Double Talk in Triplicate

Double Talk in Triplicate

One thing about the folks at Sanofi (NYSE:SNY), who reported 2013 fourth quarter and full year results yesterday; they sure hope the investment community has short memories.  Yesterday was yet another example when the company modified statements they had made previously. Diabetic Investor has outlined this double talk before as the company has changed its public comments on a generic version of Lantus several times; first saying that making insulin wasn’t easy, then stating a generic version wouldn’t be profitable and now they are suing Lilly (NYSE:LLY) to stop this drug that was never really a threat- go figure.

While we’ll have more on the legal battle later it’s interesting to note how their position has changed on the product which is supposed to replace Lantus, U300. Yes the good people at Sanofi think they a better mouse trap with U300 and that payors will pony up big bucks for this new and improved version of Lantus. Elias Adam Zerhouni – President of Global Research & Development said this about U300;

“With U300, we’re developing the next generation of basal insulin for a broad diabetes population. And the excitement around U300 is due to its really exceptional pharmacological profile. As the slide shows, it has less excursions than Lantus and the PK level, which leads to a much better PD — pharmacodynamic effectiveness over the 24-hour period of administration.

So if you look at the data from the addition program, it suggests that at equal efficacy, U300 is associated with a lower incidence of hypoglycemic events. Importantly, in the titration phase as well as in the maintenance phase of U300 therapy, we’re noticing a decrease in the hypoglycemic event rates.”

Now we don’t want to understate the importance of fewer hypoglycemic events, as hypoglycemic events can be dangerous, but when the company originally talked about U300 it was all about longer duration of action. Or put another way the company was touting the possibility that patients would only need to administer U300 once every two or three days not every day as they do now with Lantus. The simple fact the company is over hyping what really is just a slightly different version of Lantus, an incremental improvement not a major breakthrough by any means.

Equally interesting is their talk around LixLan, which is Lantus and Lyxumia – the company’s once daily GLP-1 which is approved in Europe but stalled here in the US. Listening to company talk about LixLan one might they think they are the only company working on an insulin/GLP-1 combination product when Novo Nordisk (NYSE:NVO) and Lilly are doing the exact same thing. But that’s not the odd part here; the truly odd part here is how the company expects the FDA to approve a combo product when one of the two products hasn’t been approved by the FDA.

The fact is the company is doing whatever they can to divert attention away from Lantus, which when it comes to diabetes and Sanofi is really all they have. Hence the reasons for the lawsuit against Lilly which will be a knockdown, drag out, balls to the wall fight. Take a look at the comments made by Christopher A. Viehbacher – Chief Executive Officer, Director and Member of Strategy Committee- during yesterday’s Q&A session

“In terms of the 30-month stay, clearly, we had a deep analysis of this, including external attorneys. When you have the situation, we can request information from the biosimilar filer. And that’s why we believe that there is infringement on 4 of the patents. Normally, that 30-month stay will only end if Lilly could get a summary judgment, and I’m not going to be speculating on court processes in the U.S. But obviously, we wouldn’t have launched this if we didn’t think that we had a very robust case to defend this. I think the major — that does hold the major benefit of that, and clearly, you’ve got an even better time to establish U300 as the standard in diabetes care.”

It’s his last statement that is most telling as it basically sums up the Sanofi diabetes strategy for the near future- do whatever it takes to prevent Lilly from bringing their drug to the market – and hope like hell that U300 is better than what been shown so far. Should Lilly prevail in court and be able to bring their version of Lantus to the market watch out. Just how bad would it be for Sanofi – take a look at what Pascale Witz – Executive Vice President of Global Divisions & Strategic Development stated when asked where the growth in Lantus sales came from – “Well, for Lantus in the U.S., we see a price volume, a split of about 2/3, 1/3. Globally, it’s more 1/2 and 1/2, so that’s what we have been seeing.” Translation sales really aren’t growing that fast and most the increase in revenue is coming from price increases. As Diabetic Investor has been noting Sanofi owns the long acting insulin market and has been forcing through price increases with reckless abandon as they knew they really didn’t have any serious competition. Imagine a world when all of a sudden there is a generic equivalent for the world’s number one selling insulin, an insulin that used by over 8 million patients worldwide. Not a pretty picture is it.

The company can talk all they want about U300 or LixLan but when it comes to Sanofi and diabetes their future rests in the hands of the US judicial system, which is not unlike the wacky world of diabetes where anything can and usually does happen.