Game On

Game On

This morning Reuters announced results of a survey on two new oral medications for the treatment of type 2 diabetes. Januvia from Merck (NYSE:MRK) and Galvus from Novartis (NYSE:NVS) are both awaiting Food and Drug Administration (FDA) approval. Both drugs are DPP-4 inhibitors and in clinical trials have shown solid results. Both drugs have the potential to reach blockbuster status mainly due to the lack of adverse side effects.

According to Reuters a survey of about 60 endocrinologists, general practitioners and internists- who already had at least some awareness of the drugs- found that virtually all will use either Januvia or Galvus alone or in combination with other treatments. Of those physicians, about 90 percent of primary care providers said they intend to use one of the drugs, while 95 percent of endocrinologists said they intend to use them.

The survey also looked into whether physicians currently prescribing Byetta from Amylin Pharmaceuticals (NASDAQ:AMLN) would be open to switching patients from Byetta to one of the new drugs and found more 70 percent said they would be somewhat to very likely to change treatments. Not surprisingly Amylin shares are down while shares of Merck and Novartis are up on the news.

Before everyone starts dumping their shares of Amylin and starts buying Merck or Novartis, take a deep breath and consider the following. While Januvia and Galvus have shown solid results in lowering A1C, the drugs have proved to be weight neutral while patients on Byetta are losing weight. It’s also worth taking a closer look at the clinical studies for Januvia and Galvus when used alone and not in combination with metformin. While Merck and Novartis have been touting their respective drug’s ability to lower A1C, used as mono-therapy neither drug lowered A1C as well as metformin used as a mono-therapy. Byetta by contrast has proven effective used alone or in combination with other therapies.

Diabetic Investor sees a place for Januvia and Galvus and they do have blockbuster potential. However, we do not see Byetta sales slowing dramatically with their introduction into the marketplace. While we would generally agree that an oral medication is preferable to an injectable medication IF all things are equal but in this case all things are not equal. Keep in mind that these same people who doubted Byetta because it is an injectable are the same people who when the drug was approved said it would not be widely prescribed because patients must inject themselves twice a day. Byetta sales continue to accelerate and nearly 500,000 are using the drug. Even with this success and the fact that patients on Byetta are more than satisfied with the drug, doubters remain. As Diabetic Investor accurately predicted when the drug was approved Byetta’s proven ability to help patient’s lose weight would override any concerns that the drug had to be injected.

In our next issue Diabetic Investor will take a closer look at both Januvia and Galvus and their effect on the market, an issue no one will want to miss. What we can say today is that while their introduction to the market will have a marginal impact on Byetta sales we see no reason to change our belief that Amylin is the most valuable property in the diabetes sector.

As we all should have learned by now is that survey’s are a funny thing. All the initial survey’s surrounding Pfizer’s (NYSE:PFE) inhaled insulin Exubera said patient’s and physicians would adopt the drug because patients would no longer have to inject insulin. Diabetic Investor stood alone stating the fact that Exubera was inhaled rather than injected was not sufficient reason to believe the drug would reach blockbuster status. Once again Diabetic Investor was on target as sales of Exubera are disappointing. As Diabetic Investor accurately pointed out the cumbersome nature of Exubera’s delivery device is making selling the drug difficult. Not to mention that inhaled or injected, Exubera is just insulin with a different delivery system and patients aren’t afraid of injections their afraid of insulin.

The bottom line here is surveys don’t sell drugs, results do and right now Byetta is producing excellent results.

David Kliff
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