Let the games begin

Let the games begin

This morning that soap opera that has transformed into a three ring circus Sanofi (NYSE:SNY) announced that the FDA has approved their new but unnecessarily improved long acting insulin Toujeo®. According to a company issued press release; “Sanofi announced today that the U.S. Food and Drug Administration (FDA) approved Toujeo® (insulin glargine [rDNA origin] injection, 300 U/mL), a once-daily long-acting basal insulin, to improve glycemic control in adults living with type 1 and type 2 diabetes. Toujeo is expected to be available in the U.S. at the beginning of Q2 2015.”

Sanofi is betting the farm that payors, physicians and patients will embrace Toujeo that the millions of patients currently using Lantus will automatically switch to Toujeo. The reason the company gives is not because Toujeo produces better outcomes than Lantus, it doesn’t. In terms of glycemic control Toujeo is on par with Lantus but NOT better than Lantus. No what Sanofi wants everyone to believe is Toujeo will be successful because patients using Toujeo experience fewer hypoglycemic events.

Yes it is true that hypoglycemic events should not be taken lightly and can be a life threatening event in its most severe cases. However, anyone who looks at the data generated by the clinical trials for Toujeo will notice that while patients had fewer events than those using Lantus it was not by a wide margin. Yes there was a difference but not enough of a difference that would overcome the many obstacles Toujeo will face when it hits the market.

Physicians will not automatically switch Lantus patients to Toujeo. Take away reimbursement for a moment, physicians are loath to switch patients off any therapy option that’s working and let’s face facts Lantus works very well and is relatively easy to use.

It won’t help matters any that Toujeo has a different dosing algorithm than Lantus. Put in simple terms a patient taking 30 units of Lantus each night would not take the same amount of Toujeo to achieve comparable results. So just when a patient has become comfortable with Lantus, they would have to learn a whole new dosing regimen should they be switched to Toujeo, not a positive.

Reimbursement could be a major issue as payors see the same thing everyone else does, namely Toujeo is only incrementally better than Lantus and therefore unworthy of premium reimbursement or prime formulary position. Payors have the added leverage of knowing that a generic Lantus is waiting in the wings plus Novo Nordisk (NYSE:NVO) has been ultra-aggressive with Levemir. The harsh reality is payors won’t help Sanofi any as they know there are other options which are not only just as good as Toujeo but also much cheaper. With cost control being the order of the day guess who wins that battle?

To offset these obstacles look for Sanofi to do what they have done for Afrezza basically give Toujeo away for free to get patients on the drug and then subsidize patient co-payments limiting their out of pocket cost for refills. This is all well and good but all these programs do is eat into margins not exactly what Sanofi needs at the moment.

Ironically on the same day Toujeo was approved Sanofi lost another longtime executive as Jerry Durso, part of the diabetes global leadership team is leaving the company. (In actuality it was more like being asked to leave and don’t let the door hit you in the fanny on your way out. The French can be so arrogant when they behead someone.) Keep in mind Mr. Durso was a 22 year Sanofi veteran, which makes Diabetic Investor wonder what his mind is like after living in a circus for 22 years.

So let’s review for a moment where things stand at Sanofi as Olivier Brandicourt gets set to take the reins. The Afrezza launch isn’t going all that great and has become the norm at Sanofi since our buddy Serge decided to become not just a board member but a full time quote machine, management is once again blaming the sales team for this less than spectacular launch. Toujeo, the drug which is supposed to replace Sanofi’s lone successful diabetes product, Lantus is now getting set to launch into a less than friendly environment. And it won’t help matters any that Toujeo is only incrementally better than Lantus, if that. Lantus, the goose that laid the golden eggs, is about to get cooked with its patent expiring. Lilly (NYSE:LLY) has already received approval for their Biosimilar version of Lantus and is just waiting for the 30 month stay to expire. Novo Nordisk, who’s already been eating away at Lantus share continues to be aggressive.

But wait the drama doesn’t end there, nope the company is once again submitting Lyxumia, their once-daily me-too copycat late to market GLP-1 to the FDA. And waiting in the wings is another me-too copycat late to market drug LixiLen, a combination of the yet to be approved Lyxumia and Lantus.

Now if that’s not enough Olivier must somehow navigate a negative pricing environment, stiffer competition and payors who are increasingly looking to stick it to Sanofi who for years kept raising the price for Lantus as they had no credible competition. As we have said many times payback is a bitch and payors are now getting their payback and then some. Morale at the company is at an all-time low and our wine drinking friends in France are already bitching about the compensation package which lured Brandicourt to Sanofi.

Listen contrary to what some may believe we actually want Brandicourt to do well, no matter how much fun we have writing about this three ring circus. Yet this job which was already difficult has taken on huge significance given that the diabetes is Sanofi’s largest franchise, a franchise which has one great product whose run is coming to an end. There is nothing being launched or about to be launched that will come anywhere near replacing the revenue that will be lost when Lantus officially goes off patent. There is nothing of substance in the pipeline and before he takes a seat at the table the French are blasting his pay package.

Thank goodness Serge didn’t take us up on offer to take the CEO job, we would have hated to give up our Miller Lite or Grey Goose. Although we have this feeling Brandicourt will be pounding down the chardonnay or Prisoner as in the immortal words of brother John Blutarsky; “If I were you I would start drinking heavily.”