JP Morgan Healthcare Conference

January 13-16, 2014; San Francisco, CA Day #2 Highlights - Draft

Executive Highlights

Day #2 of the 32nd JP Morgan Healthcare Conference featured an excellent mix of pipeline updates and company commentary on the latest trends in diabetes and obesity, along with a rousing keynote address from charismatic Cleveland Clinic CEO Dr. Delos Cosgrove. This report contains our top 10 highlights from the day plus an appendix containing our in-depth coverage of some of the most noteworthy presentations.

The Day #2 agenda featured a number of the current and former heavyweights in diabetes pharmacotherapy, including BMS, AZ, Lilly, Sanofi, and GSK. We were very pleased to hear, after seemingly endless silence on BMS’ part, that the Bydureon dual-chambered pen is under regulatory review with potential US and EU approvals expected in 2Q14 and 4Q14, respectively. The management teams at AZ, BMS, and Alkermes all commented on BMS’ recent divestiture of its diabetes business to AZ. The consensus seems to be that the move is a win-win for everyone involved: BMS will have cash to invest in its new focus areas and AZ will be able to more efficiently and flexibly bring new diabetes therapies to market, which in turn will help patients – they’re more interested in the PCP side, where diabetes certainly is. Excitingly, we also learned that AZ is advancing two candidates for chronic kidney disease/end-stage renal disease into phase 3 in the next two years. Dreams of Reata. Switching gears to the oral antidiabetic drug arena, Lilly management suggested that SGLT-2 inhibitors are putting substantial pressure on the DPP-4 inhibitor market; Lilly may not find this as worrisome as others, as it has the SGLT-2 inhibitor empagliflozin under review, but clearly, Tradjenta is key to its franchise. Sanofi CEO Chris Viehbacher expressed doubt that biosimilar insulin glargines will be able to undercut Lantus substantially on price due to high development and manufacturing costs, and also chimed in on Express Scripts’ recent formulary decision for GLP-1 agonists (which made us think of commentary from Lilly’s recent 2014 Financial Guidance call). Sanofi and Amgen remain locked in a race to market the first PCSK9 inhibitor.

In diabetes technology, Dexcom stole the show, reporting standout 4Q13 product revenues of $51 million, up an impressive (we nearly said unbelievable) 61% year-over-year and up 20% sequentially (for context, 3Q13 sales grew a striking 101%). The G4 Platinum pediatric indication has been deemed approvable by the FDA, and Dexcom is simply waiting for the word from FDA. CEO Mr. Terry Gregg reinforced what an important catalyst this will be for Dexcom.

Orexigen announced today that it is considering seeking a diabetes indication for Contrave and developing a fixed-dose combination of Contrave (naltrexone/bupropion) and a DPP-4 inhibitor. At this stage, both are potential lifecycle opportunities, and there is no ongoing clinical work on either opportunity. We believe that the DPP-4 inhibitor would be Takeda’s Nesina (alogliptin), since Takeda is Orexigen’s partner for Contrave in North America. We think this could be a great option for patients; we are eager to see what happens on the FDC front. 

Right down the street at the BioTech 2014 conference, 4P Therapeutics CEO and President Mr. Steven Damon emphasized the company’s focus on developing transdermally-delivered GLP-1s agonists – a benefit for needle-adverse patients. Ten-person Xeris Pharmaceuticals continued to garner interest, providing an update on its three-pronged liquid glucagon program. Most notably, the recently completed phase 2 study of the company’s liquid glucagon formulation showed bioequivalence to Lilly’s glucagon (to be submitted as a late breaker for ADA 2014). If all goes well, phase 3 (in 30 healthy volunteers) would occur in later this year, supporting an NDA submission in 1Q15. We also heard they are working on a fast acting insulin.

We also attended presentations today from Abbott, Allergan, Array, Artery, Astellas, Biocon, BioKier, CFR Pharmaceuticals, Cipla, Glenmark Pharmaceuticals, GSK, Leading BioSciences, Merck KGaA, Ohr Pharmaceutical, One Medical Group, Sense.ly, Sernova, and Viking Therapeutics, none of which had major diabetes or obesity updates. We will include our full coverage of these companies’ presentations in our full report.

