A changing landscape; maybe.

A changing landscape; maybe.

Over the past several years Diabetic Investor has gone back and forth over the use of surgery as a treatment for diabetes.  Several studies have shown that surgery has been very effective in controlling and in some cases eliminating Type 2 diabetes. While some have gone so far as to call this a cure, others point out that should the patient regain the weight the diabetes returns. Diabetic Investors concerns were slightly different as we were concerned with costs and possible long term side effects of surgery.

Based on a recent article in JAMA there are others who share our concerns over the long term impact of surgery. The article “Long-term Risks and Benefits of Bariatric Surgery A Research Challengeby Bruce M. Wolfe, MD and Steven H. Belle, PhD was published online yesterday.  The authors concluded; “High-quality evidence shows that bariatric surgical procedures result in greater weight loss than nonsurgical treatments and are more effective at inducing initial type 2 diabetes mellitus remission in obese patients. More information is needed about the long-term durability of comorbidity control and complications after bariatric procedures and this evidence will most likely come from carefully designed observational studies.”

The authors also note; “Because bariatric surgical procedures alter gastrointestinal anatomy, complications of the procedures may take many years to manifest. Identifying the true incidence of long-term complications is critical for establishing the risk-to-benefit ratio of surgical procedures. To date, this has not been done.”

Still on balance Diabetic Investor sees surgery as one of the many tools that should be considered as a treatment for Type 2 diabetes. An option that should be seriously considered when the patient is morbidly obese and other methods at reducing weight have failed. However in cases where a patient is mildly obese surgery should be the option of last resort.

Lost in this debate over the use of surgery, is an opportunity for diabetes drug companies, particularly those in the GLP-1 space to expand their revenues by repositioning their offerings as not just a treatment for diabetes but also a treatment for obesity. Novo Nordisk (NYSE:NVO) was the first to see this opportunity and is repositioning their once-daily GLP-1 Victoza as treatment for obesity. Novo sees that when it comes to treating diabetes the market opportunity for Victoza is becoming more difficult. Lilly (NYSE:LLY), GlaxoSmithKline (NYSE:GSK) and AstraZeneca (NYSE:AZN) all have once-weekly GLP-1’s on the market and as we have noted on numerous occasions; just as once-daily trumps twice daily so does once-weekly trump once-daily.

Diabetic Investor suspects that Novo’s own success here may actually come back to haunt them as they have paved the way for their competitors to make this transition. Given that recently an FDA panel voted overwhelmingly that Victoza be approved as treatment for obesity, the competition now has a path to follow. Thankfully for Novo the competition is currently figuring out new ways to beat each other up in the diabetes market and has yet to turn their attention to the obesity market.

The harsh reality is that obesity and diabetes go hand and hand. Diabetic Investor suspects it’s just a matter of time before the GLP-1 market gets another boost when pre-diabetes officially becomes a disease state. According to the National Institute of Health (NIH) there are nearly 90 million Americans who would fall into the pre-diabetes category. It’s also known based on other studies that one in three children will develop during their lifetime and many of these children are obese.

Now Diabetic Investor doesn’t believe that Novo Nordisk will ever abandon the diabetes market in favor of the obesity market, however we see this move into the market a very positive sign. The company which has been slow to adapt to the changing diabetes market and has experienced some serious setbacks with new drugs, is showing signs of life.  That unlike others in this space they are not wandering in the wilderness clueless as to where they are going. They realize that the diabetes market is becoming ultra-competitive and while they have several excellent offerings they also lack some key components needed to compete in today’s world where single source contracting is becoming more popular.

Novo is not known for bold moves but this might just be the time to make one. Given the company has virtually no presence in the oral medication market why not acquire Astra’s diabetes portfolio before someone else does. Yes there would some overlap in the GLP-1 area but none anywhere else. Although Astra has publicly stated they aren’t getting acquired and are serious about diabetes, we’re just not buying it. Frankly should Astra get acquired it would be a disaster for their diabetes portfolio which has seen more owners than Minnesota has lakes.

Still with such a move Novo could then compete with Lilly head on; an ironic statement given the history between these two companies both of whom have seen their fair share of ups and downs.  Even more ironic looking back on the diabetes drug landscape over the past 5 or 10 years, as there was a time when it seemed that Novo and Lilly would lose their relevance in diabetes. The simple fact is Novo and Lilly with their strong diabetes experience are survivors who will lock horns well into the future. Yes there was time when it looked like this might not be the case but as the old adage goes the more things change, the more they stay the same.