Some random tidbits
Yesterday a Banc of America analyst issued a “buy” rating for Alkermes (NASDAQ:ALKS) citing two diabetes drugs the company is involved with, the once-a-week version of Byetta from Amylin (NASDAQ:AMLN) and AIR inhaled insulin with Lilly (NYSE:LLY). Diabetic Investor does not necessarily disagree with the recommendation as we view Byetta LAR as potential mega-blockbuster, we found his comments on AIR interesting.
The analyst William T Ho, speaking on the prospects for AIR stated “Small market penetration could result in tremendous success as the insulin market is estimated at more than $10 billion, growing at greater than 10% annually.” Mr. Ho must believe the Exubera’s failure in the marketplace will not adversely hamper AIR should it reach the market. What he and so many others ignore however is that Byetta LAR is actually a greater threat to alternate insulin delivery systems than Exubera’s failure.
For reasons Diabetic Investors fails to understand many analysts do not see these two drugs competing when in reality they are both targeted at the same market, type 2 patients. To view inhaled insulin as a product for type 1’s is a serious mistake. In the US there are approximately 1.2 million type 1 patients, nearly 27% use an insulin pump the remaining 73% are already on some form of injection therapy. While it is possible that a small percentage of type 1’s might switch to inhaled delivery Diabetic Investor sees this as improbable. The key for inhaled insulin is to move poorly controlled type 2’s from oral medications to insulin.
The problem here is Byetta and Byetta LAR. As we have seen with Byetta’s growing market penetration the fact that Byetta is injected twice daily has not been an impediment to patient and physician acceptance. Once LAR hits the market, with it’s simple once-a-week dosing regimen, physicians will offer poorly controlled type 2’s the choice of injecting once a week or inhaling insulin two or more times each day.
It’s also about time everyone stopped worrying about needle size and mixing. Yes the current needle for LAR is larger than needles used for insulin injections. However, unlike insulin which is injected before every meal LAR is injected once a week. LAR is not an intramuscular injection, the “injection zones” are the same zones used for insulin, namely fatty areas of the body like the abdomen. Although we would not characterize any injection as a pleasant experience the fact that it is only once a week will lessen the so-called “fear factor”.
The same is true that LAR must be mixed prior to injection. Just how this is a negative is beyond us. Yes patients will need to be trained on how to mix but this education requirement is much less burdensome than educating patients on insulin therapy. LAR is injected regardless of what the patients glucose levels are, what the patient eats, whether or not the patient is about to exercise and can be done in the privacy of their home. Most importantly there is little chance the patient will experience hypoglycemia and end up in the hospital. According to a study published in the December 4, 2007 issue of the Annals of Internal Medicine, three medications caused 58,000 emergency room visits a year in those 65 and older, the three drugs Warfarin, Insulin and Digoxin.
Improperly dosed insulin can be a dangerous, even life threatening drug. Which is just one reason so many primary care physicians, nearly 80% of patients with diabetes are treated by PCPs, are reluctant to prescribe insulin therapy.
Some believe that inhaled insulin stands a better chance of penetrating the 4 million plus type 2 patients already on insulin, another serious mistake. Nearly 68% of these patients are injecting 2 or less times each, 31% are on multiple daily injection therapy with remaining and less 1% are on pump therapy. In reality LAR is a greater threat to this market than inhaled insulin as these patients are already comfortable with injecting themselves and LAR would significantly cut the number of times they must inject. Consider that a Type 2 using Lantus injects 7 times a week or 365 times each year, moved to LAR this patient would reduce the number of injections by 86%. A percentage which only increases when compared to patients on MDI.
Diabetic Investor does believe there is a market for inhaled insulin and that the AIR product looks promising. However, the market is a relatively small and unlikely to ever reach blockbuster status.
While there is no question Alkermes stands to be a winner with LAR, the real winner here could be Lilly who has a hand in both LAR and AIR. Although the company maintains they have no interest in buying Amylin, Diabetic Investor believes the company will follow a path set when they acquired ICOS, who partnered with Lilly on Cialis. Lilly waited until Cialis established itself in the market before making a play for the company.
Even without an offer from Lilly, Amylin has more than LAR to make it one of the most attractive investment opportunities for 2008 and beyond.
David Kliff
Publisher
Diabetic Investor
www.diabeticinvestor.com
www.davesrunfordiabetes.blogspot.com
847-634-4777
800-783-3712
847-634-4646 fax
224-715-3761 mobile