Top 10 Highlights

1) At long last, after BMS’ silence on progress on the Bydureon dual-chambered pen, we finally learned from Alkermes CEO Richard Pops and AstraZeneca CEO Pascal Soriot that the dual-chambered pen is under regulatory review. A US decision is expected in 2Q14 and an EU decision in 4Q14. As a reminder, this dual-chambered pen eliminates the need for manual reconstitution. This timeline is consistent with BMS/AZ’s past guidance for submission of the dual-chamber pen in 3Q13 and a launch in 2014. Mr. Pops also indicated that the once-weekly Bydureon suspension (advanced to phase 3 in 4Q12) being filed in 2015. Getting these easier forms of administration on the market will be key for Bydureon to continue to compete in the growing GLP-1 agonist market, especially once another once-weekly candidate makes it to the market (Lilly’s dulaglutide could be the first in 2014, and it would not require any reconstitution). Alkermes had an encouraging meeting with AstraZeneca last week, and Mr. Pops pressed, “there is no doubt that [Bydureon] is a core business for them.” During AstraZeneca’s Q&A, when asked about the status of the once-monthly Bydureon product, management stated that it “won’t comment on the exact probability [that it will be successful], but we are doing our best. If your objective is to get a sense for how much it factored into the decision [to acquire BMS’ diabetes business], it was a minor factor.”

2) The CEOs of BMS, AZ, and Alkermes all also commented on BMS’ recent divestiture of its diabetes business to AZ – the overarching theme is that the move is a win-win for most everyone involved (patients included), although it seems to be a case of BMS deciding to exit diabetes while it still can. BMS CEO Lamberto Andreotti, however, also cited several additional benefits of the divestiture, including greater financial flexibility in allocating resources to its specialty care priorities and streamlining of the company’s organizational operation. It seems odd to us that the board would make such an about-face after fighting so hard to buy Amylin; that said, from our view, it is definitely better for patients and HCPs and employees that AZ will have sole ownership on diabetes. (BMS did point out that it would certainly be aligned as it would have a stake, presumably through royalties.) AZ CEO Pascal Soriot is extremely enthusiastic about AZ’s ability to leverage its expertise in primary care and its global presence in emerging markets to make the diabetes business more successful than it was under BMS – Mr. Soriot stated that “it’s a franchise that can be more profitable in our hands than it would be in the hands of someone who doesn’t have a primary care team [BMS]” and focuses more on developed markets. During Alkermes’ breakout CEO Richard Pops also shared his belief that the sale of BMS’s diabetes business to AZ is going to be favorable for Alkermes (who receives royalties on Bydureon sales), because of the improvements in efficiency that will come about from bringing Bydureon under the control of one team – it will also improve due to increased focus (Mr. Pops mentioned that it was “astonishing” how long it took for decisions to make their way through BMS and AZ’s bureaucracies).

3) Excitingly, AZ also appears to be making significant moves on the chronic kidney disease (CKD)/end-stage renal disease (ESRD) front: it plans to move one candidate for ESRD/CKD (roxadustat [FG-4592]) into phase 3 in 2014 and potentially another candidate for ESRD (AZD1722) into phase 3 in 2015. Roxudustat is a hypoxia-inducible factor (HIF) inhibitor, and AZD1722 is an NHE3 inhibitor. HIF inhibitors, interestingly, are more commonly investigated as a cancer treatment since HIF is a master regulator of tissue response to hypoxia (low oxygen), so we will be interested in learning its effects on chronic kidney disease. NHE3 is the sodium-hydrogen antiporter 3, a protein that is essential for the absorption of sodium in the intestines. By decreasing dietary sodium absorption, an NHE3 inhibitor could thus decrease the amount of sodium in the blood stream that would have to be processed by the kidneys.

