Pipeline Insight: Non-insulin Antidiabetics Type 2 diabetes unlikely to develop into a switch market

A Datamonitor report Pipeline Insight: Non-insulin Antidiabetics Type 2 diabetes unlikely to develop into a switch market Published: Aug-06 Product Code: Providing you with: Assessment of the patient potential for developmental non-insulin agents in the type 2 diabetes setting of over the period 2006-15 Overview of the non-insulin antidiabetics R&D pipeline, with detailed information on the classes in development and comparator drugs Use this report to... Understand the key factors that will contribute to the success of the next generation of anti-diabetes drugs Commercial analysis of key compounds in development regarding their ability to satisfy key unmet needs, supported by the views of key opinion leaders Sales forecasts for key late-stage developmental non-insulin antidiabetics in the seven major markets to 2015 www.datamonitor.com/healthcare

Pipeline Insight: Non-insulin Antidiabetics Type 2 diabetes unlikely to develop into a switch market Introduction Datamonitor expects the continuously growing prevalence of diabetes to drive growth in diabetes drug spending, benefiting market uptake of newly developed, efficacious therapies. A variety of novel, non-insulin antidiabetic agents are poised to become available to patients in the next decade, with two DPP-4 inhibitors likely to launch in 2007 and two GLP-1 agonists entering the market by 2010. Key findings and highlights The diabetes market is worthy of investment because of the endemic size of its patient pool which is set to grow further, and the nature of its unmet clinical needs. This situation is reflected in the R&D pipeline for non-insulin antidiabetics, comprising a diverse collection of 76 novel agents in clinical development. Datamonitor has identified five late-stage candidate drugs likely to be launched into the diabetes market within the next five years. These are the DPP-4 inhibitors Galvus and Januvia, the GLP-1 agonists Byetta LAR and liraglutide, and the specific PPAR-? modulator metaglidasen. Apart from metaglidasen, all four agents have blockbuster potential. Despite the fact that pipeline products will impact the diabetes market greatly in the next five years, there are currently no agents in late-stage clinical development that are likely to fully replace current mainstays of antidiabetic therapy. Type 2 diabetes is therefore likely to remain an add-on market rather than develop into a switch market. Reasons to buy Understand the key factors that will contribute to the success of the next generation of anti-diabetes drugs View independent sales forecasts for products in late stage development for therapy of type 2 diabetes Understand physician sentiment on clinical trial endpoints and late-stage candidate drugs for the diabetes market For more information... Contact Nikolaos Karachalias, Lead Analyst - Cardiovascular and Diabetes tel: +44 20 7675 7218 fax: +44 20 7675 7016 email: hcmarketing@datamonitor.com

www.datamonitor.com/healthcare Sample pages from the report Late-Stage Drug Analysis & Forecasts Datamonitor believes that Byetta BID has significant potential, having been shown to be effective and well tolerated, at low doses, both in patients controlling their diabetes with exercise/diet, OADs or insulin, indicating that the compound has a wide patient potential. Furthermore, although Byetta BID has to be injected, it may represent a useful substitute for insulin in type 2 diabetics, as, unlike insulin, it is not associated with weight gain but with significant weight loss. The UK opinion leader was not convinced that use of Byetta BID was due to its weight-reducing effect alone and suggested that this attribute was not likely to put Byetta in favorable reimbursement positions in the eyes of UK authorities or key physicians like him who