Wishing you a happy Friday from a lovely San Francisco, a warm and sunny Pasadena, and a grey and rainy Manchester. We have ten items for you today, including four stories on diabetes drugs, two conference updates, two reports on diabetes technology, and two policy updates relating to the striking PCP shortage..



1. Rachmiel Levine Day #2 - new commentary on Reata's bardoxolone, lots of basic science on type 1 diabetes

2. Diabetes UK Day #2 - pricing details on Forxiga and Lyxumia; Dr. Clifford Bailey on 10 new important oral therapies


Diabetes Drugs

3. Zealand 4Q12 - Lyxumia launched in UK

4. Astellas submits SGLT-2 inhibitor in Japan (summary below)

5. FDA investigating incretins and pancreatic toxicity (summary below)

6. J&J submits canagliflozin/metformin fixed-dose combination in Europe (summary below)


Diabetes Technology

7. Bayer 4Q12 - Contour sales up a strong 14% in 4Q12 and 13% in 2012, though Big 4 BGM cumulatively down 5% for the year

8. EASD seeks to tighten medical device approval requirements in EU to avoid a "disaster" (summary below)



9. Bills in California could expand the role of optometrists, nurse practitioners, pharmacists, and physician assistants to address PCP shortage

10. AAMC report shows that debt plays little role in medical students' choice of specialty (summary below)



1. Rachmiel Levine Day #2 - read our report. We're back with highlights from Rachmiel Levine Day #2, which included a fascinating presentation from Dr. Mark Cooper discussing Reata's bardoxolone methyl. He shared some very interesting details and suggested that Reata did not conduct the adequate basic science research before jumping into trials. Indeed, a preclinical paper published just a few weeks after the BEACON trial suggests the safety concerns could have been detected much earlier - our report has more details on what Dr. Cooper said. Today also included lots of interesting basic-science-geared presentations, with a particular focus on the gut microbiome and epigenetics. Topics were broad and varied: incursion of bacteria from the gut into the pancreatic duct leads to type 1 diabetes, fecal transplantation boosts insulin sensitivity, combination anti-CD3/ bacterial treatment reverses diabetes in mice, and much more. We're looking forward to tomorrow's program, which includes a debate between Dr. Kevan Herold and Dr. Carla Greenbaum on whether there is evidence for distinct courses in loss of beta cell function in type 1 diabetes.

2. Diabetes UK Day #2 - read our report.We learned a lot in the exhibit hall today, including pricing for Forxiga, which will be about $55/month, and Lyxumia, which is 20-25% cheaper than Byetta and Victoza; while we imagine pricing products cheaper will work in the UK to build volume, we are sorry to see it happening since it will probably result in fewer R&D dollars overall to diabetes globally. Dr. Clifford Bailey of Birmingham, England also gave a list of ten new oral therapies he felt would be important - read our report to find out what classes he included and what he said about SGLT-2s on bladder cancer. Plus, he describes what was different about the EU and FDA reviews of dapagliflozin.

3. We're back with more details on Zealand's 2012 and 4Q12 update - read our report. You can read our full report here for details on management's comments about Lyxumia's first sales, Lyxumia's positioning in the GLP-1 competitive landscape, and Sanofi's considerations over the lixisenatide/Lantus combination devices. Zealand recorded revenues of DKK 224 (~$39 million) in 2012, its best year on record. The company was not scheduled to receive any milestone payments in 4Q12, and thus did not record any revenue for the quarter. Management did not provide guidance on 2013 revenue since Sanofi has not forecast expected sales of Lyxumia. However, during Zealand's Capital Markets Day in December, CEO Dr. David Solomon projected ~$55 million for Lyxumia's  first year of sales. Beyond updates on Lyxumia, Zealand provided few new updates to the rest of its diabetes/obesity pipeline. Zealand expects its glucagon/GLP-1 dual-agonist ZP2929 (in partnership with BI) to advance in clinical development in 2013 - its current phase 1 trial is set to complete in September, so we presume this means Zealand plans on initiating phase 2 by the end of the year. See our full report for more details. We also learned earlier today that Zealand's Chief Scientific Officer will be moving on; they have been very lucky to benefit from Christian Grondahl's experience and he has set a very high bar for incoming heads.

