Merck and Pfizer Join Forces

Merck and Pfizer Join Forces

This morning Merck (NYSE:MRK) and Pfizer (NYSE:PFE) two companies who at one time seemed to be bitter enemies joined forces. According to a jointly issued press release; -“Merck & Co., Inc. (NYSE: MRK), known as MSD outside the United States and Canada (“Merck”), and Pfizer Inc. (NYSE:PFE) today announced that they have entered into a worldwide (except Japan) collaboration agreement for the development and commercialization of Pfizer’s ertugliflozin (PF-04971729), an investigational oral sodium glucose cotransporter (SGLT2) inhibitor being evaluated for the treatment of type 2 diabetes. Ertugliflozin is Phase III ready, with trials expected to begin later in 2013.”

Late last month Johnson and Johnson (NYSE:JNJ) became the first company to receive FDA approval for their SGLT2, Invokana. Lilly (NYSE:LLY) along with their partner Boehringer Ingelheim have also submitted their SGLT2 Empagliflozin to the FDA. Astellas Pharma also has a SGLT2 under development and let’s not forget that Bristol Myers Squibb (NYSE:BMY) along with their partner AstraZeneca (NYSE:AZN) has already seen their SGLT2 dapagliflozin rejected by the FDA.

Given that if approved Ertugliflozin by the FDA it would be the third, possibly fourth SGLT2, on the market one has to wonder why Merck, who owns the hugely successful Januvia franchise felt it necessary to enter into this collaboration. Diabetic Investor certainly understands why Pfizer wanted to do this deal, as whom better to partner with than a company who has ready-made access to the diabetes market. Plus given their checkered history in the diabetes space, remember the $4 billion Exubera failure, better to get 40% of something than 100% of nothing. Still for Merck this deal is perplexing.

The deal becomes even stranger when one considers that few expect this category of drugs to achieve blockbuster status. When the FDA approved JNJ’s Invokana it asked for five post-marketing studies for the drug including a cardiovascular outcomes trial, an enhanced pharmacovigilance program, a bone safety study and two pediatric studies. Besides these concerns this class of drugs has also been associated with genital infections. Perhaps this is why the diabetologiests, endocrinologists and primary care providers interviewed by Diabetic Investor have been less than impressed with the category.

Now it could be that Merck is hedging their bets here as they know the FDA has been looking into issues related to Januvia. While Diabetic Investor believes the issues raised by the FDA should have never been raised in the first place, history tells us that we should never underestimate what the FDA could do. All one needs to do is go back to the Avandia controversy, a controversy which still hasn’t gone away and continues to rear its ugly head. Back when the controversy began Avandia, just as Januvia is today, was a blockbuster franchise. Yet thanks to Dr. Nissen and his infamous meta-analysis Avandia went from the penthouse to the outhouse and in many respects actually helped Januvia become the mega-blockbuster it is today.

As Diabetic Investor has noted previously Januvia is perhaps the luckiest drug ever. It was launched just as the Avandia controversy started and also benefited from the many mistakes made by Amylin and Lilly who had just launched Byetta. Physicians looking for an Avandia replacement quickly converted their Type 2 patients to Januvia although many believed that Januvia wasn’t that great of drug. In fact as Januvia was going through clinical trials it earned the nickname Junknuvia as its data was less than impressive.

Still even if the FDA goes completely off the reservation and makes drastic changes to the Januvia label or worse seeks removal of the drug from the market, this collaboration with Pfizer won’t generate one cent of revenue as the drug hasn’t been submitted to the FDA.  Should this event occur, and with the FDA Diabetic Investor is not discounting any possibility, JNJ would be in the same position Merck was back when they launched Januvia. Just as Januvia was a readymade replacement for Avandia, Invokana would be a logical replacement for Januvia.

To Diabetic Investor this deal is just further evidence that when it comes to the wacky world of diabetes, anything can and usually does happen. Why else would a company like Merck choose to partner up with a former rival for a drug that even if approved would be the third, possibly fourth drug in the category to come to market. In the past developing me-too, copycat, late to market drugs was the domain of Lilly and to certain extent Sanofi (NYSE:SNY). One would think Merck would have learned that the key to success isn’t developing me-too, copycat, and late to market drugs this is a recipe for disaster. This lack of innovation is nothing more than a strategy for turning gold into sand, just look at what’s already happened at Lilly and what’s about to happen to Sanofi.

Could be this be a signal from Merck that Januvia’s luck is about to change?