Toujeo some initial observations

Toujeo some initial observations

Yes its way early in the Toujeo launch to determine much of anything however based on some early reports from the field we have a few initial observations. Our premise all along with Toujeo is that the drug is only incrementally better than Lantus, the drug which it is designed to replace. Basically what study data has shown is Toujeo is on par with Lantus in terms of glycemic control and slightly, slightly better at avoiding hypoglycemic events. Our belief is the only way Toujeo can succeed commercially is if the drug is priced on par with Lantus and achieves favorable formulary position. Even with that Diabetic Investor isn’t sure the drug will ever attain the sales estimates many have projected for the drug.

Now before moving onto reports from the field take a look at the Toujeo web site. As anticipated Sanofi (NYSE:SNY) is supplementing the cost of the drug with a co-pay equalization program. According to the site; “With the Toujeo® Savings Card, you’ll pay no more than $15* per Toujeo®SoloStar® prescription for the next 12 months.” Again as we have noted in the past the use of co-pay equalization programs are increasingly common yet eat into margins.

The fact that Sanofi had to use such a program with Toujeo and Afrezza shows two things. First the market for diabetes drugs even supposed innovative drugs is more competitive than ever. Second, the use of these programs points to Sanofi’s failure to achieve favorable formulary position for either drug.  As we’ve been stating all along payors are in no mood to provide favorable formulary position to drugs which are only slightly better than the drugs they were designed to replace. Nor are payors willing to provide premium reimbursement. This double whammy, more like one two punch to the gut, is just further evidence that the diabetes drug market is moving ever closer to becoming a commodity market.

It was equally interesting that the professional site includes a special section on how Toujeo should be dosed. Some may recall Diabetic Investor noted that for reasons only known to Sanofi the dosing algorithm for Toujeo is not the same as it was for Lantus. We noted that physicians weren’t exactly thrilled with this fact as they could not simply give their Lantus patients a Toujeo pen that they would have to retrain these patients.  The fact that such a section had to be included on the professional site points to this very real issue.

Now some may say this really is no big deal and that physicians are used to this. That may be true until one considers that Toujeo is designed to replace the world’s number one selling insulin. An insulin that is well known by physicians and also very effective. The simple fact is the more hoops you make a physician jump through the less likely it is they will switch patients. Again this points to the fact that Toujeo is only incrementally better than Lantus offering physician little incentive to switch patients. Add in the fact the drug has unfavorable formulary position and a different dosing algorithm just adds to the problems facing the drug.

It should really should surprise no one that early reports from the field confirm this. Yes we know its way early but Sanofi has been very vocal promoting Toujeo. Or put more simply even before the drug was launched physicians were well aware of the drug and its performance metrics. Let’s clear here physicians, like Diabetic Investor, are not claiming that Toujeo is a bad or ineffective long acting insulin. What we are claiming is that it’s not a major improvement over Lantus and there is no compelling reason to switch patients from Lantus to Toujeo.

Let’s also be very clear that physicians are not immune to formulary position, actually the opposite is true. Physicians are acutely aware and take formulary position into account when making decisions on which drugs to prescribe. Yes co-pay equalizations cards are nice but in reality are just one more thing they don’t want the patient worrying about. When it comes to treating patients with diabetes physicians want the fewest obstacles as possible, they know the shortest distance between two points is straight line and anytime curves are added it hurts the patient.

Now none of this would be a problem if Toujeo was truly an improvement over Lantus. The same goes for Afrezza as like Toujeo it only has one supposed advantage, it’s inhaled rather than injected. Yet when it comes to glycemic control Afrezza is no better than Humalog or Novolog.

This is why Sanofi of all the insulin companies is in the most trouble as unlike Lilly (NYSE:LLY) or Novo Nordisk (NYSE:NVO) they have nothing of substance to fall back on if Toujeo and Afrezza don’t achieve commercial success. The goose that laid the golden eggs, Lantus, has been cooked and is about to become a dead duck. Their GLP-1 is way late to an already over-crowded market and even worse is not as good as what’s already on the market. Yet for reasons only known to Sanofi they insist on moving forward with the drug.

We know Brandicourt has only been on the job for less than a week but already he’s feeling the heat. Given that Toujeo was just launched and Afrezza has only been around for short time, he’ll likely get a pass from analysts when the company reports earnings at the end of the moth. Our guess is that analysts will be more concerned with where Brandicourt will be taking the company rather than performance of individual drugs. This is not to say there won’t be question about Toujeo or Afrezza rather they just have not been on the market long enough to fully gauge what if any impact they will have on earnings.

However and we cannot understate this; Brandicourt is under a tremendous amount of pressure to have a good performance. This isn’t just for the analyst community either. Keep in mind the rank and file were less than thrilled he got the job and are anxious to see what this new guy is made of. As we noted before he did inherit a smooth sailing ship, he inherited the Titanic. The question is did he take the helm in time, can he avoid the iceberg that lies ahead or did come aboard too late and can do nothing more than watch the ship sink.