Avandia Part 2?

Avandia Part 2?

Today Johnson and Johnson (NYSE:JNJ) held their pharmaceutical business review and not surprisingly their SGLT2 Invokana was front and center. As has been widely reported the FDA recently issued a warning for this new class of diabetes drugs. Naturally even though the FDA hasn’t taken any additional steps the class action lawsuits are popping up. Just as naturally rumors are flying that the FDA was aware of the issues with this class and approved them anyway.

Now at this point we nor does anyone else for that matter know what the FDA will do next. Their options range from asking for additional studies to adding a Black Box warning to the drugs label, to almost anything else in between. We’re certain even if additional studies are not demanded by the agency researchers will start their own studies and while we hope this doesn’t happen we see the much dreaded meta-analysis coming in the future.

The problem for JNJ however goes much deeper than what the FDA does or doesn’t do with this class. The problem for JNJ is how they build a diabetes drug portfolio around a drug which has issues. The fact is Invokana is the cornerstone upon which their diabetes drug portfolio is being built. Invokana was not supposed to be a one trick pony rather the first in series of diabetes treatments.

As much as this is starting to sound like a broken record JNJ also knows that in the future it’s systems that matter. Already deeply engrained in the diabetes device world, Invokana was the first step towards building the drug side.

Yet JNJ isn’t the only company who could pay a heavy price here, just ask the folks at AstraZeneca (NYSE:AZN) whose DPP4 Onglyza and SGLT2 Forxiga have come under attack. Given that the cardiovascular data for Januvia was much better than what was seen for Onglyza, the company had hoped that Forxiga would pick up some of the slack. Something that doesn’t look likely with the FDA warning. This basically means that Bydureon must lead the way for diabetes and while sales have shown some improvement recently the market for once-weekly GLP-1’s is a crowded and competitive one.

While Lilly (NYSE:LLY) also has a DPP4 and SGLT2 neither would be considered essential to their overall strategy. Given the depth of their portfolio they can still be a major player.

Considering the generally positive cardiovascular data for Januvia and the warning from the FDA on SGLT2’s Merck (NYSE:MRK) stands to be a net winner. Prior to the Onglyza less than positive cardiovascular data, the drug was eating away at Januvia. The same was true when Invokana came onto the market. Today Januvia continues its incredible lucky streak and likely will see share lost to Onglyza or Invokana recaptured.

As we have stated in the past physicians are loathe to prescribe any drug once issues crop up. This doesn’t mean they will take patients off Invokana rather they won’t be so quick to put new patients on the drug. Like everyone else they will likely take a wait and see attitude making judgements when more data becomes available.

Yet we can’t help but feel that we are about to head down a very slippery slope, a slope we have been down before. While we don’t disagree with what the FDA did we do wonder whether they have learned anything from the past. Yes the issues identified are serious however as JNJ correctly noted today millions of prescriptions have been written for Invokana. Which puts us where we have been too many times before, debating the benefits of Invokana which are widely noted against the extent or percentage of patients who may experience a serious adverse event. If we use history as a guide the outlook is not positive as the FDA has become ultra-conservative ever since the Avandia controversy reared its ugly head.

Yes that crusading cardiologist Dr. Steve Nissen certainly has left his mark on the diabetes drug world. Like Dr. Frankenstein the monster he created is now running lose in the village wreaking havoc on the defenseless villagers. Like Frankenstein every time the monster seems to be dead, it’s gets reanimated and wreaks havoc all over again. Diabetic Investor isn’t a big fan of reruns yet that’s exactly what we see coming.