Memorandum

GSK 1Q14 – Once-weekly GLP-1 agonist Tanzeum/Eperzan (albiglutide) approved in US and EU – April 30, 2014

Executive Highlights

  • GSK’s once-weekly GLP-1 agonist albiglutide (branded Tanzeum in the US and Eperzan in the EU) was approved in Europe in late March, and approved in the US in mid-April.
  • The company press release confirmed previous guidance for EU and US launches in 3Q14.

Earlier today, GSK CEO Mr. Andrew Witty led the company’s 1Q14 financial update presentation. The biggest recent news in diabetes for GSK was the approval of the company’s once-weekly GLP-1 agonist albiglutide in both the US and EU. In the EU, where the product has the brand name Eperzan, EMA approval arrived in late March (read our report). In the US, where the product will be marketed under the brand name Tanzeum, the drug was approved just a few weeks ago (read our report). Management declined to comment on strategy or pricing for Tanzeum/Eperzan during Q&A, but noted that there are differences in the pricing environment in the EU and US. GSK’s last major diabetes product, Avandia (rosiglitazone), was a market-leader that eventually faced competition from follow-on candidates – management expressed enthusiasm that the launch of Tanzeum/Eperzan into an already-established class gives the company a chance for a “role reversal.” Other once-weekly GLP-1 agonists on the market or under review include AZ’s Bydureon (exenatide; read our report on the new pen) and Lilly’s dulaglutide (read our Lilly 1Q14 Report for more details on that candidate). During a media call following Tanzeum’s US approval, management commented that the drug’s long duration of phase 3 study (multiple trials over three years) and tolerability should help differentiate the product from Bydureon (read our report), although the product will also require a ~15 minute warm-up and reconstitution process. Notably, GSK’s drug did fail to achieve non-inferiority against Novo Nordisk’s once-daily Victoza (liraglutide) in Harmony 7 (albeit with a narrow 0.2% non-inferiority margin). During the company’s 4Q13 update, we learned that the company was no longer seeking a partner for Tanzeum/Eperzan’s commercialization, and instead planned to use the drug as a foundation for a broader cardiometabolic portfolio – we will be interested to learn more on the development of that portfolio. 

The company stopped reporting sales for the TZD Avandia (rosiglitazone) in 3Q13. Despite the fact that the FDA re-assessed the safety data on the drug last year and determined that there is no conclusive evidence of an increased risk of myocardial infarction associated with Avandia (read the agency press release), sales of the drug (which peaked at a mighty $3 billion in 2006) have since diminished substantially.

  • During Q&A, management commented on some broad trends in the broader pharmaceutical industry. A relative slew of recent confirmed or proposed major pharmaceutical mergers and deals, including Valiant’s much-publicized acquisition of Allergan, Pfizer’s possible acquisition of AZ (read our report), and the three-way GSK/Novartis/Lilly deal, have been major news headlines recently – the possible Pfizer/AZ deal has the largest implications for diabetes given the size of AZ’s diabetes portfolio. Management suggested that all of the three deals are very different in nature, and although deals like this could signal that more companies are paying more thought to their long-term positioning, it is more probable that the close timing of these deals is a matter of coincidence than a harbinger of a coming wave of mergers and acquisitions.

 

Questions and Answers

Q: On Tanzeum, if the launch of that product in Europe and the US is in the second half of the year, can you talk about your pricing strategy and your general thoughts around positioning?

A: On Tanzeum, we’re not going to get into describing our positioning and pricing strategy. The US and Europe each have different pricing environments. We’ve been market leaders and have been on the receiving end of some competitive activity. It may be that with Tanzeum, we have the chance for a bit of a role reversal.

Q: What is your view on big pharma mergers?

A: As far as M&A is concerned, I don’t know what particularly kicked off all of this, and I hesitate to essentially sign up to a particular narrative because it seems to me that each of the transactions which have been announced in the last two or three weeks are all quite different. If I think about the Allergan Valiant transaction, the Pfizer AZ transaction, and the Novartis Glaxo transaction, they’re all very, very different, with very limited commonality between them. I’d slightly err on the side of coincidence rather than some enormous narrative. However, if there is a narrative, then it must be that companies are starting to think about their long-term position, and clearly that is what drove us.

Q: What has been the catalyst for the suddenly intensified price competition in the US in respiratory?

A: I don’t think the price dynamics are going to restrain themselves to the respiratory market. We are already seeing some of the elements play out in the diabetes market and other segments. […]

--by Manu Venkat and Kelly Close