Let the games begin

Let the games begin

This morning Lilly (NYSE:LLY) held their conference call which reviewed the cardiovascular data for their SGLT2 Jardiance. Given the massive amount of news coverage this data has received we will not review the data rather we will look at this from a business perspective.

The biggest question everyone is trying to figure out is whether this data is unique to Jardiance or does it apply to the entire SGLT2 class.  A class which currently is led by Invokana from Johnson and Johnson (NYSE:JNJ) and also includes Farxiga from AstraZeneca (NYSE:AZN). While there were several questions on this subject that were asked several different ways, little clarity was brought to this critical question. Perhaps we gained some insight from the fact that the company did not see an increased incidence of bone fractures in the study. As we have noted in the past the FDA issued a warning over this issue for Invokana. The fact that Jardiance did not see this issue would appear to indicate that the drug’s method of action is different than that of Invokana.

When asked directly about this subject, the company basically punted stating that the jury is still out and more data is needed. This would seem to indicate that perhaps there is a class effect here.

What everyone really wants to know is whether this data, which by every account is truly extraordinary, will positively impact Jardiance in terms of sales. This is why the class effect question is critical, if this is a class effect the entire class of SGLT2’s will benefit. If not a class effect Jardiance has a HUGE advantage.

Here is what we see happening next, as we await data from the other SGLT2’s

  1. Lilly will make every effort to have the Jardiance label changed to reflect this data.
  2. The data from this study will be analyzed six ways from Sunday, again everyone looking to see whether this is a class effect or whether Jardiance has a major competitive advantage. Today’s call was reflective of this as there were several questions regarding the various sub-sets of data.
  3. Frankly we don’t see much happening when it comes to formulary access or improved reimbursement for Jardiance as payors like everyone else are trying to figure out whether this is a class effect. Should it be a class effect payors will continue to pit one SGLT2 against the other, however if not a class effect payors will have no choice but to favor Jardiance as the data is just too compelling.
  4. The big loser here will be DPP4’s but as we noted previously this is for NEW patient starts only. We can see physicians adding an SGLT2 to a patient’s therapy regimen but not switching existing DPP4 patients to an SGLT2.
  5. JNJ and Astra not only have a data problem but a time problem. As we noted previously both companies are conducting their own cardiovascular studies yet we won’t see this data for at least another year. So not only has Lilly set a very high mark to match with their data they have the advantage of having real data. Again this is why the class effect question becomes critical.

Now here’s where things get interesting given that neither JNJ nor Astra has cardio data, do they wok to show this as a class effect. This would seem like a solid strategy but there is one huge drawback as this makes the battle for market share even more intense, which basically gives payors even more leverage in terms of price and/or rebates.  Looked at individually JNJ has more to lose here and would likely push for the class effect argument. Astra unfortunately will likely be a loser no matter what as they lack the market presence that JNJ currently has nor do they have the data Lilly has. Should this be a class effect it will set a major battle between JNJ and Lilly.

We will also say this the Cardiometabolic Health Congress held in Boston in just a few weeks has become a must attend event and Diabetic Investor will be there. Although we’re not sure whether we’ll get a definitive answer to the question that’s on everyone’s mind that won’t stop us from trying.

Let the games begin.