GSK Reports

GSK Reports

This morning GlaxoSmithKline (NYSE:GSK) reported third quarter results and not unexpectedly there was a great deal of attention on their Avandia franchise and the potential impact of DPP4’s being introduced into the market.

On the Avandia franchise the company reported worldwide growth of 11% for the quarter, in the US the growth was just 6%. During the quarter the company had several supply issues with Avandamet and was unable to provide samples to physicians during the quarter. The company made clear these supply issues have been rectified and they expect the Avandia franchise to be a growth driver for the long term.

The company’s confidence for the future of the franchise may be based on the results of the ADOPT study, the company plans to release the results of this study at the International Diabetes Federation conference in South Africa on December 4th. This study took over 4 years and involved more than 4000 patients. The endpoint of ADOPT was to compare Avandia against metformin and sulfonylurea as a front line therapy for the treatment of type 2 diabetes. Unlike the DREAM study where the company had not seen the data prior to its release at the European Diabetes conference, the company has seen the data from ADOPT. While they did not wish to reveal what they had seen, the fact that they have scheduled a presentation at the IDF speaks to the company’s enthusiasm for the Avandia franchise. Based on the tone from today’s call Diabetic Investor believes this data could be extremely compelling.

In regards to how the introduction of Januvia from Merck (NYSE:MRK) and Galvus from Novartis (NYSE:NVS), both DPP4’s, will impact the Avandia franchise the company maintained steadfast in their outlook. The company also acknowledged their own DPP4 is well behind both Januvia and Galvus. The biggest admission came in regards to the possibility that there is some evidence that long term use of a DPP4 may cause cancer. While Diabetic Investor will have much more on this subject in our next issue, there are published reports on the subject.

During the Q&A one question centered on the possible relationship between Avandia and bone density loss. The company quickly dismissed this possibility but did indicate they would have more on this potential issue at a later date.

There is no question the company is committed to their Avandia franchise and will do whatever it takes to protect this growth driver. At least in the early stages Diabetic Investor does not see Januvia or Galvus significantly hurting the Avandia franchise. While the profile for Januvia and Galvus looks compelling and physician interest is high, Avandia is a known commodity. Given the possible connection between DPP4’s and cancer physicians have a reason to pause. We have been down this road before where a once solid looking drug later turned out to be a disaster due to adverse events, think Rezulin.

The fact of the matter is physicians have a wide range of therapy options for type 2 patients, orals and injectables such as Byetta from Amylin (NASDAQ:AMLN). (It interesting that Merck reps are calling Januvia an oral Byetta.) With billions at stake and some of the biggest pharmaceutical companies involved expect the unexpected. Some analyst’s estimates have sales of diabetes drugs growing from $12 billion now to over $26 billion by 2011. This being an election year politicians in tight races resort to attack ads and dirty tricks, the coming battle in the type 2 market will make what politicians do seem like child’s play.

David Kliff
Diabetic Investor
847-634-4646 fax
224-715-3761 mobile