So long Serge

So long Serge

Well it seems as though the long awaited search to replace our favorite acting CEO Serge Weinberg is about to come to an end. As first reported by Bloomberg it appears that Olivier Brandicourt will become the next CEO for that soap opera known as Sanofi (NYSE:SNY). As we noted last week Mr. Brandicourt comes to Sanofi with some experience in the diabetes space as he oversees Bayer’s troubled and currently for sale diabetes device unit. Yet this is not his only diabetes experience as it turns out that Mr. Brandicourt while an executive at Pfizer (NYSE:PFE) was also responsible for … wait for it.. Exubera.

Yes only in the wacky world of diabetes, that gift that keeps on giving, would Sanofi choose a CEO who has experience with not one but two diabetes units that has experienced major issues. Given his experience with Exubera, a drug which ended up costing Pfizer $4 billion, one has to wonder what if anything Brandicourt learned from the Exubera disaster. What changes he might make to how Sanofi is currently marketing Exubera’s replacement Afrezza.

Way back in 2007 when it was obvious that Exubera wasn’t doing all that well Mr. Brandicourt was quoted in an New York Times article on the issues facing Exubera, stating ““Sales have been slower than expected. It takes time to educate the physician.” Yet as the article states; “Pfizer’s marketing may not be enough to overcome the medical, economic, practical and legal concerns that have hurt Exubera. In theory, the drug’s biggest advantage over standard injectable insulin is that it is more convenient and does not require needle pricks.”

Now if that sounds familiar it should as Afrezza is facing the exact same issues Exubera did. As we have stated consistently Afrezza is a far better version of inhaled insulin than Exubera. However this fact does not change the challenges facing Afrezza. Challenges that include poor formulary position, a black box warning, additional tests a physician must run when prescribing Afrezza and unfortunately the inventible comparisons to Exubera.

All along Diabetic Investor has speculated that the new CEO might walk in the door and decide it’s better to kill the MannKind (NASDAQ:MNKD) partnership. Better to stop throwing good money into a product which at best is a niche product and not the blockbuster many seem to think it is. Better to end this partnership now before it becomes a sink hole the way Exubera became a sink hole for Pfizer. That given the many issues facing the Sanofi diabetes franchise better to focus resources on products with better potential.

The problem here is Sanofi diabetes doesn’t really have any diabetes products with bright futures. As we all know the goose that lays the golden eggs for Sanofi, Lantus, is about to see its patent expire. Toujeo the product which is supposed to replace Lantus has yet to gain FDA approval and even if it does it’s unlikely to garner sales anywhere close to Lantus. Lyxumia, if approved will come to market well behind established and better GLP-1’s while LixiLen, the Lantus GLP-1 combo product also will come to market late well after other insulin/GLP-1 combo products. Add in the fact that morale is at an all-time low for the diabetes sales team and it would be an understatement to say Mr. Brandicourt will have his hands full from the moment he takes the job.

Should Mr. Brandicourt take a realistic long term view of the Sanofi diabetes franchise he could easily reason that Afrezza isn’t the answer. That better to cut ties with MannKind now rather than wait around so that Afrezza can actually prove it’s not the product many think it is. His experience with Exubera may have taught him that for all the sexiness surrounding inhaled insulin, at the end of the day it’s just a short-acting insulin which is inhaled rather than injected and not a better short-acting insulin. That the current injectable short-acting insulin’s are not only as good as Afrezza but also much cheaper than Afrezza. Given that cost containment is the order of the day combined with payors reluctance to provide Afrezza with premium reimbursement or positive formulary position, Mr. Brandicourt has plenty of ammunition to justify killing this partnership.

Whether Mr. Brandicourt stays the course with Afrezza or makes a change could well come down not to his previous experience rather how much true power Serge and the board give him. Sanofi is not exactly an organization known for admitting mistakes. Yet based on comments made by Serge that Sanofi management must now be held accountable could push Mr. Brandicourt to cut ties sooner rather than later.

A move which becomes more likely as the partnership with MannKind was pushed through by former   CEO. In a way jettisoning MannKind would help the company get past the mess that Viehbacher left behind, a mess which includes an ongoing whistleblower lawsuit.  It would provide some justification that Serge and the board actually did the right thing by canning Viehbacher.

The simple fact is every new CEO likes to come in and make a statement. A statement which tells everyone there’s a new sheriff in town. Ending the MannKind partnership is a low risk high reward statement that would a signal to everyone at Sanofi and their stakeholders that the new guy in town gets it, that he understands what the problems are and isn’t afraid to take action. This would be a welcome departure from the past and refreshing change in attitude. Let’s just hope that Serge allows Mr. Brandicourt the latitude to make his statement and doesn’t get in the way by doing what he’s done so well; opening his mouth and inserting his foot.