News flash on Sanofi-Aventis! The company hosted a meeting in Paris earlier today at the excellent George V (we love the bar here) and Erin Kane was present to document key diabetes items. About 150 investors and analysts were present and the mood was positive, reflecting the reported 26% increase adjusted earnings per share in the first half. An update on key items of note:
1. Inhaled insulin: In the presentation, the company said virtually nothing (commentary in and of itself) except it noted the upcoming September 8 advisory meeting and said there would be news in the near future – we’re already looking forward to that meeting as we think it’ll give us some great clues directionally as to where and how the FDA is headed. We think the Agency will pay more attention than ever to what the advisory panel says, particularly in this Vioxx vortex era. While we personally wouldn’t take inhaled insulin (why!?) until we saw 20-year data, we do think inhaled insulin has conceivably great (and at the very least, some) potential to increase compliance, which matters tremendously and even more importantly, given the very poor outcomes (only about one third of type 2 patients with diabetes are at goal, 7% or less – and even that goal has some downward pressure in our view, meaning that an even lower percentage of patients are really where they should be in terms of glycemic control).
When directly questioned on the collaborative relationship with Pfizer, however, and on Sanofi’s dedication to commercializing the product should it be approved, CEO Jean-Francois Dehecq and VP of Pharmaceutical Operations Hanspeter Spek hedged, stating that they were “trying to be as neutral as possible” and that they “couldn’t really say anything else.” Interesting – remember a few months ago when questioned, S-A characterized inhaled insulin as charming at first glance! (We have tried often to work that into our vocabulary – doesn’t it speak volumes!)
Of course, they did say a bit else, characterizing inhaled insulin as a “very interesting product’ (they can say that again) and noting that patients would welcome an alternative to injections but that future devices will have to be more simple and portable. This couldn’t be more apt, especially coming from the makers of Lantus, the blockbuster long-acting insulin analog that we feel owes its incredible success - over $1.0 billion in global sales in 2004, just its third full year on the market. Management also stated that while the partnership could be mutually beneficial, Pfizer might consider itself to be ‘so big, and so strong, that they can take the product themselves.’ Interesting! Overall, the half-hearted concessions to the utility of the product paled in comparison to the critiques and tone toward the Pfizer relationship, and we will be interested to watch the inhaled insulin drama continue to unfold.
We are still trying to figure out the managed care equation, ourselves. Our bet is that if approved, the label will be narrow – no type 1s, no people who are already on insulin and enduring it, but really more type 2s who obviously need to be on some more aggressive therapy but aren’t, ostensibly due to fear. We don’t even know whether we really buy the fear story, but then again, we don’t really have to – all we have to do is look at the $92 billion in direct costs spent every year and see that the bulk is from patients with diabetes who are out of control and racking up large complications costs. This isn’t a huge percentage of patients, but the costs for these patients are enormous because they didn’t learn early the importance of control and because they aren’t properly engaged. We think now there are so many type 2s out of control that it doesn’t matter anymore if they won’t belong to a certain insurance plan for long – insurers must start to get at some point that even if their type 2 patient leave, they are going to get someone else’s in equally bad control! That said, we also point out the “they’re-only-in-my-plan-for-three-years-anyway-who-cares” argument is a bit of a myth – diabetes patients who receive good coverage tend to remain in good plans longer than average because good plans for such patients are so hard to find.
2. Rimonabant: Sanofi was much more eager to discuss this product, and management expressed significant confidence that it will land on their list of flagship products and that the company was on schedule with pre-marketing activity. Sanofi implied that the drug was particularly attractive to payors, especially U.S. payors, as they are seeing a lot of tier 2 access overall for their drugs. Interestingly, Spek alluded to the August 25 joint announcement of the EASD and ADA disputing “metabolic syndrome” as a legitimate diagnosis – we’ll be writing about this in our next issue of DCU – very interesting to see this pronouncement. Rimonabant’s potential as a powerful treatment for metabolic syndrome was featured prominently by the company in studies and published literature. Spek was dismissive of the controversy over the metabolic syndrome diagnosis, calling it “an academic debate” that was “interesting but not vital” (they are so good as being dismissive – doesn’t that have the same ring of “charming at first glance”?) to the future of the product. Certainly, it is true that the five studies currently underway are investigating an extremely wide range of possible applications for rimonabant, including weight loss/obesity treatment, smoking cessation, and use in patients with Type 2 diabetes, cardiovascular disease, or dyslipidemia. We expect to see Sanofi-Aventis continue to shift focus from metabolic syndrome to cardiovascular disease in future presentations and rimonabant studies. Indeed, we point out the controversy over “metabolic syndrome” isn’t a question of whether or not these patients have problems—they certainly do—but whether there is any clinical significance to a clustering of CVD risk factors, insulin resistance, etc., that would require a separate diagnosis.
In response to a question about combination agents, Sanofi stated that they preferred to develop Acomplia as a single therapy, but confirmed that, in theory, Acomplia could be marketed in a combination therapy with a product that acts on nicotine receptors. We can think of many other potential types of combination therapy for Acomplia and we guess it wasn’t stressed since that’s not the point of the NDA at present.
3. Lantus/Apidra: Little was said about Sanofi’s basal insulin or the impact that the marketing Novo Nordisk’s Levemir, with its lower variability (and weight gain) status, might have on Sanofi’s Lantus sales. Lantus was discussed in conjunction with Sanofi’s increasing U.S. tier 2 access, as Lantus tier 2 access rose to 84% in June of 2005 from 79% six months earlier. Sanofi attributed this stellar U.S. market performance—growth rate two times the overall market rate—in part to this increased presence in managed care and alluded to preparation for the Medicare Modernization Act. With extended drug coverage, Sanofi hopes for acceleration in the U.S. insulin market in 2006. Sanofi also reported Lantus sales at a whopping 52% increase from last year’s first half, comprising 20% of the worldwide market share. 20% in fewer than five years – that is really something. We’ve been waiting, of course, for the Apidra (rapid acting insulin recently approved) pen and to see what happens with marketing – will it turn automatically? Will rapid acting continue to be ignored?
4. Amaryl: Likewise, Amaryl was not a point of focus during the meeting, except that it was noted that its U.S. patent expires in the second half of this year. Sanofi-Aventis is looking into launching its own generic. One thing we would point out – Sanofi had previously sold Lantus (unofficially of course) with the slogan “one shot a day, one pill a day …” – we’re very curious to see how this changes over time as basal bolus is pushed more aggressively.