act as gatekeepers to GP prescribing within the confines of their PCT territory and their specialty: I take your point about patients losing weight, but I haven t seen people switching from oral agents to insulin like mad because it makes the weight go down. I do but most other people don t, so it can t just be that one explanation. And the data might be better now but the early data on exenatide, the weight won t go down a lot, not like with Rimonabant. I mean, that at a year is causing five, six, Late-Stage seven kilos weight Drug loss. Analysis & Forecasts Dr Burden, UK It depends on the cost because there are cheaper ways of getting the weight down. The NHS has a finite budget. Dr Burden, UK Pipeline summary One of the most appealing aspects of Byetta BID is the possibility that it may confer neogenic potential to the islet cells of type 2 diabetics. In addition Table to its 16 incretin provides an overview of non-insulin antidiabetics in late-stage development. actions, Byetta BID may form new islets and presumably among these there would be new -cell mass to enhance the function of the current insulin-producing Table cells 16: and Key pipeline non-insulin antidiabetic therapies, 2006 promote the revitalization of the pancreas. This leads to the exciting possibility that Drug Mode of action Status Originator/ Collaborator/ long-term treatment with Byetta BID may not only achieve a short-term licensor licensee pharmacological result, but also a longer-term islet neogenic function. Byetta LAR GLP-1 agonist Phase III Amylin Eli Lilly, Alkermes There are lots of drugs that cross the blood-brain barrier and we don t (exenatide know what LAR) they do. So there is no evidence that there is anything harmful, in the Liraglutide short term at GLP-1 agonist Phase III Massachusetts Scios, Novo (NN-2211) General Hospital Nordisk least. US KOL (sublicensee) Galvus DPP-4 inhibitor Pre-reg Novartis n/a I would expect that exenatide really crosses the blood-brain barrier and (vildagliptin) induces the (FDA) loss of appetite. So this is what I would expect is already occurring because Januvia you are DPP-4 inhibitor Pre-reg Merck & Co Ono (sitagliptin) (FDA) Pharmaceutical, giving super physiological doses of this protein. But of course we have to wait and Banyu see and should be really careful in the management of these patients. German KOL Pharmaceutical Metaglidasen PPAR- modulator Phase II Metabolex Ortho-McNeil Uptake of Byetta BID has been strong and a filing for Byetta BID use (MBX-102) in combination get fluid retention, but this is what you guys would call unmet medical need. So here I with TZDs was submitted to the FDA during Q1 2006, with a potential Pre-reg = approval pre-registration think we could do something. We re not talking about the advanced stages of expected to increase Byetta BID s applicable market. The drug Source: is currently Datamonitor; so IMS Lifecycle, IMS Health, May 2006, diabetes, we have wonderful insulins. Prof. Stumvoll, Germany Copyright, reprinted with permission; IDdb3, June 2006, Copyright Thomson Scientific D A T A M O N I T O R In short, there are significant limitations to current OADs: Pipeline Insight: Non-Insulin Antidiabetics Datamonitor (Published 07/2006) Page 141 Sustainability: level of HbA1c reduction is not maintained over time, This report is a licensed product and is not to be photocopied The pipeline of late-stage developmental drugs is dominated by two regardless new drugof the form of therapy; classes, GLP-1 agonists and DPP-4 inhibitors. DPP-4 inhibitors will serve the OAD segment of the diabetes market, while GLP-1 agonists are likely to be targeted Tolerability at the and safety: all current forms of therapy have suboptimal more severe cases of type 2 diabetes and at patients who have to switch tolerability from DPP-4 and safety profiles: inhibitors to GLP-1s because of