4) Dexcom CEO Mr. Terry Gregg provided an impassioned update on the company’s striking growth and near-term pipeline. Most notable were the impressive estimated 4Q13 sales figures – $51 million in product revenue, up an impressive 61% year-over-year and up 20% sequentially. Significantly, this performance was on two very challenging comparisons, as sales were up 52% year-over-year in 4Q12 and 101% year-over-year in 3Q13. Management also disclosed that 60,000 G4 Platinum receivers were sold between October 2012 and December 31, 2013 – that translates to ~54,000 unique patients on the G4. Compelling prescriber data suggested that patients are really driving demand for this product, reinforcing our view that CGM has perhaps reached a tipping point in the marketplace. On the pipeline side, FDA approval of a pediatric indication for the G4 Platinum is extremely close – the agency has completed its review and deemed the filing approvable. This has taken longer than expected (the hope was by end of 2013), though it will be a terrific catalyst for Dexcom – management explained that only 8-10% of the company’s installed base is patients <18 years old (vs. ~30% under 18 years old in the type 1 population) and the company cannot currently call on 800-1000 pediatric endocrinologists. A timeline slide succinctly summarized the slew of near-term launches in the pipeline: pediatric indication (2014), Animas Vibe (2014), Dexcom Share (2014), Tandem t:slim integration (2014/2015), and smartphone integration (2015). While there was a multi-year absence of new products between the Seven Plus and G4 Platinum, it’s excellent to see the company diligently iterating ahead on the product front. See the appendix for many more details from this presentation.

5) Orexigen CEO Mr. Mike Narachi announced that Orexigen is considering seeking a diabetes indication for Contrave and developing a fixed-dose combination of Contrave (naltrexone/bupropion) and a DPP-4 inhibitor. At this stage, both are potential lifecycle opportunities, and there is no ongoing clinical work on either opportunity. We assume the DPP-4 will be Orexigen partner Takeda’s Nesina (alogliptin). Mr. Narachi noted that such a fixed-dose combination would likely have a “really short” clinical development pathway (details in Appendix). Turning to the regulatory prospects for Contrave, the agent’s PDUFA date is June 10, 2014. When asked about the potential for public disclosure of the interim results from the Light Study at an Advisory Committee meeting, Mr. Narachi explained that Orexigen has received no indication that the FDA will call an Advisory Committee meeting (details below). (Should one be called, Orexigen would rapidly disclose it.) He did not address what the contingency plan would be to try to maintain data blinding if a meeting were to be held. We do think there will probably be an Advisory Committee meeting, not due to any doubt we have on Contrave, but just given the tone of the FDA.

6) Xeris CEO Mr. Douglas Baum discussed the company’s three-pronged liquid glucagon program. Most notably, Xeris completed the phase 2 study of the G-Pen (severe hypoglycemia auto-injector) – results showed bioequivalence to Lilly’s reconstituted glucagon (to be submitted as a late breaker for ADA 2014). Xeris will soon submit a request for an end of phase 2 meeting with the FDA – past discussions have suggested that the phase 3 program would only require 30 healthy volunteers. The plan is for the phase 3 trial to occur in the third or fourth quarter of 2014 (back slightly from the previous “2Q14” estimate). Following an expected NDA submission in the first quarter of 2015, Xeris believes approval and launch of the G-Pen auto-injector could occur in the fourth quarter of 2015. Throughout his talk, Mr. Baum emphasized that all the work for the G-Pen auto-injector program can be leveraged for the glucagon mini-dose and pump opportunities – indeed, these seem to be moving along at a good clip. The IND for the mini-dose pen has cleared, and Xeris is initiating a phase 2 trial next month at Baylor (on par with previous estimates). On the pump side, Xeris has applied for an orphan drug application for congenital hyperinsulinism, which should speed things along with the FDA. An IND application for the pump program is expected by December 30, and a clinical trial is slated for late 1Q14 at Oregon using the Insulet OmniPod. To date, Xeris has only needed $12 million (~$6 million from investors and ~$5 million from NIH/JDRF/Helmsley Charitable Trust grants); the company is fully funded through phase 2 studies, but is looking to raise another $10-12 million to get through the G-Pen NDA submission. Partnerships discussions with big pharma are ongoing, but management did not share any details. The company may also look to commercialize on its own, given that a small endocrinologist sales force is feasible for commercializing glucagon. Regarding the competitive landscape, Xeris is a bit further along than the closest glucagon competitor, Locemia (a phase 2 nasal formulation of glucagon) – see below for a complete summary.

