ADA Day One – Lilly Responds

ADA Day One – Lilly Responds

On a day when Lilly (NYSE:LLY), Amylin (NASDAQ:AMLN) and Alkermes (NASDAQ:ALKS) issued a flurry of study results on Byetta® and Bydureon™ it almost seemed as if Amylin wasn’t suing Lilly and the this trio of companies were working together. The most important of all this data came from the DURATION-1 studies which noted that Bydueron was not associated with clinically relevant QT prolongation in patients with type 2 diabetes.  Although the company must still complete a study to satisfy the FDA on this issue, these results are a positive step forward.

Ironically Diabetic Investor was interviewing Enrique Conterno Lilly’s Senior Vice President and President, Lilly Diabetes at the time this avalanche of data hit. Needless to say Diabetic Investor was curious how Mr. Conterno would respond to all this good news from a partner that is currently suing his company for not playing well with others. After all Mr. Conterno actually put Lilly together with Boehringer Ingelheim and believes Tradjenta has blockbuster potential.

While he would not comment on the lawsuit, Mr. Conterno went out of his way to state that he believes as strongly in Bydureon as does Diabetic Investor. However, he believes just as strongly that although Tradjenta is the third DPP-4 to come to market has no formulary coverage to speak of and competes against DPP-4 kingpin Januvia, the drug will eventually achieve blockbuster status. There are two main reasons for his strong convictions; Tradjenta has a better profile for patients with renal failure and that the market for DDP-4’s will continue to grow. The basic premise is that with these two factors Tradjenta could eventually reach blockbuster status.

When asked if it was a good allocation of resources to promote a drug that is third to market, has little formulary coverage and is basically a me-too drug with only a slight difference between it and its very established competitors rather than allocate these same resources towards the Bydureon launch, the unsurprising answer was Lilly could do both well and that somehow Tradjenta will help sell more Bydureon. (Diabetic Investor is still trying to figure that last part about Tradjenta somehow helping Bydureon.)

The short answer here is that like all good corporate soldiers Mr. Conterno is promoting the company line. The only problem Diabetic Investor has with this line is that no matter how many times we try and understand the rational for the BI deal, the more problems we have with it.  While it is possible the DPP-4 market will grow into a $10 billion market, there is nothing to indicate that Januvia won’t continue its current market dominance. Yes we know that by capturing just 10% of this market translate into a billion in sales but Diabetic Investor just isn’t convinced the market will grow that large or that Tradjenta can capture a 10% share.

This is not like the Cialis versus Viagra, where Cialis had a compelling advantage (three day life versus just one day) and even though it came to market well after Viagra became a major hit. The central fact is with DPP-4’s there are little, if any, compelling reasons for a physician to choose Tradjenta over Januvia.

The way Diabetic Investor views this situation is that Lilly knows that Bydureon has mega-blockbuster potential but became disenchanted with the many FDA delays. Needing something to keep the revenue coming and provide their sales reps with a reason to see primary care physicians Lilly reasoned that Tradjenta would be a nice temporary stopgap until Bydureon finally cleared the final hurdles at the FDA. Being Lilly they figured that Amylin, who needs Lilly’s sales reps to make Bydureon a hit, would be perfectly content with this deal even though the two drugs are targeting almost exactly the same patient.

What Lilly didn’t count on was Amylin going to court and throwing a monkey wrench into their plans. The bottom line here is Lilly is doing its best to make fertilizer smell like perfume, yet the more ways they try and justify this alliance with BI the more pungent the smell. The stark reality is that Lilly had a chance to own the GLP-1 market just as Merck (NYSE:MRK) now owns the DPP-4 market, but once again the situation may be too little too late.

The real question is can the damage between Lilly and Amylin be repaired and can Lilly somehow get refocused on Bydureon? The more we see and hear the less likely this looks like a happy ending. There’s a great deal of fertilizer being spread here but the only thing growing at the moment is weeds. Not a pretty sight at all.