4. Astellas submits SGLT-2 inhibitor in Japan. Astellas Pharma announced on Wednesday that it has submitted its SGLT-2 inhibitor ipragliflozin to Japanese regulatory authorities - read the press release. As a reminder, Astellas developed ipragliflozin through its research collaboration with Kotobuki Pharmaceutical. To our knowledge, this is the first SGLT-2 inhibitor submission in Japan - during the 2013 JP Morgan Healthcare Conference, Astellas CEO Yoshihiko Hatanaka remarked that ipragliflozin could be first drug on the Japanese market, as well as the market leader (see page 11 of our JP Morgan report). During the conference, Mr.  Hatanaka explained that Astellas has discontinued the development of ipragliflozin in the US and EU (where it was in phase 2) due to the high likelihood of a late market entry. Ipragliflozin's  development timeline in the US and EU positioned it to be the fourth or fifth SGLT-2 inhibitor to market (depending on the approvals of its potential competitors). As a reminder, BMS/AZ  recently launched dapagliflozin (brand name Forxiga) in the EU and expect to submit Forxiga to the FDA in mid-2013. J&J's canagliflozin (Invokana) is currently under review in the US and EU. Lilly plans to submit empagliflozin to regulatory authorities in 2013 and Pfizer's SGLT-2 inhibitor PF-04971729 appears to be "phase 3 ready." We have heard little about ipragliflozin's efficacy and safety profile - at CODHY China 2012, Dr. Ralph DeFronzo commented that ipragliflozin is not associated with an increased risk of urinary tract infection (UTI), suggesting that it may potentially cause less urinary glucose excretion than drugs such as dapagliflozin that Dr. DeFronzo noted have been linked to slightly higher rates of UTI (our CODHY China report is available at this link).

5. In a MedWatch report released yesterday, the FDA announced that it is investigating the possible increased risk of pancreatitis and pre-cancerous cellular changes associated with incretin therapies - read the posting. The concern of pancreatic toxicity is   based on unpublished academic research that examined a small number of cadaveric pancreatic tissue samples from people who died from unspecified causes. The FDA has asked the researchers for their methodology, as well as the tissue samples themselves for further evaluation. We're curious whether the FDA takes such precaution for every safety-raising study, or whether the results from  this academic study were particularly compelling. The FDA highlighted that its viewpoint on incretin safety has not changed, and that the report was simply meant as an update to the public and the healthcare community. The agency notes that it will release its final safety conclusions and recommendations at a later time. Notably, the FDA does not call for a change in the use of incretin therapies and urges patients and HCPs to continue following the current drug guidelines. The question of incretins and pancreatitis has receive notable attention of late due to a rather controversial study published in JAMA Internal Medicine which found that exenatide and sitagliptin were associated with an increased risk of acute pancreatitis - our report has the full details of the study and our perspective on its limitations and implications. The ADA and AACE drew further attention to the article by releasing a joint statement that highlighted the study's lack of rigor and declared that the results do not necessitate changing diabetes treatment protocols. In relation to this article, KOLs in general have not expressed particular concern about incretin therapies and pancreatitis; looking forward, we're interested in the FDA's conclusion, as it will influence the development and regulatory review of incretin therapies (Sanofi's Lyxumia is currently under  review), and potentially of other drug classes that affect GLP-1 levels (such as SGLT-2 inhibitors).

6. J&J submits canagliflozin/metformin fixed-dose combination in Europe - read the press release. J&J announced last week that it had submitted a European Marketing Authorization Application for its canagliflozin/immediate-release metformin fixed-dose combination (FDC). This follows the company's December 2012 submission of the same combination to the FDA, putting a potential US approval in December 2013 and a potential European approval in early-mid 2014. BMS/AZ also filed a dapagliflozin/metformin FDC in Europe in 4Q12, placing a potential approval at the end of 2013 or early 2014. J&J also has a canagliflozin/extended-release metformin FDC in phase 3 clinical trials in both the US and Europe. Canagliflozin as a monotherapy remains under review  with the FDA (with a PDUFA date estimated around March 31) and the EMA (decision expected 3Q13). As a reminder, at the FDA Advisory Committee meeting for canagliflozin in January, the FDA raised concerns about the drug's renal, cardiovascular, and bone density safety profiles.

7. Bayer 4Q12 - read our report. To follow up our preliminary coverage of Bayer's 4Q12 results, we have our full report with additional financial and pipeline details. Contour (Bayer's lead blood glucose monitor) revenue reached its highest single-quarter result in over five years at 722 million euros ($928 million). Additionally, the company expects to launch its remaining two Contour Next platform products (Contour Next and Contour Next USB blood glucose meters) in the US this month. Bayer does not disclose Diabetes Care revenue; however, the business was highlighted as a driver for overall Medical Care growth in 2012 (Diabetes Care, contrast agents, and medical equipment fall under this segment). Our report also provides a 2012 review of the Big 4 BGM players, including  4Q12 and 2012 comparisons and notes on which company had the strongest year in 2012.

