What the Street is missing on Exubera.
A week from tomorrow an FDA panel will meet to discuss Exubera the inhaled form of insulin from Pfizer (NYSE:PFE), Sanofi-Aventis (NYSE:SNY) and Nektar (NASDAQ:NKTR). Since this will be one of the first panel meetings after the Vioxx verdict and because there is a fascination with any non-injectable form of insulin the panel meeting has gained national attention. For some time Diabetic Investor has reported that even if approved, by no means a certainty, Exubera would not achieve the commercial success predicted by many analysts. Still there are many analysts jumping on the Exubera bandwagon projecting sales reaching $1 billion annually. (It should be noted that at one time analysts had projected Exubera sales at $3 billion.)
So who’s right here, Diabetic Investor or the street?
It’s easy to understand why so many analysts believe that Exubera will be a commercial success. To anyone who does not have diabetes the prospect of daily injections is not pleasant. It is also well known that patients on insulin therapy achieve better results than those on oral medications alone. Therefore it stands to reason that a non-injectable form of insulin would be widely adapted. Add in the fact that Exubera is being marketed by drug giant Pfizer, diabetes is growing at epidemic rates, the majority of patients fail to achieve adequate control using oral medications alone and you have the makings of a blockbuster.
While Diabetic Investor agrees that a non-injectable form of insulin would be beneficial to the diabetes patient population. We do not see Exubera, if approved, achieving blockbuster status. Here’s why:
1. 1. Long Term Safety – Pfizer has gone to great lengths to prove that Exubera is safe. However, questions remain on how long term use will affect the patient. It’s important to keep in mind that Exubera is a form of short-acting insulin which patients take at meal-time. This means that the majority of patients on the drug will be inhaling Exubera 3 or more times each and every day. Since not all the insulin is absorbed in the lung, studies indicate that as much as 75% of the inhaled insulin is not absorbed, it remains to be seen how the lungs will respond after years of use. There have also been questions of the formation of antibodies. While Pfizer does not see this as a cause for concern, Novo Nordisk (NYSE:NVO) halted development of their inhaled insulin due to adverse events related to the antibody issue. It’s an open question if physician would feel comfortable prescribing Exubera, especially after the Rezulin disaster.
2. 2. Delivery device – Simply put Exubera’s delivery device is not patient friendly. It is difficult to imagine a patient carrying around such a large device, let alone using it in public. A fact that is misunderstood by the street is that many patients with diabetes are extremely sensitive about their diabetes. These patients prefer to keep the fact that they have diabetes private. While injecting insulin may seem painful, something Diabetic Investor disputes, current injection devices can be used in relative privacy.
3. 3. Cost- It has been widely assumed that patients and more importantly insurance companies would be willing to pay a premium for a non-injectable form of insulin. With healthcare costs rising faster than the rate of inflation and diabetes growing at epidemic rates Diabetic Investor does not believe this to be the case. This is especially true when there are cheaper alternatives that provide as good or better results than Exubera.
4. 4. Effectiveness- It has been widely reported that Exubera is just as effective as injectable insulin. This is true only up to a point. In nearly every study with Type 2 patients currently using oral medications, Exubera’s target market, Exubera has helped lower patients A1C. Overlooked is the fact that when used in conjunction with oral medications neither Exubera nor injectable short-acting insulin lower A1C’s to recommended levels. The results change when the drug is used in conjunction with long-acting insulin; here there is noticeable A1C improvement. Not a surprise as it well known that multiple daily injection (MDI) therapy produces much better results than orals alone or orals used with insulin. Diabetic Investor does not see patients currently on MDI who are already comfortable with injections switching to Exubera.
5. 5. Byetta- Although only the market for a short period time Byetta is proving to be widely accepted by patients and physicians. This in spite of the fact that the drug must be injected twice each day. As Diabetic Investor predicted, Byetta’s effectiveness combined with its ability to promote weight loss would overcome the fact it must be injected. It should also be noted that Byetta is not dose dependent, the patient injects the same amount no matter their glucose levels are. Anytime a patient is put on insulin measuring glucose levels takes on added importance. Taking insulin without knowing or understanding glucose levels is like taking a road trip without knowing where you want to go. While it’s true you’ll end up somewhere it may not be where you want to be. Type 2 patients, Exubera’s target market, are the least frequent testers of glucose levels. It is not only foolish to take insulin without knowing glucose levels; it’s dangerous with the patient risking Hypoglycemia.
6. 6. Education- One reason primary care physicians, 80% of people with diabetes are treated by primary care physicians, have been slow to introduce insulin therapy to their Type 2 patients is that patients need to be educated on how insulin works. A physician does not simply write a prescription for insulin and send the patient home. The patient must know how to use their delivery device, understand the importance of testing their glucose levels and what those levels mean. In addition patients also need to gain an understanding of how different food groups affect their levels. While there are physicians who provide this type of education is the exception rather than the rule. This is also one reason why Byetta is gaining momentum as it requires minimal patient training. Placing a patient on insulin therapy without proper education could do more harm than good. Given the short amount of time primary care providers spend with their patients and the fact the education services are not highly reimbursed dampen Exubera’s prospects.
There is no question that a safe, easy to use non-injectable form of insulin has bright commercial prospects. It is even possible that an inhaled form of insulin could reach blockbuster status. Diabetic Investor believes with all the questions surrounding Exubera, the drug will not be that blockbuster. Next week’s panel meeting will be the first step in determining who’s right Diabetic Investor or the street.
As a reminder David Kliff, publisher of Diabetic Investor will be appearing live on CNBC’s Squawk Box at 8:10 EST on Friday September 9th. Just a day after the FDA panel meeting one thing you can count on is that Exubera will be the main topic of discussion. Stay tuned.