Big Week – Be Careful What You Wish For

Big Week – Be Careful What You Wish For

It wasn’t that long ago that Diabetic Investor was complaining about how boring earnings calls have become and how nice it would be if these calls actually provided some real news. Given what’s going on in the diabetes world and the companies who’ll be reporting this week it appears our wish will be granted.

In one respect we could call this week – As Amylin (NASDAQ:AMLN) Turns – as the situation at Amylin has turned into a real world soap opera with all the craziness and sub-plots that were once reserved for daytime television.  Thursday in particular should be a very interesting day as not only does Amylin report, but two potential Amylin suitors, Bristol Myers Squibb (NYSE:BMY) and AstraZeneca (NYSE:AZN), will also be reporting.

It’s also likely Amylin will be discussed on Wednesday, when GlaxoSmithKline (NYSE:GSK) and Lilly (NYSE:LLY) report.  Many, including Diabetic Investor, see GSK as a possible suitor for Amylin even though they have their own long-acting once-weekly GLP-1 under development. The fact is GSK wants to get into diabetes in the worst way and would like nothing better than to redeem itself for the Avandia situation. Lilly, on the other hand, will likely face some tough questioning on their diabetes strategy which for all practical purposes appears to be going nowhere in a hurry.

Also reporting Wednesday will be Bayer, the last of the shrinking big four glucose monitoring companies to report. (Given the way the glucose monitoring market is going Diabetic Investor no longer believes it’s appropriate to call LifeScan, Abbott (NYSE:ABT), Roche and Bayer the big four and we are open to suggestions as how to characterize these once dominate now shrinking branded glucose monitoring companies.)  If Bayer follows the pattern of the other members of this yet to be named group once known as the big four, sales in the US should be up slightly while sales internationally will be down mid-single digits.

Saving the best for last both Novo Nordisk (NYSE:NVO) and Sanofi (NYSE:SNY) will report on Friday morning. Frankly Diabetic Investor isn’t quite sure which call will be more interesting as both companies are facing their own dramas. As everyone knows last week the consumer watchdog group Public Citizen asked the FDA to pull Victoza from the market due to what they see as safety concerns. While Diabetic Investor does not believe the FDA will pull the drug it will be interesting to hear how the company responds to these allegations. It will be doubly interesting when you consider that Victoza is the source of another Novo embarrassment as the drugs spokesperson is none other than Paula Deen, the celebrity chef who besides having type 2 diabetes has an incredible talent for putting her foot in her overly large mouth.

Although the situation at Sanofi isn’t quite as interesting as what’s going on at Novo, the company has its own set of issues and drama. Like so many others mentioned here the company is rumored to be a possible suitor for Amylin, something Diabetic Investor believes is a very remote possibility but a possibility nonetheless. More problematic for the company is their difficultly in executing their ambitious diabetes strategy which is supposed to help the company deal with the impending patent cliff for their top selling diabetes drug and the world’s number one selling insulin Lantus. The harsh reality here is that the company is finding it incredibly difficult to build and sell a true diabetes management system, a system that not only provides all the drugs and devices a patient needs but also provides disease management services for the patient and the patients physician.

The problem is not just that no one has done this before; the problem is compounded by the company’s inability to get out of their own way. Apidra, the company’s short-acting insulin, has been a complete failure.  Lyxumia®, their once-daily GLP-1, is a me-too late to market copycat drug that even if it receives FDA approval will likely be a commercial failure similar to the Apidra disaster.  The iBGStar, their entry into the highly competitive glucose monitoring market, may be way cool but is unlikely to make much of impact. When it comes to diabetes devices, glucose monitors in particular, way cool is nice but scale is everything and without acquiring one member of the yet to be named group once known as the big four Diabetic Investor isn’t overly optimistic that the iBGStar will be anything more than a really cool product that generates tons of buzz but does little to impact the bottom line.

Back in the day some may recall that while Diabetic Investor believed the company was on the right track when they went after this ambitious strategy success would come down to how well the company executed. Based on what we’ve seen so far execution has been less than stellular and without some major improvements this ambitious strategy could well become the company’s albatross.

No matter what happens one thing is certain this going to be one interesting week, thank goodness!