7) Lilly’s Q&A featured rich discussion on product differentiation, utilization of SGLT-2 inhibitors, and positioning of its once-weekly GLP-1 agonist, dulaglutide (see the Appendix for our in-depth coverage of the presentation and selected Q&A). Specifically with regard to SGLT-2 inhibitors, management remarked during that “US endocrinologists are now starting more patients on SGLT-2 inhibitors than on the entire class of DPP-4 inhibitors combined” (in-depth coverage of Lilly’s presentation and selected Q&A are included in the Appendix of this report). We were not clear whether this referred to SGLT-2 inhibitors’ NBRx share or NRx share, but in either case, it reflects quite a strong performance for SGLT-2 inhibitors and illustrates how the class sounds like it is putting some competitive pressure on DPP-4s. Given that J&J has yet to break out revenue for Invokana (the only SGLT-2 inhibitor to be approved in the US up until last week when AZ’s Farxiga received approval), we found this to be a valuable glimpse at this new class’s performance.

8) Sanofi CEO Chris Viehbacher (Sanofi, Paris, France) provided valuable commentary on the pricing environment for diabetes drugs during a very diabetes-centric breakout session. He expressed doubt that biosimilar insulin glargines will be able to undercut Lantus substantially on price, given the costs involved in testing and manufacturing biosimilars — that said, we imagine that even a relatively modest discount could be enough to win share (or reimbursement contracts) given today’s immense pricing pressure for diabetes drugs. Biocon has a biosimilar insulin glargine in production, Lilly has one under regulatory review, and Merck is believed to be developing another candidate. Mr. Viehbacher also chimed in on Express Scripts’ decision to replace Novo Nordisk’s Victoza (liraglutide) on its national formulary with BMS/AZ’s Byetta (exenatide twice daily) and Bydureon (exenatide once weekly). He sees the decision as a loss for patients, and not just in terms of the loss of choice: “It’s pretty clear that Victoza is a better drug than Bydureon,” he said, “and making someone go from once-a-day to twice-a-day is a potential compliance issue” (referring to Byetta). However, overall, he does not see Express Scripts’ decision as particularly worrying — instead, he compared Novo Nordisk’s contract loss to being placed on tier three of a formulary. He expressed confidence that at the end of the day, patient interests will trump price in terms of formulary decisions. We see the Express Scripts decision as a disappointing example of a case where, despite significant differentiation amongst products in the GLP-1 agonist class, a payer chose to reimburse only one member of the class. This ties into comments made during Lilly’s 2014 Financial Guidance call last week whereby management remarked that differentiation is the key to securing reimbursement in diabetes. We will be interested to see how the sole source decisions continue to play out.

9) We learned of a new (to us) biotech today called 4P Therapeutics, which is focusing on developing transdermally-delivered GLP-1 agonists and GLP-1 agonist/insulin combinations. Additionally, the company may also explore an interstitial blood glucose sensor in the future. Mr. Steven Damon, CEO and President of 4P Therapeutics, particularly highlighted the company’s work using Byetta (AZ’s exenatide) and Victoza (Novo Nordisk’s liraglutide), and he presented the positive results of a proof of concept trial using exenatide that showed favorable kinetics; however, Mr. Damon did not release the mechanism of delivery (i.e., microporation, microneedles, or passive transdermal drug delivery). Mr. Damon remarked that there is a “real opportunity” for transdermally-delivered GLP-1s – he noted that many patients with type 2 diabetes are hesitant to take injections, and a transdermal delivery would eliminate the visibility and pain of a needle (at the 2013 Diabetes Technology Meeting we heard that there was virtually no pain associated with microneedle insertion). Clearly there would have to be lots of success to get to a product on this front. Mr. Damon also acknowledged that the company was looking to develop a blood glucose sensor using the same transdermal technology to reach interstitial fluid for glucose readings; however, 4P Therapeutics is only looking to add these “bells and whistles” after it makes headway with the GLP-1 delivery. Although 4P Therapeutics is only beginning to develop its products, we already have many questions: What will be the mechanism of delivery (dissolvable needles? Coated needles? Microporation?) How long will the patient wear each device, and how frequently? How fragile will it be? What will be the cost of each device?

