Dueling Insulin’s Lilly and Novo Report Results
This morning both Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO) announced fourth quarter and full year results for 2008. While it would be easy to say that not much has changed in the insulin world as Novo is still the unquestioned worldwide leader in insulin sales. There were some notable developments from both companies.
Let’s start with Novo who reported a 21% increase in insulin sales in the US. Novo also noted in their press release “Currently, more than 37% of Novo Nordisk’s modern insulin volume is being sold in FlexPen®.” As Diabetic Investor pointed out yesterday when BD (NYSE:BDX) reported, the trend in insulin delivery favors insulin pens and just as BD is number one in needles and syringes, Novo has the finest insulin delivery devices around. Its likely Novo insulin dominance will continue as they offer the most complete portfolio of insulin products and best insulin delivery systems.
Turning to liraglutide nothing new here as the company indicated they have heard nothing from the FDA indicating a change in the approval timeline. The drug’s original action date was supposed to be March 23, 2009 but has been pushed back due to the upcoming FDA panel meeting on April 2nd. Should the panel provide a favorable review, look for liraglutide to receive full approval late second quarter.
Diabetic Investor found it interesting that the company made a point to mention they discontinued all pulmonary activities. (For anyone who thought MannKind (NASDAQ:MNKD) had a chance take note.) Even more interesting was their statement “Future strategic research focus on oral delivery of insulins and GLP-1.” Diabetic Investor finds this statement intriguing given what we known about oral delivery of both compounds. For years we’ve seen too many companies come and go who said they could offer insulin in a pill. As with so many drugs early results always look promising only to fizzle when more advanced research is done. Perhaps Novo has found some type of magic potion however the proof will be in results.
It’s not surprising that Novo is pursuing an oral formulation of GLP-1 as Amylin (NASDAQ:AMLN) is also looking at alternate delivery systems for their GLP-1 Byetta. Diabetic Investor suspects that while Novo has a strong team and could conceivably come up with oral formulations for both insulin and GLP-1; these efforts are similar to the reasons they jumped on the inhaled insulin bandwagon while Pfizer (PFE:PFE) was developing Exubera. Back in the day a Novo executive once told Diabetic Investor, “We really don’t see inhaled insulin working but we can’t take the chance that someone else gets there and we’re left with nothing in the pipeline.” Given that GLP-1 therapy has the chance to become the dominate therapy option for type 2 diabetes and insulin use continues to increase these efforts to develop an oral formulation make sense. However, Diabetic Investor remains skeptical that either drug will become available in a pill anytime in the near or distant future.
Turing our attention to Lilly the news wasn’t as promising, with Humalog sales increasing 14% domestically larger driven by higher prices. Lilly is also benefiting from the increased use of insulin therapy but lacks a broad insulin product portfolio and while improved their insulin pen options still trail what Novo has to offer. The good news for Lilly continues to be they have stopped the bleeding in their insulin franchise and is no longer losing share. However, with all their efforts they have been unable to regain much of the share they have lost to Novo. In the insulin market the reality is Lilly’s main objective is to keep the share they have and avoid any further missteps which would make them a minor player in the growing insulin market.
Although there was little discussion on Byetta or Byetta LAR, Lilly’s roller coaster relationship continues. It seems with each call Lilly can’t decide if their relationship with Amylin is a positive or a negative. Granted there are many issues facing Amylin however Lilly’s statements today did little to calm concerns over the pending label change for Byetta. Given that Lilly’s influence at Amylin appears to be growing with each passing day, (it’s not exactly an accident that the new marketing VP at Amylin came from Lilly), one might think the company would support their partner when times are tough.
The fact is Amylin owns the most valuable asset in diabetes with Byetta LAR. Given the comments made by Amylin during their call earlier this week and the lack of support from Lilly today Diabetic Investor wonders if there’s more to the upcoming label change then either Lilly or Amylin are publicly disclosing. Perhaps they are just being overly cautious not wanting to take any chances that anything they would say would be taken the wrong way at the FDA.
As Diabetic Investor has pointed out in the past when it comes to dealing with the FDA it’s not exactly a good idea to say anything that might tick off the agency that controls your future. Perhaps Lilly has learned a lesson from their neighbors Roche, who publicly blasted the agency while they were waiting to get their insulin pump back into the US. Back then Roche made the foolish mistake of blasting the agency not once but twice and both times in a public forum.
Looking forward this battle between Lilly and Novo continues with Novo for the moment holding the higher ground. All of this could change should the FDA issue a Black Box warning for Byetta or should the FDA panel vote against liraglutide. The ultimate irony here is that each must secretly root for the other as the last thing they need is for the FDA to kill the goose that lays the golden eggs. Should the label change for Byetta be minor and liraglutide gain full approval, two events Diabetic Investor believes will occur, then this battle will resume. For the short term Lilly and Novo are reminded of something Stanislaw J. Lec once said; “The face of the enemy frightens me only when I see how much it resembles mine.”
