Moving in opposite directions

Moving in opposite directions

This morning Roche reported half year results, while Lilly (NYSE:LLY) reported second quarter results. When it comes to their respective diabetes franchises what you have here are two companies moving in opposite directions. As everyone knows Roche suffered a serious setback with their GLP-1 candidate, tasoglutide which has been delayed at least 18 months and for all practical purposes is a dead drug. On the flip side Lilly, who continues their schizophrenic attitude with their partner Amylin (NASDAQ:AMLN), has once again fallen in love with their GLP-1 drug Bydureon™ which is awaiting FDA approval.


As was seen at the ADA conference the attitude regarding GLP-1 therapy is shifting as more patient friendly options become available. The current GLP-1 leader Byetta is twice a day injection, Byetta has since been joined by Victoza from Novo Nordisk which is a one injection per day and later this year Byetta and Victoza will be joined by Bydureon with its once-a-week injection.  As Diabetic Investor noted during the ADA it was gratifying to see that the Bydureon delivery system is not as onerous as anticipated and should not prevent uptake of the drug once it becomes available.


The reality of the situation is that Lilly truly needs Bydureon as the remainder of the diabetes franchise is facing a major headwinds going forward. While the company has stopped major share erosion for their insulin franchise, they are not regaining share. Looking ahead Lilly understands the huge opportunity they’ve been given to own the GLP-1 space. With possible competitors to Bydureon delayed or years away, Lilly can dominate the GLP-1 space just as Merck (NYSE:MRK) dominates the DPP4 space with Januvia.


Roche on the other hand continues to struggle in the diabetes space. Besides the problems with tasoglutide, the device franchise continues to be stuck in reverse. To illustrate just how out of touch with reality the company has become in the device segment can be seen in one of the slides the company used. Slide number 128 shows 4% growth in blood glucose and 17% growth in insulin delivery; as if this shows they have turned the corner in insulin delivery. A laughable assertion as you could probably fit all the Roche insulin pump users in the conference room they used for today’s conference call and there would be a fair amount of empty seats.


Diabetic Investor finds it amusing the company still claims they are growing faster than the market in BGM.  That may be true if you ignore the entire North American market, which just happens to include the United States, and where sales are DOWN 3% for the first six months of the year. It’s also pretty easy to improve ex-US sales when you’re comparing results to truly poor results from a year earlier. The US results are truly damning as like the rest of the world last year’s results were pretty bad.


This is pretty much par for the course when it comes to Roche. Management continues to ignore the issues with BGM and remains totally clueless regarding insulin delivery. If management truly believes that the Medingo acquisition will be a game changer in insulin delivery Diabetic Investor wants whatever drugs they are taking. Or as Laurence Peter wrote; “Reality is for people who can’t face drugs.”