Event – Lantus biosimilar’s success could affirm Lilly R&D strategy

Source EP Vantage
Company Eli LillyBoehringer IngelheimSanofi 
Tags Trial Results, Event - Closed, Free Content, Analysis, Company Strategy, Phase III, Endocrine
Date August 15, 2012

Among Eli Lilly ’s upcoming pipeline catalysts, none is more important than the stealthy approach of phase III data for its new insulin glargine product LY2963016. The long-acting antidiabetic is the Indiana group’s most valuable R&D product, and given its biological similarity to Sanofi ’s Lantus success will be expected.

The biosimilar Lantus was part of the Boehringer Ingelheim  deal that led to the unwinding of its diabetes partnership with Amylin. Thus disappointing efficacy or an emerging safety signal would be all the more negative in the light of the expected failure of Alzheimer’s disease drug solanezumab, especially given chief executive John Lechleiter’s resolve in sticking with a research-oriented strategy.

Company  Eli Lilly  
Product  LY2963016 (new insulin glargine product) 
Market cap  $49bn 
Product NPV  $2.1bn 
% of market cap  4% 
Event type  Phase III results in type 2 diabetes 
Date  Q4 

The Lilly candidate is being tested in both type 2 diabetics in combination with oral diabetic medications over 24 weeks and in type 1 patients in combination with mealtime Humalog over 52 weeks. The programme covers 600 type 2 and 400 type 1 patients, comparing the candidate against Lantus. The type 2 study is expected to read out by year end; the type 1 data are also likely to come soon.

Obviously, an inferior performance in controlling blood sugar levels or hypoglycaemia would hurt ‘3016’s case, as would the emergence of a safety signal; Lantus itself has only just emerged from under the cloud of a cancer worry that extends back several years (No cardiac benefit for Lantus but Origin confirms cancer safety, June 12, 2012).

Although not a certainty, it seems reasonable to expect that biological similarity would result in a similar safety profile. From a commercial standpoint then, the question will be whether Lilly’s glargine can differentiate itself on efficacy, although the company’s presence in diabetes could give a decent marketing edge to an undifferentiated product.

Analysts reckon ’3016 has a pretty good shot at making a mark in the insulin space; EvaluatePharma’s consensus forecasts sales of $416m in 2018, making it the Indiana company’s 10th biggest seller and third biggest growth driver. At a net present value of $2.13bn, the glargine product is worth 4% of Lilly’s market capitalisation.

What will help ‘3016 along the way is the Boehringer partnership, which extends across five products: three oral drugs, a novel long-acting insulin and the Lantus biosimilar. Three of the four are expected to have reported phase III data by mid-2013, with glargine and the SGLT-2 empagliflozin coming by the end of 2012.

In addition, Lilly’s diabetes franchise could receive a lift when the wholly-owned GLP-1 dulaglutide reports data by the end of 2012 (After Lilly shrugs off schizophrenia failure pipeline must deliver, July 12, 2012). Empagliflozin, also known as BI10773, and dulaglutide will be somewhat late off the mark and launching into a competitive space, as will the insulin glargine.

As a biosimilar, a component of the strategy with glargine could be to compete on price. However, Lilly already has a presence in marketing human and recombinant insulins in the form of Humulin and Humalog, and the addition of DPP-IV Tradjenta as part of the Boehringer deal strengthens the Indiana group’s diabetes armoury.

Adding insulin glargine would presumably help Lilly build on that strategy and for newly diagnosed patients persuade endocrinologists to spurn Lantus, Sanofi ’s only patent-protected diabetes product. Moreover, if success comes for dulaglutide and the novel basal insulin, LY2605541, Lillly would have a formidable franchise to compete against. The three products dulaglutide, ‘5541 and ‘3016 constitute Lilly’s three biggest growth drivers, adding $1.43bn in revenue in 2018 – but replacing just one product expected to lose market exclusivity – Alimta.

Which speaks to the Indiana group’s current predicament: it needs its pipeline to succeed magnificently for it to fulfil confident forecasts of rising profits beginning in 2014. With failure so widely expected for solanezumab, and the schizophrenia drug pomaglumetad already dead, the pressure on the diabetes franchise to deliver is all the greater.

Trial IDs  Type 1 diabetes (Element 1)  NCT01421147 
  Type 2 diabetes (Element 2)  NCT01421459 

To contact the writer of this story email Jonathan Gardner in London at jonathang@epvantage.com

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