Janumet Wins Approval
Late Friday the FDA announced they had approved Janumet™, the combination of Januvia and metformin into one pill. This approval continues Merck’s (NYSE:MRK) incredible streak of luck with the Januvia franchise as it is the only DPPIV that has received FDA approval. With this clean approval it appears that the Januvia franchise is destine for blockbuster status. However, before everyone loads up on Merck shares a few cautionary notes.
A. A. This approval is not unexpected. As Diabetic Investor reported in a previous note, the FDA was between a rock and hard place with Janumet as they had already approved Januvia and Janumet is merely combining Januvia and metformin into one pill. Suffice it to say the FDA would have placed themselves into a difficult situation had they not approved the drug.
B. B. There is still much we do not know about DPPIV’s and long term usage of the drug. Frankly there to many highly respected researchers who are concerned about long term usage and what we don’t know.
C. C. Diabetic Investor and Merck for that matter have been down this road before. Do the names Rezulin or Vioxx ring any bells?
It would be devastating if six to nine months from now if we begin to see issues with the Januvia franchise. Diabetes is a chronic disease for which there is no cure, once on a medication it is highly unlikely that patient will switch medications, more likely additional medications will be added over time. Besides Rezulin and Vioxx, two medications originally approved by the FDA only to be pulled from the market at later dates, there are other examples of approved medications developing previously unknown side effects after long term usage. A clear example of this has comes from the new bone fracture data and TZD’s. TZD’s have been on the market for several years and only now are we seeing this new adverse event.
All this however matters little to physicians who see the FDA’s approval as the green light to usage. Facing no competition for at least another year, more likely longer, Merck has an opportunity to own this market and make it next to impossible for anyone to compete effectively. Should no long term problems develop; competitors will have the burden of proving that their DPPIV is better than Januvia. As we have seen with Lantus, the long acting insulin from Sanofi-Aventis (NYSE:SNY) and Levemir® the long acting insulin from Novo Nordisk (NYSE:NVO), being first to market and having that market to yourself for a few years makes competing difficult. While there is evidence that Levemir is actually better than Lantus, the differences are not compelling enough to justify switching. This is exactly the situation competitors to Januvia will be faced with, it will not be good enough for their DPPIV to work as well as Januvia, and it will have to work substantially better than Januvia.
With all the problems they have faced Diabetic Investor hopes for the sake of Merck shareholders that our concerns over long term usage prove unwarranted.
Ironically today is the opening day of the baseball season. Traditionally opening day brings optimism to all baseball fans for on opening day everyone has a chance to be World Series Champions. Even if it’s just for one day the lowly Kansas City Royals are on par with the Mighty New York Yankees. Only on opening day can long suffering Chicago Cubs fans, who have not seen a World Series in almost 100 years, look optimistically towards the season ahead. However, this optimism tends to fad as the season wears on and reality begins to set in. There are occasional exceptions as we saw with the Tigers last year, but there is a reason most baseball experts are picking the teams from large markets with huge payrolls to make it to the Fall Classic.
As it stands today Merck looks like the Yankees in the DPPIV market and everyone else has little reason for optimism.