10) Sanofi and Amgen remain neck-in-neck in the race for the first PCSK9 inhibitor. During his presentation, Sanofi CEO Chris Viehbacher characterized these LDL-lowering drugs as a potential future “mega-class,” due to their likely unprecedented LDL-C-lowering efficacy. Sanofi announced topline data from alirocumab’s phase 3 ODYSSEY program in October, demonstrating that its candidate was three times as effective at lowering LDL cholesterol as ezetimibe (a less efficacious alternative to statins that inhibits dietary absorption of cholesterol). Additional phase 3 data is expected in mid-2014 through 3Q14. The company announced today that regulatory submissions for alirocumab outside the US are expected to start in early 2015, with a US submission occurring at some point in 2015. Amgen management, who presented later in the morning, stated that data from three pivotal phase 3 trials of its PCSK9 inhibitor evolocumab is expected by the end of 1Q14. This follows the disclosure of positive topline data from two phase 3 studies in late December (read the press releases here and here). Amgen has not yet provided estimates on submission timelines, but the timing of phase 3 data release is closely tracking Sanofi’s. See our reports on Amgen's 3Q13 Update, Sanofi’s 3Q13 Update, and our AHA Day #3 and AHA Day #4 for more details on the two candidates.

 

Honorable Mention

1) Apollo Endosurgery, a private company, expounded upon its purchase of Allergan’s obesity intervention business for $110 million. As background, purchased portfolio included the Lap-Band (which has 97% of the gastric banding market) and the Orbera intragastric balloon system (which has more than 80% share of the balloon market). Apollo Endosurgery CEO Mr. Dennis McWilliams stated that Apollo plans to have the product filed in the US this quarter, and that the FDA has “made significant progress on easing restrictions” for less invasive options to treat obesity. Turning to the Lap-Band, Mr. McWilliams believes that its sales have largely bottomed out, and that Apollo’s team, being solely focused on bariatric surgery, will more successfully promote the product. Mr. McWilliams noted that only 0.2% of eligible patients elect to undergo the procedure and that the number of surgeries performed each year has plateaued (we note that the last time point on the graph he presented was 2011). Mr. McWilliams thinks that while Roux-en-Y gastric bypass (RYGB) is the “gold standard” in bariatric surgery, many patients are seeking less invasive and less dangerous option. Mr. McWilliams believes that the Lap-Band can meet this need, though our sense is that the gastric sleeve (which is more efficacious that the Lap-Band) is drawing much of this market.

2) CVS Caremark CEO Mr. Larry Merlo highlighted the company’s efforts to increase medication adherence and attract people with diabetes (the only patient population he spoke of in detail). Mr. Merlo explained that CVS is running a number of pilot programs on ways to help people with diabetes, and that one enables CVS to alert providers if a person with diabetes who is a candidate for a concomitant medication (e.g., a statin or ACE inhibitor) is not currently on one. Of course such a program benefits CVS by likely increasing the number of medications a person purchases through CVS, and we think that it could serve as an aid for busy PCPs. Furthermore, CVS is “laser focused” on improving patient adherence; CVS estimates that poor patient adherence costs the US nearly $30 billion a year in avoidable medical costs. With the aim of improving adherence, CVS conducted about 79 million live clinical interventions (it was unclear what form these events took).

3) Cleveland Clinic’s charismatic CEO Dr. Delos Cosgrove delivered today’s keynote address, focusing on hidden opportunities that could be found in today’s tumultuous healthcare environment (including unmet opportunities for preventing 70% of premature deaths in the US that are due to behavior or genetics where genome sequencing is becoming more and more accessible). He made a particularly disheartening comment, however, during Q&A when he said that the “leaders on smoking or obesity will not come out of Washington because 20% of voters smoke, and 30-40% of voters are obese,” implying that government would not want to take any actions that would risk upsetting a large proportion of its voting constituents – we found comment to be somewhat pejorative to people with obesity, as it suggested that they actually want to be obese. In any case, the fact that Dr. Cosgrove, who is such a strong proponent of wellness and fighting obesity, sees such little hope for government efforts is quite discouraging.

