JPM Day Two Final

We’ll probably catch some flak for saying this but we almost feel sorry for Lilly. Not only are they being accused of putting profits before patients lives no matter how many programs they offer for lower price insulin. Before their presentation yesterday afternoon a small group of protestors gathered outside the event this time protesting Lilly’s treatment of animals. Perhaps we should look at these protests differently and not as the annoyances they seem to be. Perhaps it’s a sign of how deeply healthcare has become engrained in our society. Monday it was global warming, Tuesday it was  the treatment of animals can’t wait to see what they protest today.

Frankly the protest outside was more interesting than Lilly CEO’s fireside chat but then again we didn’t expect to hear anything earth shattering here and we weren’t disappointed. Although we did not attend the Sanofi presentation today, Lilly echoed Sanofi’s comments that insulin has become a commodity and in a commodity market price trumps everything. Mr. Hudson Sanofi’s new CEO was a little more blunt noting not just pricing pressure but double digit revenue declines.

Thankfully Lilly is not in as bad as shape as Sanofi when it comes to diabetes as their comprehensive portfolio is doing quite nicely. The big growth driver of course is the continued expansion of the GLP-1 market making the future very bright for Trulicity. Jardiance is also doing just fine even with the highly competitive SGLT2 market.

The biggest disappointment, but not unexpected was the lack of news on Lilly’s version of Tyler. Yes the company has submitted their cap cover or maybe a better term would be injector button cover to the FDA but as so often happens when drug companies get into the device business things aren’t exactly going swimmingly.

This product will eventually get here but this fiasco makes us wonder when or if we’ll ever see Lilly’s connected totally disposable pen. The technology exists to make this happen unfortunately this technology resides with a drug not a device company and nothing against Lilly who is damn good at drugs but they aren’t exactly the sharpest knife in the drawer when it comes to devices. They are for sure used to getting drugs through the FDA it’s a vastly different story when it comes to getting devices through the FDA. Proving what we said yesterday that just because a company is very good at one thing does not by any means they are good at all things.

Making their first appearance at JPM Novo Nordisk jumped on the insulin is a commodity bandwagon. In fact being new to JPM anyone attending the presentation or breakout who was unfamiliar with the company just might think Novo was actually a GLP-1 company and they’d be right. Like Lilly and Sanofi, Novo acknowledges insulin long and short acting has become a commodity, prices will not rebound and volume is really all that matters. Therefore the company is betting the ranch on their line of GLP-1 therapy options which now includes the oral version Rybelsus.

Still with deep roots in the insulin world the company has not abandoned insulin entirely seeking the Holy Grail with glucose sensitive insulin. As the name implies should they get this to work and this is by no means is an easy task patients would be able to inject insulin which would only work in the presence of glucose. It’s not an overstatement to say this is a moonshot project which like putting a man on the moon would be one huge accomplishment.

Also like Lilly and Sanofi the company is developing a Tyler which unfortunately won’t reach our shores until 2021. Like Lilly and Sanofi Novo has decided given the popularity of disposable insulin pens in the US they will use connected pen cap covers as their toy to deliver insulin dosing information to their app. The company does have a durable connected pen overseas and did note something we already knew that Tyler works.

Be that as it may when it comes to Tyler a market which should be owned by the insulin companies the door is wide open for someone else to come in beat all the insulin players to the punch. The strongest candidate being Companion Medical who presents later this afternoon. Armed with more capital and an existing relationship with Dexcom don’t be surprised if Companion takes the bull by the horns and becomes the first company to launch Tyler. The lone issue facing the company, one which is easily fixed, at the moment the company does not have connected cap covers and given the popularity of disposable pens this is a must have product if they are to be a serious Tyler entry.

Getting back to Novo and Rybelsus the company is confident the complex dosing regimen will not stand in the way of the drug becoming a success. While we cannot say we share this confidence the drug when dosed properly does work very well and should they be correct and the dosing regimen does not get in the way there is no question they have a winner on their hands. Time will tell.

Leaving Novo, Sanofi just can’t seem to leave diabetes even though they are sending every signal they want to leave. Take a look at this from a press release issued yesterday;

“BIOCORP (FR0012788065 – ALCOR / Eligible PEA PME), a French company specialized in the development and manufacturing of medical devices and smart drug delivery systems, and SANOFI announce today, the signature of a new contract concerning BIOCORP’s smart sensor Mallya.

Negotiations started in July 2019 have led the BIOCORP and SANOFI teams to strengthen their collaboration, developing real synergies around the Mallya system. A new project aiming at closely associating Mallya with SoloStar insulin pens is thus initiated today.

BIOCORP, which has already received €6 million in upfront payments from SANOFI in 2019, is today receiving a new €1 million upfront payment with an additional €12 million milestone payments spread over the period of the collaboration. Additional revenues will be generated from the production of Mallya devices by BIOCORP on behalf of SANOFI.”

We still believe that Mr. Hudson who has been incredibly blunt about the problems with the diabetes franchise will take the final step and sell this franchise. No CEO that blunt who has already made dramatic cuts in the unit is stupid. Our guess and it’s only a guess is that Mr. Hudson has already begun his quest to find a greater fool and given the history in this wacky world we have no doubt he’ll find one.

Well that’s a wrap from JPM and it’s time to leave this beautiful city by the bay and head back to cold Chicago. Tomorrow we’ll have some follow on pieces with some additional thoughts but after CES and now JPM it’s time to head home.