Lilly Reports
Before we get into the bulk of the results Lilly (NYSE:LLY) reported this morning Diabetic Investor thinks it’s time for a moment of silence as we mourn the passing of inhaled insulin as a viable product. While the AIR® Insulin program did not cost Lilly billions as Exubera cost Pfizer (NYSE:PFE) it is costing them $145.7 million in “restructuring and other special charges.”
This announcement comes just two days after Novartis (NYSE:NVS) purchased Nektar’s (NASDAQ:NKTR) pulmonary drug unit for $115 million. Nektar was Pfizer’s partner with Exubera and this move is just one more signal that inhaled insulin was an unmitigated disaster.
Not wanting to give up MannKind (NASDAQ:MNKD) continues to pursue their efforts in inhaled insulin. Given the billions written off in failed attempts by major companies like Pfizer, Lilly and Novo Nordisk (NYSE:NVO) it’s unlikely anyone will step up to the plate and partner with MannKind. This really isn’t an indictment of MannKind’s product rather it just reflects the realities of the market.
Moving on to Lilly’s results a few items stand out. First the company has stabilized their insulin franchise as Humalog® sales were up 13% domestically and 28% internationally. Granted some of this growth comes from a price increase however there is no question that Lilly is benefiting from the increasing use of insulin with type 2 patients. While Diabetic Investor does not see Lilly regaining the majority of share they have surrendered to Novo and Sanofi-Aventis (NYSE:SNY) they at least have stopped the bleeding.
Looking down the road Lilly knows that the most promising new therapy for type 2 diabetes is GLP-1 therapy and they along with their partner Amylin (NASDAQ:AMLN) have the long-acting once-a-week version of Byetta in the wings. Based on the comments made by Amylin during their call this past Tuesday the LAR submission remains on track. The company backed up this sentiment with a $300 million investment when they announced a supply agreement with Amylin on Tuesday.
Lilly also knows that Novo still must face a panel meeting for liraglutide on March 2nd and even with a favorable panel recommendation it’s unlikely Byetta would face a threat until the second half of 2009. This is about the same time LAR should be going to the FDA. Just as Novo will tout their once daily administration of liraglutide when selling against Byetta which is taken twice daily, Lilly and Amylin will counter with LAR which is taken just once a week.
The battle for supremacy in the GLP-1 market is going to be fierce as the stakes are huge. Making this even more interesting is the animosity between the two key players, Lilly and Novo. The question is which player will keep their cool and concentrate on the bigger picture.
