Timing is Everything

Timing is Everything

This morning Johnson and Johnson (NYSE: JNJ) will conducting their Pharmaceutical Business Review Meeting, which is ironic considering that their SGLT2 Invokana was hit with black box warning just yesterday. Per a release from the FDA;

“Based on new data from two large clinical trials, the U.S. Food and Drug Administration (FDA) has concluded that the type 2 diabetes medicine canagliflozin (Invokana, Invokamet, Invokamet XR) causes an increased risk of leg and foot amputations. We are requiring new warnings, including our most prominent Boxed Warning, to be added to the canagliflozin drug labels to describe this risk.”

Th release goes onto to state;

“Final results from two clinical trials – the CANVAS (Canagliflozin Cardiovascular Assessment Study) and CANVAS-R (A Study of the Effects of Canagliflozin on Renal Endpoints in Adult Participants With Type 2 Diabetes Mellitus) – showed that leg and foot amputations occurred about twice as often in patients treated with canagliflozin compared to patients treated with placebo, which is an inactive treatment. The CANVAS trial showed that over a year’s time, the risk of amputation for patients in the trial were equivalent to:

  • 5.9 out of every 1,000 patients treated with canagliflozin
  • 2.8 out of every 1,000 patients treated with placebo

The CANVAS-R trial showed that over a year’s time, the risk of amputation for patients in the trial were equivalent to:

  • 7.5 out of every 1,000 patients treated with canagliflozin
  • 4.2 out of every 1,000 patients treated with placebo

Amputations of the toe and middle of the foot were the most common; however, amputations involving the leg, below and above the knee, also occurred. Some patients had more than one amputation, some involving both limbs.”

The question is will this latest warning adversely impact sales in the highly competitive SGLT2 category. A category that has been growing since the release of the ground-breaking EMPA-REG data for Lilly’s (NYSE: LLY) Jardiance. A category which also includes Farxiga from AstraZeneca (NYSE: AZN).

It should be noted that about a year ago the FDA also strengthened the labels for Invokana and Farxiga warning about an increased risk of acute kidney injury. A warning that was NOT extended to Jardiance.

Just by way of review Invokana was the first SGLT2 to hit the market approved by the FDA back in March 2013, followed by Farxiga in January 2014 and finally Jardiance approved in the summer of 2014. Understanding that this would be a highly competitive market and that competition was just months away JNJ did a solid job of locking up formulary placement prior to Farxiga and Jardiance hitting the market. A move which made it difficult for Lilly to capitalize on the ground breaking EMPA-REG data.

Today the SGLT2 category is growing with Astra being the most aggressive in the price/rebate game. After getting their butts kicked by Lilly in the long-acting GLP-1 category, a category Astra should have owned, the company is using the only weapon they have in the SGLT2 category.

So, we’ll ask again will this latest warning to hit Invokana change anything. The honest answer is probably not as even if payors deemphasize Invokana, they still have Lilly and Astra battling for formulary position. In other words, payors still hold the keys to the kingdom. Or put another way in a commodity market price continues to trump performance.

Perhaps the more interesting question is what would happen should Farxiga get hit with a warning of their own. Or what might happen if Jardiance gets hit. This situation in the SGLT2 category reminds Diabetic Investor of the Avandia/Actos controversy from years ago. These two TZD’s were both blockbusters until the now infamous meta-analysis from that crusading cardiologist Dr. Steven Nissen became public. Lost in the controversy which centered around the cardiovascular impact of these two drugs was another issue, increased incidence of bone fractures, an issue which did not appear until these two drugs were on the market for seven years.

Now we do not mean to imply that SGLT2’s will suffer the same fate as TZD’s however it would be foolish not to be somewhat concerned here. Diabetes is chronic condition with no cure on the horizon which means that patients take these drugs for years on end. Even with the lengthy clinical trial process there is no reasonable way to gauge what adverse events may appear for patients who take these drugs for years on end. As we noted the bone fracture data for the TZD’s did not appear until they had been on the market for seven years.

There is also another bit of irony here as many of the researchers who support SGLT2’s today, were not so enthusiastic back when these drugs were undergoing clinical trials. The major concern back then was urinary tract infections, a concern which seems small compared to the warnings that have hit Invokana and Farxiga.

Based solely on known data Jardiance should own this category. Besides EMPA-REG the drug, to date, has not been hit with any adverse label changes. All factors being equal, which they aren’t, Lilly should be running away with the category.  What the facts show, yes, those pesky facts again, is that all the SGLT2’s are not created equal but in this wacky world of ours that doesn’t seem to matter. What matters is what payors think and the power they exert over the success or failure of a drug.

IF and this is a huge IF payors actually cared about patient outcomes there is no way Jardiance would not own this category, the data clearly indicates that of the three SGLT2’s it has the best overall risk/reward profile. But this isn’t about the patient or data this is all about money, who makes it, who spends it and who saves it. Some things just don’t change but that doesn’t mean they shouldn’t.