 

Appendix

JP Morgan Healthcare Conference: Public Companies

Dexcom

Terry Gregg (CEO, Dexcom, San Diego, CA)

Dexcom CEO Mr. Terry Gregg provided an impassioned update on the company’s business and near-term pipeline. Most notable were the impressive estimated 4Q13 sales figures – $51 million in product revenue, up an impressive 61% year-over-year and up 20% sequentially. Most importantly, this performance was on two very challenging comparisons, as sales were up 52% year-over-year in 4Q12 and 101% year-over-year in 3Q13. The 20% sequential gain from 3Q13 was particularly staggering, given that quarter’s record high sales. Management also disclosed that 60,000 G4 Platinum receivers were sold between October 2012 and December 31, 2013 – that translates to ~54,000 unique patients on the G4. Compelling prescriber data suggested that patients are really driving demand for this product, reinforcing our view that CGM is becoming more mainstream (see details below). On the pipeline side, FDA approval of a pediatric indication for the G4 Platinum is extremely close – the agency has completed its review and deemed the filing approvable. This has taken longer than expected (the hope was by end of 2013), though it will be a terrific catalyst for Dexcom – management explained that only 8-10% of the company’s installed base is patients <18 years old (vs. ~30% under 18 years old in the type 1 population) and the company cannot currently call on 800-1000 pediatric endocrinologists. A timeline slide succinctly summarized the slew of near-term launches in the pipeline: pediatric indication (2014), Animas Vibe (2014), Dexcom Share (2014), Tandem t:slim integration (2014/2015), and smartphone integration (2015). While there was a multi-year absence of new products from Dexcom between Seven Plus and G4 Platinum, it’s excellent to see the company diligently moving ahead on so many fronts.

  • Full year 2013 product revenue was $157 million, up 69% from 2012. This performance completely smashed the $130-140 million guidance management stuck to in the 3Q13 call. (As a reminder, management did not raise full-year revenue guidance despite very strong 3Q13 performance – concerns were the launch of Medtronic’s MiniMed 530G/Enlite and a challenging comparison to strong 4Q12 performance. Based on the striking performance in 4Q13, neither seemed to have any impact on the business’ growth trajectory.)
  • Management gave 2014 product revenue guidance in the range of $205-225 million (31-43% growth from 2013). This is slightly wider on the top and bottom end of the 35-40% growth range than management has used in the past ($211-217 million). The guidance builds in Dexcom Share and the pediatric indication, but no partnership revenue from Animas and Tandem. CEO Mr. Terry Gregg cautioned that with $51 million in sales in 4Q13 and seasonality, the first quarter “will not be as robust.”
  • In a rarity, management disclosed that Dexcom sold ~60,000 G4 Platinum receivers between October 2012 and December 31, 2013. Since 10% of these receivers were sold to patients who previously purchased a G4 Platinum receiver, this translates to ~54,000 unique patients on the G4 Platinum to date. We assume that some patients are still on the Seven Plus, so an estimate for Dexcom’s installed base is ~60,000 patients. During this time, Dexcom sold 1.5 million G4 Platinum sensors, translating to approximately two sensors per patient per month. At face value, this would suggest patients are only wearing the seven-day sensor 50% of the time; however, we would guess this has more to do with use of individual sensors for longer than seven days, rather than intermittent use.
  • Dexcom has received formal communication from the FDA that the review of the G4 Platinum pediatric indication is complete and the filing has been classified as approvable. The company is simply waiting for the letter from the FDA to arrive. Management used words such as “shortly” and “some time soon.” 
    • Management reiterated the business upside to a pediatric indication. Currently 8-10% of Dexcom’s installed base is less than 18 years old, though ~30% of type 1s are under 18 years old. There are currently 800-1,000 pediatric endocrinologists that Dexcom cannot call on right now. Said CEO Mr. Terry Gregg, “We’ve got some upside.”
  • At the end of 2013, there were 7,000 unique prescribers of Dexcom starter kits – notably, the sales force only calls on 2,000 prescribers. The takeaway from Mr. Gregg was that “patients are driving demand” of the G4 Platinum. Management has mentioned this trend in the past, though it was terrific to hear some metrics behind it.
  • One slide highlighted Drs. Ed Damiano and Steven Russell’s head-to-head study of the Dexcom G4 Platinum and Medtronic Enlite: a MARD of 10.8% (Dexcom) vs. 17.9% (Medtronic). CEO Mr. Terry Gregg also showed data on the companies’ net promoter scores (NPS): 69% (Dexcom) vs. -4% (Medtronic).
  • Mr. Gregg briefly discussed the ongoing FDA review of Dexcom Share – a response from the agency is expected in the first half of 2014. As a reminder, the remote monitoring product was submitted in July 2013, and Dexcom responded to FDA questions in late 2013. On the business side, Dexcom plans to sell the Share cradle at a “nominal cost,” as it is “not going to be reimbursed” (consistent with previous remarks). Management reiterated that Dexcom’s goal with Share is to sell more sensors.
    • The presentation also included a video on Dexcom Share, marketing that was first shown at Dexcom’s CES exhibit. Visuals emphasized that access to patients’ real time CGM data brings parents, spouses, and caregivers peace of mind. We appreciated the clever taglines: “We’ve all been taught that sharing is the right thing to do” and “to share is to care.”
  • A pipeline slide slated the Gen 5 mobile platform for “2015” – talks are still ongoing with the FDA (“literally monthly”) regarding the commercial pathway. Gen 5 will include the same sensor as the G4 Platinum, but with a new algorithm and a new transmitter that sends CGM data direct to a smartphone. Mr. Gregg emphasized that Dexcom Share is an interim step that the FDA is comfortable with (i.e., a secondary display), but Gen 5 is much bigger leap.
  • “Yes, we have built factory calibrated sensors that last for 11 days. We can do that on a bench top. But the cost was probably $10,000.” The challenge, said Mr. Gregg, is manufacturing factory-calibrated sensors cost-effectively. That said, he repeatedly emphasized Dexcom’s goal as a company – to eliminate fingersticks. In the 2Q13 call, Dexcom announced reception of a $4 million grant from the Helmsley Charitable Trust to accelerate the development of its Gen 6 sensor. Milestone payments will occur over the “next several years.” We hope to hear more as this exciting program progresses, though the company certainly has its hands full with Share and Gen 5.

