The Two Sides of Lilly

The Two Sides of Lilly

Looking over the results released by Lilly
(NYSE:LLY) this morning and listening to their call Diabetic Investor continues
to wonder just where the company is going with their diabetes franchise. For
their insulin franchise the numbers appear to indicate that the company’s
renewed interest in this franchise has paid off as they are no longer losing
market share to Novo Nordisk (NYSE:NVO). Still when it comes to their
relationship with Amylin (NASDAQ:AMLN) the company continues their Jekyll and
Hyde approach.

At times the company appears to be in love
with Amylin embracing the relationship. Yet at other times the company appears
intent on sabotaging the relationship. Today’s call was a perfect example of this.
When the company talked up the potential of GLP-1 therapy while at the same
time had to deal with concerns with their own GLP-1 under development. Diabetic
Investor has long questioned Lilly’s approach to the GLP-1 market and never
understood why they would feel the need to develop their own GLP-1 when they
have a relationship with the most promising drug now at the FDA, Byetta LAR.

Given that the two companies have never
been closer in terms of working together and that LAR will soon be one the
market, this Jekyll and Hyde approach by Lilly concerns Diabetic Investor.
Lilly has a real opportunity with LAR to become the dominate player in
diabetes, particularly in the huge type 2 market. For the first time in recent
memory events are providing the company with an enormous opportunity. Thanks to
the FDA and Novo’s many missteps with Victoza, Lilly and Amylin have a chance
to own this space.

As Diabetic Investor has said before as
good as LAR is, the drug won’t sell itself and execution is critical. The two
companies appear to have learned from past mistakes when Byetta was first
approved. However, even with physicians anxiously awaiting LAR, the company
would be well advised not to ignore their rival Novo.  Looked at side by side LAR is superior to
Victoza, with the biggest advantage being it’s once a week administration. Still
Novo will have a slim edge as Victoza will likely hit the market a few months
before LAR. Diabetic Investor does not see this as a major advantage but Novo
needs Victoza to be a hit and will pull out all the stops marketing the drug.

The fact is Novo crushed Lilly in the
insulin market as Lilly was basically asleep at the wheel. Lilly cannot afford
to make the same mistake with LAR. Investors, patients and physicians can only
hope that this rocky relationship between Amylin and Lilly is now on the same
page. Based on today’s call Diabetic Investor isn’t so sure.