A leg up

A leg up

This morning we learned that Jardiance, Lilly’s (NYSE:LLY) SGLT2 showed it can lower the risk of heart attack, stroke and death from cardiovascular causes. According to results from the EMPA-REG OUTCOME study which involved more than 7,000 patients adding Jardiance to the standard of care showed that the combo did a better job of staving off CV death, heart attack and stroke.

The question is will these results give Lilly a leg up in the competitive SGLT2 space which also includes Invokana from Johnson and Johnson (NYSE:JNJ) and Farxiga from AstraZeneca (NYSE:AZN). A secondary question is will these results offset concerns over SGLT2 usage and DKA. As we noted just the other day class action attorneys are already trolling for SGLT2 users.

To Diabetic Investor what’s happening in the SGLT2 market is just another example of the impact the Avandia controversy has had on the diabetes drug market. On the one hand our good friend that crusading cardiologist Dr. Steven Nissen should be thrilled with these results. Yet on the other he might not be given the DKA issues. Once again physicians are in a conundrum, do they prescribe a SGLT2 which from this data shows solid cardiovascular benefits or does the concern over DKA trump these benefits.

Reading through the press release issued by Lilly this morning it’s obvious the company intends to use these results aggressively. The release states; “JARDIANCE is the only glucose-lowering agent to have demonstrated CV risk reduction in a dedicated cardiovascular outcomes trial.”

Yet again the question is will this advantage offset DKA concerns. Or put another way will payors who have three choices in this category provide Jardiance with more favorable formulary placement believing the DKA concerns are minor while cardiovascular issues are more important.

Equally important here is how JNJ and Astra responds to this data. Searching www.clinicaltrails.gov of the 49 studies listed for SGLT2’s we did not find any related to either Invokana or Fraxiga and cardiovascular outcomes. Even if JNJ and Astra initiated studies Lilly still has a leg up. With today’s results Lilly has made JNJ and Astra play defense forcing them to show their SGLT2’s can replicate their data. Ironically this data also helps the class action attorneys as well as they now can add the fact that neither JNJ nor Astra has conducted CV studies to their list of grievances.

It would also be ironic if today’s results pushed Jardiance to the top of the SGLT2 class given how CV concerns have harmed so many other diabetes drugs. In his own way Dr. Nissen may have inadvertently helped Lilly. Yes we know we keep saying this but there is a reason we call this the wacky world of diabetes, where anything can and usually does happen.

Frankly Diabetic Investor isn’t sure what to expect next. We continue to believe the diabetes drug market is commoditizing. However commodization assumes all things are equal and as today’s results show for the SGLT2 category anyway all things may not be equal. This is not like the crowded DPP4 category where there are minor differences between the drugs, better CV outcomes are a MAJOR difference.  A difference we also believe will trump DKA concerns as given the choice physicians see CV outcomes as more important.

For the moment Lilly has the ball and we look for them to press this advantage aggressively. This category is growing and given the nature of the diabetes drug market where share means everything Lilly won’t fumble. Thankfully Lilly has learned from past mistakes.

However we can’t help but wonder what will happen next. Will the FDA force a label change for all SGLT2’s due to the DKA concerns? Will they force JNJ and Astra to conduct CV studies for their respective SGLT2’s? In attempt to offset this news will JNJ and Astra offer deeper discounts and/or higher rebates to maintain formulary placement? One thing that is certain this market will not standstill that the battle for share remains.

When it comes to SGLT2’s Lilly now has the advantage, let’s see how long that lasts.