tolerability reasons or because they are obese. GLPo Weight gain: TZDs, SUs 1 agonists have the potential to take share from insulins. o Hypoglycemia: SUs I see the place for incretin mimetics earlier in the disease, I see them as what I usually call an intelligent secretagogue because they don t work in the absence of o Edema (fluid retention): TZDs hyperglycemia. Prof. Stumvoll, Germany They may even be very useful as adjuncts to insulin therapy: o GI-tolerability (abdominal pain, diarrhea): Metformin. However, outcome data are crucial and metformin will be hard to replace as first-line There are especially two types of patient groups for which I don t have the right type therapy: of drug available now, the obese ones because most drugs result in weight gain and insulin-treated patients. Insulin is a powerful agent but in all Ultimately the surveys outcome or trials data are what drives prescription choice. It s never going to drive availability, you can t wait for outcome data to make a drug available, that doesn t Pipeline Insight: Non-Insulin Antidiabetics make sense. But when it comes to choosing first line therapy, for example, clearly Datamonitor (Published 07/2006) Page 107 outcome data makes a difference and that s why Metformin does very well. US KOL This report is a licensed product and is not to be photocopied I m not sure if we can continue to ask for these mega outcome studies for everything we re doing, but clearly novel agents and especially those with a completely novel mechanism of action, will have to show that they re in the same league with Metformin, for example, which has pretty good evidence regarding a number of things. Prof. Stumvoll, Germany [On the aspect of durability in the efficacy of incretin mimetics:] I don t believe it, that s claimed with the glitazones and the fact that its mechanistically plausible, that means nothing. I need to see the outcome trials and I don t think they exist for the new drugs. I mean, remember insulin makes sense in terms of the mechanics to prolong islet cell survival. Totally plausible, it didn t work in the UK PDS but that was one of the reasons for the UK PDS. So having a mechanical mechanistic exploration is interesting but not a reason to prescribe a drug. I would wait for outcome trials, and also GPs are very hot on evidence-based work. Dr Burden, UK Pipeline Insight: Non-Insulin Antidiabetics Datamonitor (Published 07/2006) Page 64 This report is a licensed product and is not to be photocopied...there are especially two types of patient groups for which I don't have the right type of drug available now, the obese ones - because most drugs result in weight gain - and insulin treated patients... Key opinion leader, Pipeline Insight: Non-insulin Antidiabetics Type 2 diabetes unlikely to develop into a switch market

Pipeline Insight: Non-insulin Antidiabetics Type 2 diabetes unlikely to develop into a switch market Table of contents EXECUTIVE SUMMARY Scope of the analysis Datamonitor insight into the market for non-insulin antidiabetic pharmacotherapies - The R&D pipeline for non-insulin antidiabetics is a mechanistically diverse collection of 77 novel agents at the clinical stages of drug development and dominated by a set of five pharmaceutical companies - The diabetes market is characterized primarily by significant unmet clinical needs but also by some unmet market needs - Datamonitor has identified five late-stage candidate drugs likely to be launched into the diabetes market within the next five years-the DPP-4 inhibitors Galvus (vildagliptin) and Januvia (sitagliptin), the GLP-1 agonists Byetta LAR (exenatide LAR) and liraglutide, and the specific PPAR-? modulator metaglidasen. PIPELINE OVERVIEW Pipeline overview - Non-insulin antidiabetic pipeline is mechanistically diversified - Non-insulin antidiabetic pipeline is rich in Phase I and Phase II candidates - The R&D landscape is dominated by five companies: GSK, Roche, Sanofi-Aventis, Merck & Co. and Novo Nordisk PATIENT POTENTIAL Definition of diabetes Segmentation of diabetes - Type 1 diabetes - Type 1.5 diabetes - Type 2 diabetes Epidemiology of diabetes - Current prevalence of type 1 and type 2 diabetes - Future prevalence of type 2 diabetes Unmet need in diabetes - Unmet market needs - Unmet clinical needs - Type 2 diabetes Comparator therapies - Thiazolidinediones - Sulfonylureas - Biguanides - Other classes Classification of pipeline products - Incretin mimetics - PPAR agonists - Sodium glucose co-transporter 2 (SGLT2) inhibitors - Other classes of agents in development Clinical trial issues in diabetes - Efficacy - Safety and side effects - Patient compliance LATE-STAGE DRUG ANALYSIS & FORECASTS: NON- INSULIN ANTIDIABETICS Overview of pharmacotherapies in late-stage development for type 2 diabetes - Pipeline summary DPP-4 inhibitor class - Januvia (sitagliptin, MK-0431) - Galvus (vildagliptin, LAF-237) - Competitive environment of the DPP-4 inhibitor class - SWOT analysis: Januvia (sitagliptin) - SWOT analysis: Galvus (vildagliptin) - Forecast: Galvus and Januvia GLP-1 class - Byetta LAR (exenatide LAR) - Liraglutide (NN-2211) - Competitive environment of the GLP-1 class - Forecast: Byetta LAR and liraglutide Metaglidasen (MBX-102) - Forecast: metaglidasen Datamonitor does not believe non-injectable insulins to be able to compete with non-insulin antidiabetics Datamonitor drug assessment summary R&D APPROACH Therapy overview in type 1 and type 2 diabetes - Type 1 diabetes OTHER NON-INSULIN ANTIDIABETICS 625019 For more information... Contact Contact Nikolaos Karachalias, Lead Analyst - Cardiovascular and Diabetes tel: +44 20 7675 7218 fax: +44 20 7675 7016 email: hcmarketing@datamonitor.com

www.datamonitor.com/healthcare 677954 825964 189075 Ro-0730699 DRF-2593 (Balaglitazone) PHX-1149 AMG-221 APD-668 Arimoclomol (BRX-345) Anti-CD3 - Phase I/II clinical trials AVE-0847 AVE-2268 AVE-5376 AVE-8134 AZD-6610 AZD-8677 AVE-0010 (ZP-10) BAY-73-7977 BI-1356-BS BIM-51077 (ITM-077) BLX-1002 CJC-1134-PC - Phase I/II CKD-501 CS-917 (MB-6322) Denagliptin (Redona, 823093) Diamyd (GAD-65) DiaPep277 (AVE-0277) DIO-901 DIO-902 EMD-387008 EN-122004 GRC-8200 - Phase I 716155 (albugon) K-111 KRP-104 ISIS-113715 MB-07803 MBX-2044 MK-0533 MK-0893 MK-0941 MP-513 Naveglitazar (LY-818, LY519818) iplex (mecasermin rinfabate) Netoglitazone (MCC-555) NN-0606 NN-9101...Medically, there is no difference between Galvus and Januvia in my mind. There is a big difference in the testing; Galvus has been tested in a much wider range of patients. So they will probably get a broader indication... Key opinion leader, Pipeline Insight: Non-insulin Antidiabetics Type 2 diabetes unlikely to develop into a switch market

Pipeline Insight: Non-insulin Antidiabetics Type 2 diabetes unlikely to develop into a switch market ONO-5129 PLX-204 PSN-010 PSN-357 PSN-9301 (P93/01) R-1438 R-1439 R-1440 AVR-118 (reticulose, Product R) CS-011 (rivoglitazone) Saxagliptin (BMS-477118) TS-033 SGLT2 Inhibitor (lab code undisclosed) Solabegron (427353) SSR-162369 CS-872 SYR-322 T-1095 TA-6666 TAK-654 TH-0318 TS-021 TRX-4 (agcd3) E1-INT Drug overview APPENDIX A Datamonitor drug assessment summary Bibliography Report methodology APPENDIX B TABLES Table 1: Pipeline of non-insulin antidiabetic agents, 2006 Table 2: The pipeline for non-insulin antidiabetic agents is mechanistically diversified: full listing, 2006 Table 3: The pipeline for non-insulin antidiabetic agents is mechanistically diversified, 2006 Table 4: Acute pipeline of non-insulin antidiabetic agents by company, 2006 Table 5: Collaborative nature of R&D projects among key players in the non-insulin antidiabetic therapy sector, 2006 Table 6: Prevalence of diabetes mellitus is forecast to increase by the