Confirmation on Sunday that the FDA has issued a complete response letter for Novo Nordisk's long-acting insulin product degludec is undoubtedly a major setback for the Danish diabetes specialist. The decision provides a welcome boost to Sanofi, however, insofar that it eliminates the prospect of immediate US market competition to its Lantus franchise.
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Sanofi's Lantus dominates the market for long-acting insulin products, accounting for 81 percent of sales, according to recent analysis by Bloomberg Industries. The franchise generated global sales of $6.7 billion in 2012, which represents an increase of $1.5 billion over 2011 revenues. Indeed, according to a recently compiled list by FirstWord, Lantus was the industry's leading growth driver product in 2012 (see FirstWord Lists: The 20 biggest growing pharma products in 2012 - Sanofi's Lantus leads the way).
Lantus accounts for around 15 percent of Sanofi's prescription pharmaceutical sales and, according to analyst estimates, approximately 20 percent of the company's profits. The French drugmaker announced its Q4/full-year results last week and expects to resume growth in the second half of the year following a succession of high-profile patent expiries. Guidance for the year was nevertheless "disappointing" in relation to consensus expectations, commented a number of analysts; Novo Nordisk's setback will therefore provide a timely fillip to Sanofi and its shareholders.
As to whether degludec will reach the market in the US and emerge as a competitor of note to Lantus there are three potential scenarios, suggested Sanford C. Bernstein analyst Tim Anderson in a note to clients.
A best case scenario for Novo Nordisk is now a US launch for degludec in 2015, says Anderson, which would be dependent on fast patient enrolment into the necessary cardiovascular trial and approval being based on partial, interim data. Were the FDA to require full data from the study, this would likely push approval of degludec into 2017/18, adds Anderson. A worst case scenario would be the FDA's failure to approve degludec altogether if a cardiovascular signal is discovered. This would naturally have implications for Novo Nordisk's product in ex-US markets, where approval has already been secured, says Anderson.
Analysts at JP Morgan are not optimistic. The FDA will require an 8000-patient trial they suggest, which will take the best part of a year to enrol. Furthermore, the necessary interim data to support FDA approval will take three years to generate. Accounting for a minimum six-month review period, this would mean a launch in 2018, they conclude. Analysts at Bank of America Merrill Lynch have removed forecasts for degludec completely from their models.
Regardless of outcome, the delay is positive for Sanofi in two ways, remarks Anderson. Aside from the economic impact – which should see Lantus deliver stronger revenue growth in 2013/14 than most had expected – the delay to degludec will have a positive psychological impact on Sanofi investors by "de-risking" the company's outlook. Furthermore, Sanofi has an improved (longer half-life) formulation of Lantus in development and is expected at some stage to progress a combination of Lantus and Lyxumia (its GLP-1 receptor antagonist) into late-stage development. The setback to degludec also provides an incremental positive with regard to both of these developments.
Degludec is clearly not removed from the picture entirely at this stage although the status of the product among physicians will be notably weakened by these developments say analysts. However, Lantus is unlikely to avoid all competitive threats over the next few years. Competition is likely to come in the form of a biosimilar insulin glargine product being developed by Eli Lilly, which could be submitted by the end of the year, according to recent comments by management. Eli Lilly has suggested biosimilar Lantus products could accumulate a third of total market share.
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