This isn’t the answer

This isn’t the answer

This morning Sanofi (NYSE:SNY) announced the FDA has accepted the NDA for Toujeo® their new long-acting insulin. According to a company issued press release “By reaching this key milestone in the approval process, we are pleased to take another step forward with Toujeo, an investigational new basal insulin that has been evaluated in a broad range of people living with diabetes,” said Pierre Chancel, Senior Vice President, Global Diabetes at Sanofi. “With the FDA’s acceptance of our submission, we are anticipating the regulatory decision for marketing authorization for Toujeo in the U.S. in the first half of 2015.”

Now before everyone starts jumping for joy keep in mind that while Sanofi may anticipate approval in the first half of 2015 this is by no means a certainty. Given how the FDA is handling the NDA for Tresiba® Novo Nordisk (NYSE:NVO) new long acting insulin Diabetic Investor anticipates Toujeo will receive additional scrutiny.

Even if all goes well with the FDA, and we’d be surprised if it did, Toujeo is not the answer to Sanofi’s problems in diabetes. As we have noted with frequency Toujeo is a perfect example for the problems facing the entire diabetes drug sector. Yes it’s an improvement over Sanofi’s blockbuster Lantus, but not a major improvement. Like so many late stage compounds in this space Tuejeo is just incrementally better than Lantus.

What baffles Diabetic Investor is that Sanofi continues to believe Tuejeo will be able to replace the revenue that will be lost when Lantus faces generic competition. It’s even more baffling that Sanofi seems to believe that payors will provide preferred formulary status for Tuejeo plus provide premium reimbursement. This just isn’t going to happen, not in today’s environment where cost control is the order of the day.

Quite frankly Sanofi’s public statements on Tuejeo shows just how desperate the company has become in the diabetes space. Add in the persistent rumors that the company is going to make a play for MannKind (NASDAQ:MNKD) and what we see is a company in search of a strategy, any strategy no matter how wacky it may be.

The harsh reality is Sanofi has failed to execute on their stated strategy to give Novo Nordisk a series run for their money for supremacy in the diabetes space. The company’s many failures in diabetes have been well documented by Diabetic Investor. Still one has to wonder if management has any clue as to where they are going. There’s an old saying that if someone drives a car without directions they will reach a destination whether it’s where they really want to be is another story. This is what we see going on at Sanofi as the company seems to grasping at straws.

Besides the crazy notion that Tuejeo can become a Lantus replacement or even crazier notion that acquiring MannKind will generate significant revenue there’s the partnership with Medtronic (NYSE:MDT). Yes Medtronic is the global leader in the insulin pump market and yes Sanofi has Apidra® which can be used in a pump. Yet for all the fanfare over this partnership no one has bothered to look at the numbers. Listen if Sanofi and Medtronic seriously believe that they can convert a major portion of Type 2 patients to insulin pump therapy there is no need to accept any more nominations for which companies deserve a Diabetic Investor Wacky Award.

Yes Medtronic recently released study data that showed Type 2 patients using pumps achieved better control than those following a multiple daily injection therapy regimen. Frankly Diabetic Investor was not surprised by the results as it is well known that insulin pump is very effective. The problem isn’t the therapy option the problem is getting patients converted to the therapy option. For the past 20 years Diabetic Investor has been listening to every pump company state that they have answer for getting Type 2 patients onto insulin pump therapy. And after 20 years less than 5% of Type 2 patients use a pump. Heck only about 30% of Type 1 patients use a pump.

Truth be told what Sanofi needs is a major reality check, the company must come to grips with the fact they are in a world of hurt. Let’s assume for a moment that they are right and Tuejeo is approved in the first half of 2015; has anyone bothered to think what the long-acting insulin market will like when it gets here. Has anyone considered that it’s possible that Novo will finally get Tresiba approved by the FDA around the same time? Or that Lilly (NYSE:LLY) might want win their legal fight with Sanofi over Lilly’s Lantus knock-off? And what about the reimbursement environment does anyone seriously believe that payors will all of a sudden change their quest to control costs? Honestly folks if Sanofi management truly believes that Tuejeo is the answer we want some of what they are smoking.

In some respects Diabetic Investor wants the company to buy MannKind as it will provide some of the best copy ever. It will also prove beyond a shadow of doubt that in this wacky world of diabetes anything can and usually does happen.

The bottom line is that when it comes to diabetes Sanofi is a company in search of answers, the major problem is they aren’t asking the right questions. The fact that they blindly believe in Tuejeo, could acquire MannKind and see the partnership with Medtronic as a growth driver proves this.