Will it matter?

Will it matter?

Today Novo Nordisk (NYSE: NVO) released the following;

“Novo Nordisk today announced that semaglutide, an investigational glucagon-like peptide-1 (GLP-1) analogue administered once-weekly, significantly reduced the risk of the primary composite endpoint of time to first occurrence of either cardiovascular (CV) death, non-fatal myocardial infarction (heart attack) or non-fatal stroke by 26% vs placebo, when added to standard of care in 3,297 adults with type 2 diabetes at high CV risk.1 These results were based on an accumulation of first major adverse CV events (MACE) in 254 people.1

The main results from SUSTAIN 6 were presented today at the 52nd Annual Meeting of the European Association for the Study of Diabetes (EASD) 20162 and also published in the New England Journal of Medicine. “

The study also found that semaglutide cut stroke risks by 39% and heart attack by 26%, though the latter was statistically non-significant. Now these are very strong numbers but as we have seen with the EMPA-REG data and Jardiance sales, will these strong numbers translate into sales? Keep in mind when approved semaglutide will be the fourth once-weekly GLP-1 to hit the market following Bydureon from AstraZeneca (NYSE: AZN), Tanzeum from GlaxoSmithKline (NYSE: GSK) and Trulicity from Lilly (NYSE: LLY).

Basically what this means is that semaglutide could run into the same problem Jardiance is having, great data but locked up formulary position. As we noted before Johnson and Johnson (NYSE: JNJ) did an outstanding job of locking up formulary position for Invokana, which competes with Jardiance. As great as the EMPA-REG data is Lilly has yet to see this data translate into greater sales and has acknowledged as much publicly.  Novo will likely experience a similar situation with Lilly being very aggressive using outcomes based contracting for Trulicity.

This data will also start another arms race of sorts just as the EMPA-REG data has done for SGLT2’s. Interestingly AstraZeneca is involved in both races, one for their SGLT2 Farxiga and the other for Bydureon, which should be way ahead in the long-acting GLP-1 space but isn’t because of the many missteps made by management. Frankly this is just one more reason Astra should put their diabetes franchise up for sale as they are ill-equipped to compete in this space. Astra like our wine drinking friends in France has proven that diabetes just isn’t their gig.

This data also is just one more reminder that when it comes to diabetes drugs it’s Lilly’ and Novo’s playground. Yes, JNJ has Invokana and Merck (NYSE: MRK) has the Januvia franchise but the battle is being fought by two diabetes heavyweights. For the moment we’re giving Lilly the edge in this battle as they have more weapons but this could change in a hurry for two reasons.

First Novo has an oral version of semaglutide which has the potential to become a mega-blockbuster and second Lilly might have an unexpected problem with Jardiance. For all the hoopla surrounding EMPA-REG and the growing use of SGLT2’s Diabetic Investor is hearing some disturbing news from the field. Reports are coming in that link SGLT2 usage with a decline in kidney function some of which are very serious. Now let’s be clear here these are early reports that we are investigating. However, we are investigating for two reasons.

First the source of these reports and second we have been down this road before with TZD’s. The thing about new drugs even after they have been though the rigorous approval process no one is quite sure what the impact of long term usage will be over a broader patient population. Diabetes is a chronic disease state and quite likely once on a drug the patient will taking it for several years, perhaps their entire life. Quite frankly it is impossible to study this type of usage which it is why bone fracture issues for patients using TZD’s did not become known until after these drugs were on the market for seven years.

Again let’s be clear we are not saying the problem is widespread this is why we investigate to see whether this is a small cluster or something more. However, our gray hair and instincts tells us that this issue could become more reported. We hope we’re wrong but the uneasy feeling is back in our stomach and it’s not from the pizza we ate last night, which was great but we digress.

Getting back to semaglutide, it’s great data and whether or not it even matters time will tell. Using EMPA-REG and Jardiance as a guide we would say great data does not trump locked up formulary. A lesson which ironically Lilly will use to their advantage as they go about locking up formulary for Trulicity before semaglutide gets approved.

As Momma Kliff was fond of saying; “You don’t always have to have the best horse to win the race. An experienced jockey can be a great asset which can turn an average colt into a winner over better competition.”