8. Yesterday, the EASD released a document entitled "Avoiding a Medical Device Disaster in Diabetes." Notably, the EASD is calling for an urgent overhaul of the current CE Marking procedure for the evaluation and approval of medical devices in Europe. The press release is fairly strong in its language, noting that the current system "may seriously threaten the lives of people with diabetes because of its inadequacies." In particular, the document notes a number of limitations with notified bodies (NBs), which are the independent organizations based in EU member states that award the   CE Mark: 1) NBs have little (if any) knowledge about diabetes care, diabetes treatment, or in fact how a device which is being inspected will be used by a member of the public; 2) since NBs charge a fee, they are in effect competing with each other for device manufacturers' business, leaving the system open to abuse; 3) there are  substantial variations in the price NBs charge within and between EU member states; and 4) there is wide variation in the quality of NBs across Europe (i.e., some conduct more rigorous assessments). The EASD is urging the EU to follow the example of the Scandinavian Evaluation of Laboratory Equipment for Primary Care (SKUP). SKUP covers Norway, Sweden and Denmark, and conducts rigorous trials of devices (using patients and HCPs) to ensure that they are easy to use and do what they are supposed to do safely. EASD is also calling for better post-marketing surveillance of insulin pumps, a process that currently suffers from the same aforementioned NB weaknesses. We appreciate the EASD's focus on ensuring safe medical devices come to market, since unsafe devices can lead to very real patient harm. Of course, it's all about drawing the proper line in the sand, and we hope more stringent requirements don't inordinately delay good products from getting into the hands of patients. The move to a SKUP-like model would offer greater transparency  in our view, since it means independent research institutions would study the devices and subsequently publish the results.

9. California State Senator Dr. Ed Hernandez (D), Chair of the State Senate Health Committee and an optometrist, introduced "scope-of-practice" bills that could address the shortage of PCPs in California by allowing licensed optometrists, nurse practitioners (NPs), and pharmacists to expand the types of care they may provide - read our report. The bills would allow NPs to see Medicaid and Medicare patients even if the doctors they work for do not, optometrists to check for high blood pressure, and pharmacists to order laboratory testing to detect diabetes.  Similarly, State Senator Fran Pavley is working on a bill that would expand the scope of practice for physician assistants. Read our report here, which includes the pros and cons of the bills as well as industry efforts to expand non-MD HCPs' scope of care within  the current laws. In support of his bills, Dr. Hernandez argued that NPs, optometrists, and pharmacists "are currently practicing well below their level of training" and that California cannot "continue to underutilize [its] workforce." He points out that seven million more Californians are expected to seek healthcare coverage next year under the Affordable Care Act, and that this influx of new patients could exacerbate the already troublesome shortage of PCPs; however, the California Medical Association has publicly opposed the bill saying that it would create two classes of care. Read our report for full details.

10.The Association of American Medical Colleges (AAMC) recently published its 2012 update titled "Physician Education Debt and the Cost to Attend Medical School" - read the update. The report addresses the popular belief that money drives students' choice of specialty, noting that while education debt and potential income may be influential factors, they "do not seem to play a determining role for most [students]." The AAMC cites data from its 2012 survey of graduating medical students, which asked students to select all the factors which they believed influenced their specialty choice. "Personality fit" and "specialty content" were the most-frequently selected factors (cited by 98% of students) while "income expectations" ranked seventh (cited by 48%) and "education debt" ranked last of the 11 choices (cited by 27% of students). Based on these data and others, the AAMC concluded: "a thorough review of the academic literature shows little to no connection between economic factors such as debt/income potential and specialty choice." The American Medical News (amednews) notes that while debt as an isolated factor was ranked low on the AAMC survey, debt and income influence other highly-considered factors such as work/life balance (which was cited by 77% of surveyed students). For background, Close Concerns previously surveyed medical students and asked them to rank the importance of 13 factors in choosing a specialty (with a score of 1 being the lowest and 6 being the highest). Students ranked intellectual satisfaction and work-life balance as the two most important factors (scores of 5.1 and 4.7, respectively), while compensation received the second-lowest ranking with a score of 3.8 (students were not asked about education debt). See the full results in our poster on this topic.

Specialists typically earn three to three times the income of PCPs, and money would appear to play a role in the recent trend toward specializing, along with cultural factors such as lifestyle. Regardless of its root causes, the shortage of PCPs is quite troubling: a recent article in Health Affairs estimated that implementing the Affordable Care Act would require 7,200 additional PCPs, or 2.5% of the current supply. Echoing this warning, the AAMC Center for Workforce Studies forecasted a shortage of 45,000 PCPs by 2020. These statistics paint a rather somber picture for primary care in general, but especially for the growing diabetes population. We'd love to hear your thoughts on this matter.

Have an incredible weekend - thank you so much for all your ongoing work in the field. A special thank you to our fantastic Winter Associate Melissa An - we wish her well as she heads back to Dartmouth and feel so lucky we were able to benefit from her brainpower and charm during her time away.


very best, kelly


Kelly L. Close


Close Concerns

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