Memorandum

Lilly hosts R&D update meeting, highlighting addition of preclinical next-generation basal and once-weekly insulins, phase 1 glucagon candidate, and new GLP-1/glucagon dual agonist candidate to pipeline – May 24, 2016

Executive Highlights

  • Today, Lilly hosted an R&D update meeting: diabetes updates included new additions of next generation basal and once-weekly insulins with talk of developing a once-weekly Trulicity (dulaglutide)/insulin combination, new confirmation of a phase 1 soluble glucagon candidate with potential in bihormonal closed loop systems, and addition of a next generation oxyntomodulin candidate.

Today, Lilly hosted an R&D update meeting, which included a diabetes update led by Dr. Jeffrey Emmick and Dr. David Moller. The morning session included updates on overall R&D sustainability and productivity while the afternoon session featured a dedicated presentation on diabetes – see the slides from the morning and afternoon sessions for more. The call featured a slew of new updates, including exciting news of next generation basal and once-weekly insulins, confirmation of a phase 1 glucagon candidate with utility in bi-hormonal closed loop systems, a new oxyntomodulin candidate, and much more. Please see below for our top eight highlights from the call and see our coverage of Lilly’s 1Q16 update for more on the latest from the company.

Top Eight Highlights

1. Lilly added a next-generation basal insulin and once-weekly insulin to its preclinical pipeline and commented on the potential of developing a weekly combination product of Trulicity (dulaglutide) and weekly insulin. Management highlighted the next-generation basal insulin, which is planned to enter phase 1 in 2016, as a key area of focus for Lilly. According to Lilly, this candidate has a single chain Fc fusion, a weekly time-action profile, and a design that allows for combination with Trulicity. The latter comment was repeated throughout the call in various contexts, as management stressed that this weekly combination could allow for more flexibility with Trulicity and could be part of a next generation incretin program. It appears from the company’s latest pipeline that “next gen basal insulin” and “once-weekly insulin” are two separate candidates, although we did not hear any details on the latter candidate in the call. We find it notable that Lilly is doubling down on basal insulin efforts given its unfortunate recent luck with basal insulin peglispro. Sanofi licensed the phase 1 once-weekly basal insulin LAPSInsulin Combo along with the once-weekly GLP-1 agonist/basal inuslin combination from Hanmi Pharmaceuticals, which appears to be ahead of any preclinical work from Lilly, although possibly not by much. Daily formulation of GLP-1 agonist/basal insulin combinations are on the near horizon – the FDA Advisory Committee meeting for Novo Nordisk’s Xultophy (insulin degludec/liraglutide) just concluded with a 16-0 vote in favor of approval. An Advisory Committee meeting for Sanofi’s LixiLan (lixisenatide/insulin glargine) will take place tomorrow. A once-weekly formulation of basal insulin or of a GLP-1 agonist/basal insulin combination could be a game changer for many patients in terms of dosing convenience and we’re excited to see this area generate a bit more attention. That said, we imagine that creating a flat profile of action in a once-weekly insulin that is comparable to the impressively flat profiles of the latest daily basal insulins (such as Novo Nordisk’s Tresiba [insulin degludec]) will prove a major challenge. Lilly also does not have as much expertise in basal insulin analogs as Novo Nordisk or Sanofi – not that that has stopped it from becoming a leader in other classes.

2. Lilly highlighted a new phase 1 soluble glucagon candidate in its pipeline, notably referring to the potential utility of it in bi-hormonal closed loop systems. We suspect this is the undisclosed phase 1 hypoglycemia candidate that was added to Lilly’s pipeline in 4Q14 that we had (now correctly) assumed was a stable glucagon formulation. The company noted that the candidate is soluble, short-acting, and solution stable, with a PK/PD similar to native glucagon. Notably, management focused on the utility of this glucagon in closed loop systems, pointing specifically to prototype bi-hormonal systems – a more confident indication that Lilly may work with Beta Bionics on the glucagon front and not just on insulin. The Bionic Pancreas team has previously talked about using Xeris and Zealand glucagons – while this could still play out to be true, Lilly’s new phase 1 glucagon analog candidate seems like a promising option as well.

  • The latest pipeline also shows a new addition of “long-acting glucagon” to its preclinical development. The call didn’t bring up any further details on this separate glucagon formulation but we would not be hugely surprised to hear this come up with regards to closed loop systems later on in the future.
  • Lilly underscored its commitment to collaborating on diabetes technology in the update. The company referred to the artificial pancreas in discussion of its innovations in ultra-rapid insulin, pointing to the positive PK/PD data of BioChaperone Lispro in type 1 diabetes. Also, in line with Lilly’s recent strategic move into the convergence of technology and biotechnology, management emphasized its focus on “diabetes connected care,” highlighting its work with Companion Medical, Beta Bionics, and more. For more on Lilly’s investment in Beta Bionics and our thoughts and predictions of this collaboration, please see our report of the news, complete with interviews from Dr. Ed Damiano and Lilly.

3. The company highlighted a new preclinical next-generation GLP-1/glucagon dual agonist (oxyntomodulin analog) candidate and a new phase 1 GLP-GIP co-agonist  as promising next generation incretin programs. This came as a slight surprise to us, given Lilly’s recent decision to drop its phase 3 Transition Therapeutics-partnered GLP-1/glucagon co-agonist LY2944876/TT401. Lilly highlighted this candidate’s positive phase 2 data in the call, showing support of the dual agonist hypothesis and specifically pointed to the potential of co-formulation options of long-acting glucagon + dulaglutide as well as a tri-agonist of long-acting glucagon and a GIP/GLP-1 co-agonist, noting benefits in weight loss, weekly dosing, and glucose control. We suspect that Lilly’s drop of LY2944876/TT401 was due to the phase 2 findings’ disappointing A1c lowering in the context of an increasingly high bar for new anti-diabetic drugs – presumably the company’s new preclinical GLP-1/glucagon dual agonist candidate has appeared more promising or the company believed in this approach enough to try again. Indeed, many companies are investing significantly in GLP-1/glucagon dual agonists – see our competitive landscape for an overview. The recent Keystone Symposia on New Therapeutics for Diabetes and Obesity also included plenty of buzz on novel polyagonists for diabetes.

