The REAL Future of the GLP-1 Market

The REAL Future of the GLP-1 Market

Earlier this week GlaxoSmithKline (NYSE:GSK) announced their once-weekly GLP-1 candidate albiglutide, failed to outperform Victoza™ the once daily GLP-1 from Novo Nordisk (NYSE:NVO) in a head to head study. According to a company issued press release; “Results showed a reduction in HbA1c of 0.78% for patients receiving albiglutide compared to a reduction of 0.99% for liraglutide. While albiglutide did demonstrate a statistically significant reduction in HbA1c from baseline (p<0.001), it did not meet the pre-specified primary endpoint of non-inferiority to liraglutide (95% CI: 0.08 – 0.34%).”

This is not the first time a once-weekly GLP-1 failed to beat Victoza head on, as similar results were seen when Amylin (NASDAQ:AMLN) did a head to head comparing their once-weekly GLP-1 Bydureon to Victoza. Although Bydureon and now albiglutide failed to outperform Victoza Diabetic Investor does not believe the difference in performance is all that significant and will not adversely impact sales of either of the once-weekly options. As we have stated consistently, just as once-daily Victoza tops twice-daily Byetta, once-weekly Bydureon or albiglutide will top once-daily Victoza.

The real question that should be asked is just how many once-weekly or for that matter once-daily GLP-1’s we need. Looking over the GLP-1 landscape Diabetic Investor senses this market, although still in the expansion phase, transforming itself and following  a similar path as the insulin market where delivery systems will become just as, if not, more important than the drug itself. Although the insulin and GLP-1 markets have different dynamics there are several similarities; both drugs are taken via injection, pen delivery systems are becoming the favored delivery system and while there are some minor differences between the drugs available they all do basically the same thing the same way.

While it’s too early to worry about the GLP-1 market becoming a commodity market as the insulin market has become, this danger does exist.  As much as Diabetic Investor sees Bydureon as potentially game changing, paradigm shifting technology the fact remains we would have felt this way about a drug like albiglutide had it been first to market. Although being first to market with any new, potentially ground-breaking drug is always important in the GLP-1 market being first to market will be an enormous advantage, not unlike the advantage Januvia had in the DPP4 market.

To fully understand how the GLP-1 market will develop it would be wise to review all the publicly available data on both approved GLP-1’s and those under development.  As we noted there are some minor differences in performance but looked at realistically all GLP-1’s do a solid job at controlling glucose levels, have the added benefit of weight loss and most come with same set of adverse events the most prevalent being nausea.  This is almost exactly the situation in the short-acting insulin market and the DPP4 market. The difference between the short-acting insulin market and the DPP4 market is that in the short-acting insulin market the two main options came to market within weeks of each other while Januvia faced no competition and was therefore able to build a huge installed user until the competition came along.

This is why Diabetic Investor has been stressing that for Bydureon execution is the key, Amylin MUST take full advantage of being first to market just as Merck (NYSE:MRK) did when Januvia came to market. By our estimates Bydureon will not face any credible competition for at least two years and this assumes that everything goes as planned for the competition, and we all know how dangerous it is to assume anything in the diabetes drug space especially with the wild card more commonly known as the FDA.  Should our estimates prove correct, Amylin has time to build the installed user base of Bydureon patient’s before Bydureon becomes available in a more patient friendly pen delivery system. Once available in pen Bydureon will then be in a better position to fend off competition as it comes to market, competition that based on all available data will not have a performance advantage over Bydureon.

As Diabetic Investor has been reporting Novo sales reps are already gearing up to sell against Bydureon as they know once-weekly trumps once-daily delivery. However these reps should not lose sight of the fact that Victoza will soon face some serious competition from their arch rival Sanofi-Aventis (NYSE:SNY) who’s once-daily GLP-1 Lyxumia® is in late stage development.

Frankly Novo is in a very tight spot with Victoza, which to date has performed above expectations. Try as they might to sell against Bydureon, Diabetic Investor does not believe their sales pitch will find a receptive audience. They will also have a very tough time should Novo remain committed to their current pricing structure for Victoza. As Diabetic Investor noted in Europe where both Bydureon and Victoza compete, the 1.8mg dose of Victoza (the most popular dose) is actually more expensive than Bydureon.  It’s tough enough selling once-daily versus once-weekly administration, it’s next to impossible to sell this when the less convenient dosing option is MORE expensive.

Although Sanofi has not publicly stated their marketing strategy for Lyxumia, it wouldn’t surprise Diabetic Investor if they not only went after Victoza based on delivery systems but used price as a weapon to take away share. As well as Victoza has done its sales have been dampened as physicians know that Bydureon is coming and they would rather wait for Bydureon as they see it as an easier sale to their patients given its once-weekly dosing option.  Diabetic Investor believes that once Bydureon arrives there will still be a place for Victoza albeit as fallback position for patients who either don’t like the mixing of Bydureon or feel uncomfortable with its needle size.  Looking ahead Diabetic Investor sees Novo and Sanofi engaged in a fierce battle for the number two spot behind Bydureon.  In the end Diabetic Investor sees Bydureon playing the role of Januvia and becoming the clear leader in the category, while Victoza will play the role of Onglyza and Lyxumia becoming Tradjenta.

Given this set of dynamics it’s easy to understand why Amylin is the subject of so many takeover rumors. Will it be Sanofi, who sees the Lantus gravy train coming to an end and looks to Bydureon as the perfect replacement? Will it be GSK, also facing the patent cliff and looking for a way to re-enter the diabetes market after the Avandia disaster? Will it be Novo, who sees Victoza being regulated to second tier status, faces an uncertain regulatory path for Degludec and DegludecPlus and whose pipeline is notably weak? Or will it Takeda, also having issues of their own in diabetes and who does have a history with Amylin? And what about Pfizer (NYSE:PFE), not currently a player in diabetes but who wants to be a player given their interest in generic insulin? Or will it be someone not currently a player in diabetes who sees Bydureon as their ticket?

This is why Diabetic Investor never quite understood Lilly’s (NYSE:LLY) attitude towards Amylin. The GLP-1 market, unlike the insulin market, is growing, not facing intense pricing pressure and has patent protection.  The harsh reality is Lilly has never understood anything in the diabetes market other than insulin.  They would rather try and protect a dying franchise with a dismal future then stray from their comfort zone.  It’s any wonder Novo has supplanted Lilly as the global leader in diabetes, Novo may have issues of their own but they clearly see what’s going on in the market and are taking steps to deal with how the market is transforming.  The same can be said for Sanofi, who may not yet be at Novo’s level, but they are gaining ground and are strongly committed to the space.

Considering where the GLP-1 market is and more importantly where it’s going the real winner here, provided they can execute, is Amylin.  While there are no guarantees for Amylin they have one very strong fact that favors their chances of success- They no longer have to worry about Lilly screwing things up. This fact alone gives Diabetic Investor and every Amylin investor reason to be optimistic.