Pipeline Product

Timeline

G4 Platinum Pediatric Indication

FDA approval expected very soon. Launch in 2014.

Animas Vibe insulin pump with G4 Platinum CGM integration

PMA filed with the FDA in 1Q13; Animas is currently completing additional testing, with responses to be submitted to the FDA by the end of January 2014.

Dexcom Share

[Remote monitoring via docking cradle, Bluetooth, and smartphone app]

PMA supplement filed at end of July 2013; FDA response expected in 1H14. Launch in 2014.

Tandem t:slim insulin pump with G4 Platinum CGM integration

The 3Q13 call suggested an early 2014 filing. Launch in 2014/2015.

G4 Platinum Professional Use Indication

PMA supplement filed in 3Q13.

Updated G4 Platinum algorithm

[MARD improvement by two percentage points; remote software update]

On hold until pediatric indication is approved by the FDA. The 1Q13 call targeted FDA filing in late 2013/early 2014, with a 2014 launch. 

Dexcom/Edwards GlucoClear 2

[Critical care CGM]

CE Marked; Edwards working to understand how the system fits into hospitals’ clinical workflow

Gen 5 system

[Mobile platform, new transmitter, new algorithm, improved applicator; G4 Platinum sensor]

 

2015 Launch

Gen 6 sensor

[New sensor]

 

In 2Q13, received a $4 million development grant from Helmsley Charitable Trust based on milestones over “next several years”; ~2017 launch

 

Lilly

John Lechleiter (President and CEO, Lilly, Indianapolis, IN)

