Major Setback for Astra

Major Setback for Astra

This morning we learned that AstraZeneca (NYSE:AZN) has received a complete response letter from the FDA for their Onglyza and Fraxiga combination. According to a company issued press release;

“AstraZeneca today announced that the US Food and Drug Administration (FDA) has issued a Complete Response Letter (CRL) regarding the New Drug Application (NDA) for the investigational fixed-dose combination of saxagliptin and dapagliflozin for the treatment of adult patients with type 2 diabetes.

The CRL states that more clinical data are required to support the application. This includes clinical trial data from ongoing or completed studies and may require information from new studies. AstraZeneca will work closely with the FDA to determine the appropriate next steps for the NDA and remains committed to the development of the saxagliptin/ dapagliflozin fixed-dose combination.”

This is just the latest blow for Astra who has been struggling to find it’s footing in the ultra-competitive diabetes drug space. As we have noted in the past Astra is perhaps the only company who has the portfolio to compete with Lilly (NYSE:LLY). However unlike Lilly the company lacks any form of insulin nor do they have Lilly’s diabetes pedigree.

Since becoming the sole owner of Bydureon the company has struggled to develop a cohesive strategy for their diabetes portfolio. The fact is the company failed to take advantage of Bydureon allowing Lilly and GlaxoSmithKline (NYSE:GSK) an opening in the growing GLP-1 market. The same can said for their line of oral medications with Onglyza well behind Merck’s (NYSE:MRK) Januvia and Fraxiga facing an uphill fight against Johnson and Johnson (NYSE:JNJ) Invokana and Jardiance from Lilly.

This in essence is the problem facing Astra as the only weapon available to them is price. Even worse for the company their offerings based on recent study data are inferior to the competition.

Diabetic Investor likely isn’t the only entity wondering whether Pascal Soriot Astra’s CEO will survive this latest diabetes blunder. Keep in mind that Pascal, besides being rumored as the leading candidate to replace Chris Viehbacher after he was beheaded by Sanofi (NYSE:SNY), was very vocal about how well the diabetes franchise would perform when fending off the takeover offer from Pfizer (NYSE:PFE).  Looking back Pascal must be kicking himself for not taking the Sanofi job or the Pfizer offer.

In the past we believed that a combination of Sanofi’s insulin’s with Astra’s diabetes portfolio would give Lilly a serious run for their money. Yet looking at how badly damaged both companies diabetes portfolios have become this combination no longer looks promising.

This news today is just another confirmation that the diabetes drug market will remain a battle between Lilly and Novo Nordisk (NYSE:NVO), with Merck and JNJ playing a supporting roles. The fact is both Astra and Sanofi have become so damaged that we see little hope this damaged can be repaired. Astra has never been able to full concentrate on diabetes and is now paying a heavy price. Like Sanofi much of the damage they are experiencing is self-inflicted.

We’ve said it before and we’ll say it again whether its drugs or devices having good products is just half the battle, having a well thought out strategy that gets executed is the difference between success and failure. The fact is neither Sanofi nor Astra could execute making both companies in danger of becoming irrelevant in diabetes, if they’re not there already.