4. Lilly shared that the company is exploring doses of Trulicity beyond 1.5 mg to expand its profile in type 2 diabetes. In addition to the efforts to add the data of AWARD-8 (with sulfonylurea), AWARD-9 (with glargine), AWARD-10 (co-administration with SGLT-2 inhibitor), and AWARD-7 (in CKD with lisprol) to Trulicity’s label, Lilly highlighted that it is also looking at higher doses to see greater weight and A1c reductions. With Novo Nordisk’s success in increasing Victoza’s (liraglutide 1.8 mg) dose to an obesity drug (Saxenda [liraglutide 3.0 mg]), this may be a smart move, although that compound is not a commercial success as yet and the obesity market remains a very challenging one to date. Management also seemed to heavily emphasize efforts to make the dosing of Trulicity and insulin more flexible (in addition to the development of the weekly combination – see highlight #1).

5. Management highlighted the company’s work in “pursuing oral GLP-1” – an explicit confirmation of what we heard in the Q&A of Lilly’s 1Q16 update. Focusing on its R&D area of improving metabolic control, the company labeled GLP-1 as “a foundational target” and outlined its goal to build on the success of Trulicity. In addition to building on its injectable GLP-1 success (through multifunctional peptides and peptide combinations), management emphasized that Lilly will also pursue oral GLP-1 formulations. Lilly suggested that it will investigate both small molecule GLP-1 mimetics and secretagogues approaches as well as oral delivery of incretin-based peptides such as oxyntomodulin analogs. Management had hinted at Lilly’s investment in this area in its 1Q16 call, though management acknowledged that the company is far behind Novo Nordisk in this area. Lilly also expressed some hesitation around oral GLP-1 agonists’ efficacy and profitability, given the bioavailability challenges associated with oral peptide delivery. We’ll be curious to see whether Lilly pursues licensing another company’s small molecule formulation (we see vTv Therapeutics’ TTP273 as one promising option) or look into its own early-stage pipeline for these efforts – for more on the competition of this area and our insights, please see our 1Q16 update.

6. Management highlighted key upcoming events for Jardiance (empagliflozin) and affirmed its expectation that the FDA would convene an AdComm meeting for the product’s proposed label updates. The company pointed to the potentially precedent-setting nature of the data and shared that it hopes to see reduction in all-cause mortality and CV death included in the label. Lilly shared during 1Q16’s Q&A that it fully expects an updated indication in the label and similar confidence was expressed during today’s Q&A, as management emphasized the strength of the trial and its follow-up, calling the EMPA-REG OUTCOME findings “robust data out of a robust study.” Certainly, such expansions to the label would offer a much stronger value argument for payer negotiations. Lilly has consistently characterized a label update based on EMPA-REG OUTCOME as a positive inflection point that it expects will dramatically improve Jardiance sales. In addition, management reminded listeners of Jardiance’s further renal data disclosures at the upcoming ADA as well as the initiation of heart failure studies of the product, also highlighted in the company’s 1Q16 update.

7. Management expressed commitment to its PCSK9 inhibitor candidate LY3015014 (currently in phase 2), sharing its potential differentiation factor as having a mechanism for “exceptional durability.” Lilly had been “evaluating its options” for its PCSK9 inhibitor candidate for several quarters now. This R&D update is the first time Lilly has suggested a key element of differentiation for this candidate. Management reviewed the candidate’s PK/PD modeling, suggesting that a dosing of 240 mg every eight weeks (or every four weeks as needed) will demonstrate comparable durability with fewer and less frequent injections compared to other members of the class. Getting into more of the basic science, management showed that LY3015014’s epitope includes fewer binding sites, allowing for an enhanced duration of circulating antibodies and LDL-C reduction. We will have to wait and see phase 3 data before making any conclusive statements on this, but we can see the monthly dosing option of Amgen’s Repatha (evolocumab) proving to be a tough competitor on this front. Lilly’s PCSK9 inhibitor will be at least fourth in its class to market (behind Sanofi/Regeneron’s Praluent [alirocumab], Amgen’s Repatha [evolocumab], and Pfizer’s bococizumab) – see our comments on Lilly’s role in the PCSK9 inhibitor space in the 3Q15 report for more.

8. The company closed its diabetes update with its NASH strategy, pointing to the disease state of NASH and fibrosis as the ideal time to target therapy – oxyntomodulin and the DGAT-2 inhibitor will be studied in this area. Management highlighted that fibrosis is a strong predictor of progression and liver-related outcomes and that non-invasive diagnostic tests are emerging while NAFLD and early NASH have poor diagnosis rates and slow rates of progression. Similarly, the point of decompensated cirrhosis and beyond has less meaningful metabolic parameters and is a state that PCPs will unlikely treat. Notably, the company confirmed that it is investigating its newly added phase 1 DGAT-2 inhibitor (for dyslipidemia) for NASH. It is also investigating its new GLP-1/glucagon dual agonist formulation for the disease area (citing preclinical data of these candidates in diet-induced obese mice). The NASH therapy space is growing more crowded, as this disease area is generating more attention with increasing obesity rates and the high unmet need – see our competitive landscape for more.

 

-- by Melissa An, Helen Gao, Emily Regier, Kathy Shang, and Kelly Close