monitoring to help patients manage their diabetes ( Personalizing Patient Care:Sanofi Recasts Its Diabetes Efforts IN VIVO, July 2010). For example, Sanofi launched ibgstar in May, the first blood glucose monitoring system that directly connects to an Apple iphone or ipodtouch device. The leaders that are going to emerge are going to be the organizations that can demonstrate benefit that not only drives clinical improvement in diabetes, but economic improvement, meaning more efficient ways to manage the entire cost of diabetes, as well as ways to improve patient satisfaction, said Denis Urbaniak, Sanofi s VP-U.S. Diabetes. The company s drug pipeline includes the once-daily GLP-1 Lyxumia (lixisenatide) in Phase III development (Sanofi is targeting a regulatory filing by the end of the year) and an improved Lantus formulation in earlier development. As a once-daily GLP-1, it s unclear what edge Lyxumia might gain in the market on its own, particularly if it fails to demonstrate an improved efficacy benefit over Victoza. But given Sanofi s success with Lantus, it would be a mistake to discount lixisenatide. Moreover, access to the drug came cheap relative to the Bristol/AstraZeneca/Amylin

5 deal Sanofi linked up with Zealand in 2003 for a potential value of hundreds of millions of dollars, not billions [See Deal]. Sanofi is looking to position Lyxumia as an add-on therapy to intensify blood glucose lowering in patients already on insulin, a market it knows well. Missing from Sanofi s diabetes pipeline is an SGLT-2 inhibitor, but that doesn t concern Urbaniak, who concedes that the company does not expect to have to have everything ourselves. Relationships like the one Sanofi struck with software developer Agamatrix to bring IBGStar to market are more reflective of how the company will move in the future, he said. Novo Nordisk, meanwhile, is marching to its own drum. The Danish pharma has eschewed development of oral diabetes drugs and is focusing solely on protein therapeutics. It has thus far stayed out of the DPP-4 crush and has said it is going to pass on SGLT-2s too. Novo s success with once-daily Victoza has positioned the company as the one to beat in the GLP-1 race, however, and since none of the newer GLP-1s have as of yet demonstrated superior efficacy to Victoza, it could very well continue to dominate the market. Novo s near-term success hinges on the continued growth of Victoza, the ability of Tresiba to take share from Lantus and eventually the launch of a fixed-dose of the two. If Novo can execute on those fronts, it could continue its steady growth story F-D-C Reports, Inc.; An Elsevier Company; All Rights Reserved. Reproduction, photocopying, storage or transmission by magnetic or electronic means is strictly prohibited by law. Authorization to photocopy items for internal or personal use is granted by F-D-C Reports, Inc., when the fee of $25.00 per copy of each page is paid directly to Copyright Clearance Center, 222 Rosewood Dr., Danvers, MA 01923, (978) The Transaction Reporting Service fee code is: /12 $ $ Violation of copyright will result in legal action, including civil and/or criminal penalties, and suspension of service. For more information, contact custcare@elsevier.com.