Simple Sells: How Diabetes Drug Victoza Challenges Amylin and Lilly's Byetta

Last Updated Aug 9, 2010 6:35 PM EDT

Novo Nordisk's (NVO) new type-2 diabetes drug Victoza is rapidly gaining market share in the all-important U.S. market. The Danish drug maker's early commercial success with its subcutaneous "GLP-1" diabetes treatment is troubling news for Amylin Pharmaceuticals (AMLN) and marketing partner Eli Lilly's (LLY) in-kind, Byetta franchise.

Launched stateside in February, Victoza now accounts for 26 percent of all GLP-1 (glucagon-like peptide) agonist class prescriptions and 33.9 percent of all new GLP-1 diabetes patient starts, said Danish business daily Børsen.

The U.S. is the largest diabetes market globally, with aggregate sales of $12.9b in 2008, or 47 percent of total sales worldwide, according to industry consultants La Merie Business Intelligence.

Victoza (liraglutide) and Amlyn's Byetta (exenatide) are first-to-market in a promising group of compounds that "mimic" the activities of GLP-1, a gut-derived hormone (incretin) that induces insulin secretion from beta cells by binding to GLP receptors in the pancreas. In patients with type-2 diabetes, the incretin effect is thought to be impaired or absent totally.

Incretin-based therapy as a treatment modality for type-2 diabetes has attracted much attention from specialists and other diabetes caregivers:
GLP-1 enhances insulin secretion and suppresses glucagon secretion (from pancreatic alpha cells) in a glucose-dependent manner after eating, reducing the risk of hypoglycemia and possibly helping lower post-meal glucose levels (and glycolated hemoglobin A1-c levels); and, the incretin GLP-1 delays gastric motility and emptying -- and increases satiety -- resulting in weight loss.
Older diabetic drugs, such as insulin analogs and oral sulfonylureas, have a propensity to cause weight gain and increase the risk of hypoglycemia.

Clinical data supporting the ability of Byetta to address the unmet need of glucose control with potential weight loss quickly became a winning narrative for the drug, with analysts predicting peak sales of more than $1 billion annually by 2010. The GLP-1 agonist became the fourth most-prescribed branded product for type 2-diabetes -- after Actos, Avandia and Lantus -- within 18 months of its June 2005 launch.

Prescription momentum swung away from Byetta, however, after reports began to surface of a link between Byetta use and kidney function problems. From April 2005 to October 2007, the FDA received 30 reports of acute pancreatitis in patients taking Byetta. The number of reported cases more than doubled by October 2008.

U.S. sales for Byetta peaked in 2008 at $678.5 million. Last year, U.S. sales declined two percent to $667.6 million, as prescription demand weakened from concerns of the potential link to Byetta use and kidney problems.

The number of patients treated worldwide with Byetta dropped from 470,000 in 2007 to 440,000 in 2009, according to data obtained by Wolters Kluwer.

Even regulatory blessing for Byetta as the only GLP-1 agonist approved for first-line use in type 2 diabetes, did little to impress endocrinologists and primary care physicians: For week-ending June 4, total new prescriptions (refills and new patient starts) for Byetta and Victoza were 37,398 and 8,551, respectively, down four percent and up 42 percent from week-ending April 30, according to proprietary IMS Script (RX) Data (leaked on a Cafepharma message board).

That Victoza continues to gain ground at Byetta's expense is all the more impressive when one considers that the drug was launched with onerous luggage too:
a "black box" warning of thyroid C-cell tumors in both rats and mice. With the unknown of long-term use of Victoza and thyroid malignancies, the FDA mandated that Novo establish a 15-year cancer registry to monitor the rate of medullary thyroid cancer in the U.S.
Notwithstanding its premium pricing (top dose is about 50% more costly than Byetta) and a weaker formulary status, Novo sales reps have been successful in communicating benefits unique to Victoza:
Goldman Sachs (GS) and other Wall Street firms predict global sales of Victoza will reach $1 billion in just two years. Novo has to move quickly to build its market position, as the FDA is expected to issue an opinion on a more convenient dose of Byetta, a once-weekly injection called Bydureon, by October 22.

Pending an approvable letter, analysts are modeling worldwide sales for Bydureon of more than $3 billion by 2016 - 2017.
The revenue potential of the Byetta franchise, however, could be significantly lowered by a one-two punch of near-term competion from Victoza and longer-term competion from incretin-like therapuetics in the pipeline, said Wolters Kluwer analyst Ben Weintraub.
Although the timeline for Roche's (RHHBY) promising GLP-1 taspoglutide has been delayed for up to 18 months due to hypersensitivity problems in trial subjects, GlaxoSmithKline's (GSK) Syncria (albiglutide, also a once-weekly injection) is expected to report results from several late-stage trials by year-end 2010. Novo also has an oral GLP-1 in pre-clinical development.

In the here and now, more doctors are prescribing Victoza to patients instead of Byetta. The latest weekly statistics show that the number of new Victoza prescriptions increased by another 13.6 percent to 7,232, while the total number of new prescriptions increased by 15 percent to 12,163. More good news for Novo, less so for the Byetta franchise envisioned by Amylin and Lilly.
  • David Phillips

    David Phillips has more than 25 years' experience on Wall Street, first as a financial consultant and then as an equity analyst for several investment banking firms. He sifts through SEC filings for his blog The 10Q Detective, looking for financial statement soft spots, such as depreciation policies, warranty reserves and restructuring charges. He has been widely quoted in outlets such as BusinessWeek, The International Herald Tribune, Investor's Business Daily, Kiplinger's Personal Finance, and The Wall Street Journal.

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