Roche Reports –Diabetes in Transition

Roche Reports –Diabetes in Transition

There was a time when it came to diabetes and Roche the story was all about devices and their Accu-Chek line of blood glucose monitors. While this hasn’t changed completely some of the more interesting diabetes developments at Roche come from the drug side of the company. This is particularly true when you look at Taspoglutide the company’s GLP-1 analogue currently in Phase III trials. Just as Amylin (NASDAQ:AMLN) is using the DURATION series of trials to validate Byetta LAR, Roche has 8 T-emerge studies either ongoing or planned for taspoglutide.

While the jury is still out on this drug the fact that the company indicated that it could be filed with the FDA in late 2010 shows just how important GLP-1 therapy is to the future of managing type 2 diabetes. It also indicates that the company is not afraid of coming to market well after Byetta LAR or Victoza from Novo Nordisk (NYSE:NVO), both drugs currently awaiting FDA approval. As Diabetic Investor has been saying for some time GLP-1 therapy, in particular drugs such as Byetta LAR and taspoglutide which require fewer injections have the opportunity to become paradigm shifting technologies.

The fact is GLP-1 therapy offers the most powerful combination of benefits and could well become the predominate option for treating the growing type 2 patient population. Based on all available data and the recent concerns over adverse cardiovascular events, GLP-1 therapy trumps the existing compliment of oral medications currently on the market. Besides solid glucose control GLP-1 therapy offers the additional benefit of promoting weight loss. Add in less frequent administration and what you have is a drug class with mega blockbuster potential.

Given the success of Lantus in the type 2 market the fact that GLP-1’s must be injected should in no way hinder sales. Nor does Diabetic Investor believe concerns over pancreatitis or thyroid cancer will dampen demand. The fact is GLP-1 therapy is the most patient friendly therapy option available especially when you look at the realities of the type 2 market. As we said earlier it’s still too early to tell how well taspoglutide will be able to compete with Byetta LAR. Data from the T-emerge will provide a better picture here. Still the mere fact that Roche continues to aggressively pursue taspoglutide should tell everyone the importance of this class of drugs.

Turning to the device side of Roche the Accu-Chek unit continues to struggle. Although the diabetes device unit did not experience the sales declines seen by both Johnson and Johnson (NYSE:JNJ) and Abbott (NYSE:ABT), you know the market has forever changed when a 2% increase in sale is considered a major victory.

Perhaps the most frustrating aspect of the device side is the company actually has some pretty neat new products. As Diabetic Investor has previously reported the Accu-Chek Aviva Nano which is available in Europe and Asia remains stalled at the FDA and may never see the light day here in the US. This delay at the FDA is also putting a crimp in the company’s plan to introduce the Accu-Chek Combo here. The Combo combines the Accu-Chek Spirit insulin pump with the Nano, not unlike what Animas is doing with their OneTouch Ping. While Diabetic Investor does not believe the Combo would do much to improve the performance of the insulin pump franchise, however it’s essential if the unit is to have any chance of survival.

Another intriguing product is the Accu-Chek Mobile which employs a “no-strip” technology that replaces single-use test strips with a continuous tape of 50 tests. Think Accu-Chek Compact Plus on steroids. Although Diabetic Investor has not seen the Mobile in person what we have seen so far looks very interesting and does deal with an issue that frustrates patients who regularly monitor their glucose levels; namely carrying around all the tools used to perform a test. Again we don’t see the Mobile doing much to change the awful dynamics in the BGM market, but we do see a place for such a system.

It’s almost ironic that Accu-Chek’s new ad campaign stresses the fact that their monitors are made in America, when their most promising systems aren’t available in the US. Unfortunately for Roche when it comes to both glucose monitors and insulin pumps even solid new products will do little if anything to change the realities of both markets. Simply put these efforts while intentioned are too little and much too late.

Looking ahead we could well be reaching the point at Roche when they transform from being a player in diabetes devices to being a player in diabetes drugs. Even under horrible market conditions the device side will plod along delivering solid albeit smaller margins. As badly as the company has managed this unit it continues to be the global leader in glucose monitoring. However, given the promise of GLP-1 therapy the company has an opportunity with taspoglutide. As T.S. Eliot once wrote; “What we call the beginning is often the end. And to make an end is to make a beginning. The end is where we start from.”