Is Merck getting ahead of themselves

Is Merck getting ahead of themselves

Yesterday Merck (NYSE:MRK) raised their earnings guidance for 2007, saying they expect to earn $2.40 a share to $2.55 a share, up from $2.36 to $2.49 a share. While the company is not directly linking the increase to sales of Januvia the analyst community is now projecting greater sales for the drug. With Galvus from Novartis (NYSE:NVS) delayed for at least another year and no other competition expected until 2009, it appears Merck now owns the DPPIV market. Lehman Brothers increased sales estimates for Januvia from $353 million in 2007 to $488 million and from $887 million in 2008 to $1.17 billion. Banc of America also raised sales estimates for 2011 from $1.76 billion to $1.97 billion.

Everyone should clear their calendars for the end of March as this is when the FDA is excepted to render a decision on Janumet™, Merck’s combination of Januvia and metformin into one pill. Should Janumet be approved on time without delay it’s likely these new sales estimates will become a reality. It is widely known that used in combination Januvia and metformin have produced solid improvements in A1C with few adverse events. This remains the main selling point with primary care physicians who are aware that Januvia really does not work any better than current oral medications rather it works well enough but with a better adverse event profile.

However there some who believe that problems with Galvus, skin lesions and kidney impairment, are not unique to Galvus and apply to the entire class of DPPIV’s. It should be noted that the FDA did not delay Galvus due to skin toxicity issues as they were more concerned with kidney impairment. Some may recall Dr. Nathan’s editorial in the respected New England Journal of Medicine when he outlined his concerns over the FDA’s quick approval of Januvia. Diabetic Investor also seems to be the only media outlet that has highlighted a study by Dr. Masur et. al. that shows a possible link between extended use of DPPIV’s and the formation of cancer cells.

Before we get too far away from the skin lesion issue it’s interesting to look at how Merck and Novartis has explained why skin lesions appeared with Galvus and not Januvia. Keep in mind that this issue did not appear in human trials but primate studies. Novartis is claiming that it is possible that the skin lesion issue could be species specific as they performed their primate study in cynomolgus monkeys whereas Merck did theirs in Rhesus monkeys. Others believe it may be a dosing issue as Novartis used higher doses of Galvus in their studies than Merck did in theirs. Whatever the reason Diabetic Investor considers the skin lesion issue with Galvus a non-issue that is getting way to much attention by the analyst community.

More important is what we don’t know about the entire class of DPPIV’s. After speaking with several respected researchers Diabetic Investor believes that since DPPIV is an indiscriminate enzyme with at least 62 known substrates, some of which are inactivated by DPPIV, some activated by DPPIV. According to these researchers when you inhibit an indiscriminate enzyme you run the risk of adverse events from one of the other substrates. Diabetic Investor would recommend reading the Masur study as it outlines the role of many of the substrates. Perhaps this why the Masur concluded by stating “Furthermore, if there is a trend in down-regulating CD26/DPPIV activity in cancer cells per se, the use of DPPIV inhibitors to treat diseases like diabetes, short bowel syndrome or ulcerative colitis, where a long time treatment is indispensable, would amplify those tumour promoting effects. With regard to patients with increased gastrointestinal cancer susceptibility, long time investigations should be performed to estimate the risk of a prolonged GLP-2 treatment and/or the use of DPPIV inhibitors for cancer development and progression.”

It should be noted that Januvia already has dose adjustment labeling for renal impairment, the same issue which caused the FDA to ask Novartis to run additional Galvus studies. Why the FDA did not ask Merck for more data on this issue and is requiring Novartis to perform additional studies is anyone’s guess.

Based on Merck’s actions yesterday it would appear they are confident that Janumet will be approved without delay. According to the FDA’s press office it is possible that company won’t know about any delays until the actual PDUFA date which is why they remain confident about Janumet. When Diabetic Investor spoke with Merck’s media relations department they would not provide what day they expect a decision stating it would occur in late March. A strange statement if you are confident nothing bad will happen. Diabetic Investor is also concerned with the lack of clarity from Merck officials when asked about the drug. It’s ironic that Merck is claiming the problems with Galvus is molecule specific, anyone recall how they dealt with issues surrounding Vioxx.

All this speculation may be much to do about nothing and Janumet will receive approval without any limitations or label changes. Diabetic Investor has no direct evidence that there is a problem with Januvia only the thoughts of several respected researchers. The real problem is what happens if Janumet is delayed or comes with label changes? Has the FDA put itself between a rock and hard place? Although the FDA is supposed to be above the political fray, this is a government agency and no government agency is above political considerations. It stands to reason with Januvia being approved so quickly that Janumet should not run into any issues. This really isn’t a new drug merely a combination of two already approved drugs into one pill. Should the FDA delay Janumet the question will be asked; Why did they approve Januvia in the first place? The last thing the FDA needs is more questions on how they go about approving drugs.

At this point Diabetic Investor sees more questions than answers as there is much we don’t know about DPPIV’s. All one has to do is look at the recent developments with Avandia which has been on the market for over 5 years. While physicians thought they knew the drugs adverse event profile out of the blue comes a new concern, bone fractures. It’s possible that Januvia and Galvus although from the same class really work differently and the problems identified with Galvus are unique. It’s equally possible that there is a problem with all DPPIV’s and the FDA jumped the gun by approving Januvia so quickly.

March is typically a month associated with the NCAA basketball tournament affectionately called March Madness. This year depending on what the FDA does with Janumet this madness just might extend to the world of diabetes. This could get very, very interesting, stay tuned.

David Kliff
Diabetic Investor
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