The hits just keep on coming

The hits just keep on coming

One has to wonder just what the board at Sanofi (NYSE:SNY) is doing these days, that is other than crisis management. Yes it seems each day is an adventure for our wine drinking friends who appear intent on making Sanofi shares more affordable. One day it’s the ill-timed firing of their CEO, the next it’s getting sued over an alleged kickback and the next dealing with mounting class-action lawsuits. In the interim the acting CEO and current board Chairman cannot seem to open his mouth without fully interesting his foot.

Unfortunately just when it seemed things couldn’t get any worse Diabetic Investor has learned that Toujeo® which is currently awaiting approval at the FDA, the product the company sees as a replacement for Lantus, may not gain approval as quickly as the company thinks. Earlier this week while in Washington D.C. for the mHealth summit, Diabetic Investor learned that the FDA is leaning towards holding a panel meeting for Toujeo, a move which would push approval deeper into 2015.

Now this move really shouldn’t come as a surprise given how the agency handled the Tresiba application. Just as a refresher back in February 2013 the agency asked Novo Nordisk (NYSE:NVO) to conduct additional studies over concern for potential cardiovascular risks. As recently as late October  when the company reported earnings they noted that it may take longer than anticipated for the FDA to approve Tresiba.

In spite of this Sanofi has insisted that Toujeo would receive FDA approval without being subjected to a panel review. During his last conference call as CEO Chris Viehbacher stated; “It’s absolutely fundamental that we maintain a strong prescription base in Lantus because that will serve really the launch of Toujeo. And also I think the ability for further competition from Biosimilars has become less obvious. So for us while there may be a shorter term hit, we actually think that this puts our diabetes business on a much more sustainable platform going forward.

So the broad outlook when we look at everything and obviously we have the launch of Toujeo next year, we have the launch of Afrezza, we’ve got very good growth in the emerging markets. There will be some impact of potential Biosimilar in Europe and then the new contracting. So we net all that out. We look at that as being broadly stable in 2015.”

During the Q&A session of the call Viehbacher added; “You know I think Toujeo is going to stand on its own two feet. It is a product that’s got a benefit on hypoglycemia. We have clearly been talking to payers and key opinion leaders. But the market access will occur when the product is launched as is normal. And we believe that actually Toujeo has a very strong market positioning. I think over time we’re going to see this basal insulin market being a competition again between two players. It will be Toujeo against Tresiba and the benefit is to Toujeo; A) gets to market first and B) now we have a bigger base of prescriptions to build Toujeo off of. And three we actually believe we got a better profile in terms of the PK PD profile which leads a different titration schedule and actually better 24 hour coverage. So, that’s an independent thing.”

Given these statements it’s obvious that Sanofi believed Toujeo would get to market before Tresiba and is better product. Put more simply the company was banking on Toujeo to become their next blockbuster in diabetes. A belief that would take a major hit should the FDA ask for a panel meeting.

Even without a delay at the FDA Diabetic Investor has never felt that Toujeo would come close to replacing the revenue that will be lost when Lantus goes off patent in 2015. That while the drug is slightly better than Lantus, it is not majorly better. Looking at the publicly available data for Toujeo its main selling point, a selling point the company is banking on, is a lower incidence of hypoglycemia. In terms of outcomes as measured by HbA1c Toujeo and Lantus are about the same, in other words Toujeo does not produce better outcomes.

Granted a lower incidence of hypoglycemia is important but just not important enough for payors to pay a premium for this product. This is especially true as Toujeo has a different dosing algorithm than Lantus, a fact larger overlooked by analysts. Based on what Viehbacher stated the general belief at Sanofi is that once Toujeo is approved physicians will simply switch their Lantus patients to Toujeo and the drug will become an instant blockbuster. This belief ignores the fact that physicians are loath to switch patients off a drug which is working just fine or that Toujeo is likely to cost more than Lantus or that there are other long-acting insulin’s on the market.

Most of all it ignores the company’s fundamental premise that Toujeo will get to market before Tresiba, that it will be smooth sailing through the FDA, that the agency which is known for throwing curve balls at company’s won’t ask for any additional safety data. Frankly Diabetic Investor has never understood why Sanofi was so confident that Toujeo would avoid any issues at the FDA. That they weren’t more cautious in their public statements given what happened with Tresiba combined with the FDA’s documented history of being overly cautious with any new diabetes drug.

Looking at how the company publicly talked about the drug one might just get the impression that Toujeo was a major advancement in diabetes management, something that is clearly not supported by the data. Diabetic Investor really isn’t that surprised by this as these are the same people who believe Afrezza® is a blockbuster product.

Now that Viehbacher is gone and Serge has been very public about his distaste for innovative products, it’s looking more and more like all this hype is designed to do just one thing, push up the value of the company’s diabetes franchise so it can sold at higher multiple. As we noted yesterday what was once unthinkable has now become very possible. That Sanofi could actually exit the diabetes business.

Should it turn out what Diabetic Investor is hearing is true and the FDA does ask for a panel meeting it would be just one more example of when it comes to Sanofi and diabetes Lantus is the only thing they got right. The way we see it the clock is ticking and it’s just a matter of time before Sanofi pulls the plug on diabetes. Oh how this wacky world is changing.