International Diabetes Foundation (IDF), 2003-2025 Table 7: Prevalence rate of type 1 and type 2 diabetes in the seven major markets (%), 2006-2015 Table 8: Estimated absolute prevalence of diabetes in the seven major markets (millions), 2006-2015 Table 9: Safety of pioglitazone Table 10: Comparator Oral Antidiabetics of the TZD Class Table 11: Weight gain associated with Actos (kg) Table 12: Weight gain associated with Avandia (kg) Table 13: Comparator oral antidiabetics of the sulfonylurea class Table 14: Metformin is the only representative of the biguanide class Table 15: Characteristics of GIP and GLP-1 Table 16: Key pipeline non-insulin antidiabetic therapies, 2006 Table 17: Trial data overview: Galvus, June 2006 Table 18: Trial data overview: Januvia, June 2006 Table 19: Key adverse event data comparing Januvia and Galvus as metformin adjuncts, 2006 Table 20: Sales forecast for Januvia, 2007-15 For more information... Contact Contact Nikolaos Karachalias, Lead Analyst - Cardiovascular and Diabetes tel: +44 20 7675 7218 fax: +44 20 7675 7016 email: hcmarketing@datamonitor.com

www.datamonitor.com/healthcare Table 21: Sales forecast for Galvus, 2007-15 Table 22: Comparison of GLP-1 agonists with DPP-4 inhibitors, 2006 Table 23: Comparative analysis of Byetta BID, Byetta LAR and liraglutide, 2006 Table 24: GLP-1 agonist class: Comparison between Byetta LAR and liraglutide, 2006 Table 25: Sales forecast for Byetta LAR, 2010-2015 Table 26: Sales forecast for liraglutide, 2009-15 Table 27: Sales forecast for metaglidasen, 2011-2015 Table 28: Research, clinical and commercial attractiveness of key pipeline non-insulin antidiabetics: basis dataset Table 29: Datamonitor drug assessment parameters Figure 27: Overview of sales forecasts for the five pipeline agents analyzed in the present report, 2006-2015 Figure 28: Research, clinical and commercial attractiveness of key pipeline non-insulin antidiabetics: bubble chart Figure 29: Research, clinical and commercial attractiveness of late-stage candidate drugs in diabetes setting: radar plot Figure 30: Example of Datamonitor drug assessment scorecard Figure 31: Example of Datamonitor drug assessment graph FIGURES Figure 1: Pipeline of non-insulin antidiabetic drugs, 2006 Figure 2: The pipeline of non-insulin antidiabetic agents is mechanistically diverse, 2006 Figure 3: Pipeline maturity: percentage of R&D products in each phase of development, 2006 Figure 4: Collaborative nature of R&D projects among key players in the non-insulin antidiabetic therapy sector, 2006 Figure 5: Comparison of glucose testing Figure 6: Current NIADs do not address all medical aspects of type 2 diabetes Figure 7: Regulation of blood glucose levels by insulin, glucagon and amylin Figure 8: Mechanism of action of TZDs Figure 9: Mechanism of action of sulfonylureas and prandial glucose regulators Figure 10: Mechanism of action of metformin Figure 11: History of GLP-1, 1930-2006 Figure 12: Mechanism of action of GLP-1 Figure 13: GLP-1 effects on? cells Figure 14: Functional pancreatic effects of GLP-1 Figure 15: Mechanism of action of GLP-1 agonists Figure 16: Mechanism of action of DPP-4 inhibitors Figure 17: Combined theoretical benefits of PPAR pan agonists Figure 18: SWOT: Januvia (sitagliptin), 2006 Figure 19: SWOT: Galvus (vildagliptin), 2006 Figure 20: Sales forecast for Januvia and Galvus, 2007-2016 Figure 21: SWOT: Byetta LAR, 2006 Figure 22: SWOT: Liraglutide, 2006 Figure 23: Sales forecast for Byetta LAR, 2010-2015 Figure 24: Sales forecast for liraglutide, 2009-2015 Figure 25: SWOT: metaglidasen (MBX-102), 2006 Figure 26: Sales forecast for metaglidasen, 2011-2015 For more information... Contact Contact Nikolaos Karachalias, Lead Analyst - Cardiovascular and Diabetes tel: +44 20 7675 7218 fax: +44 20 7675 7016 email: hcmarketing@datamonitor.com

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