Mr. John Lechleiter reviewed Lilly’s major diabetes assets, citing Lilly’s diabetes business as one of two therapeutic areas that are key areas of growth for Lilly in the near future (the other area being cancer). Lilly’s DPP-4 inhibitor Tradjenta (in partnership with BI) and its insulins are the current anchors of the diabetes business – Mr. Lechleiter disclosed that Tradjenta is now capturing one-third of new patients in the DPP-4 inhibitor monotherapy market amongst US endocrinologists. In addition, he forecasts that the new insulin manufacturing platforms Lilly is currently building will double its insulin manufacturing capacity. As such, Tradjenta and Lilly’s insulins seem poised for continued strong performances. As he has in the past, Mr. Lechleiter emphasized that Lilly may soon have the most comprehensive diabetes portfolio in the industry with the potential launch of an SGLT-2 inhibitor, once-weekly GLP-1 agonist, new basal insulin glargine formulation, and novel basal insulin analog in the next two-to-three years (please see our coverage of Lilly’s 2014 Financial Guidance call for full details on the status of each of Lilly’s pipeline candidates). Lilly management made several strategic comments during the Q&A session following the presentation, including thoughts on product differentiation, utilization of SGLT-2 inhibitors in the US (apparently, US endocrinologists are now starting more patients on SGLT-2 inhibitors [J&J’s Invokana was the only SGLT-2 inhibitor approved in the US until last week when AZ’s Farxiga was approved], than on the entire class of DPP-4 inhibitors), and dulaglutide positioning. We were not clear whether management’s comments referred to SGLT-2 inhibitors’ NBRx share or NRx share, but in either case, it reflects quite a strong performance for SGLT-2 inhibitors and illustrates how the class may be putting some competitive pressure on DPP-4s. With regard to dulaglutide positioning, management aims to show non-inferiority to Novo Nordisk’s Victoza in the AWARD-6 trial (which completed in November) as a key piece of data to secure non-inferior pricing to Victoza. It believes that with non-inferior efficacy, the once-weekly dosing will give it an edge over Victoza (which is a once-daily injection), and the one-step injection device will give it an edge over AZ’s Bydureon (a once-weekly injection that requires an extra manual reconstitution step that dulaglutide will not require).

  • Lilly could launch as many as four new diabetes products in the next two to three years given the submission of three new diabetes medicines in 2013 and its phase 3 novel basal insulin analog (peglispro). As a reminder, in 2013 Lilly submitted NDAs for Lilly/BI’s SGLT-2 inhibitor empagliflozin, Lilly’s GLP-1 agonist dulaglutide, and Lilly/BI’s new basal insulin glargine formulation (it also submitted an sNDA for the concentrated U200 insulin lispro).
  • Mr. Lechleiter also highlighted Lilly’s approach to advancing early stage (preclinical and early clinical) R&D. Working together with VCs, Lilly funds several “project-focused companies” (PFCs), each focused on one compound. Lilly sees itself as a “fully integrated pharmaceutical network” (FIPNET) rather than simply a “fully-integrated pharmaceutical company” due to the wide range of organizations it works with to promote early-stage research.
    • As an example, in 2009 Lilly launched the Open Innovation Drug Discovery Initiative (OIDD), in which Lilly agrees to carry out biologic evaluation for compounds submitted by outside researchers free of charge in return to the first rights to negotiate an agreement. If Lilly does not seek to make an agreement, it gives the owners full rights to use the evaluation as they see fit with no strings attached. From this initiative, Lilly has evaluated 363 opportunities in 34 countries, resulting in 12 collaborations and the recent signing of the first milestone-based agreement.
    • Lilly also recently entered into a public-private partnership with the city of New York as one of three investors that provided a total of $50 million (to be matched by at least another $50 million from VC partners) aimed at financing and developing the next generation of life science companies from New York’s research institutions (including Rockefeller University, Sloan Kettering, Mt. Sinai, and Columbia). The goal of this initiative is to launch 15-20 new ventures by 2020.

Questions and Answers

Q: On the P&L side, R&D is having a fairly significant step down this year. Is that a decent absolute spend level to keep in mind over next few years as you work through some very heavy R&D programs. How do you see evolution of P&L from here?

A: Because of increasing payer pressure for differentiation, we are doing more in phase 2 to ensure that we have as high a success rate as possible in phase 3, which will be a key direction for the future.

Q: The DPP-4 market seems to have gone through a real slow-down in 2013. How are you thinking about that? You’ve always done a great job from a share perspective, but what do you think of the market dynamics as a whole? Will there be a return to growth? Where are we heading?

A: It’s difficult to say because the growth driver was basically coming at the expense of TZDs, and that opportunity in the US has gone away. The DPP-4 market continues to be strong outside of the US, by the way. What we would need to change in the US is to make sure that DPP-4s are seen as a substitute for sulfonylureas (SFUs) because there is still very significant utilization of SFUs very early on in diabetes treatment. We have huge opportunities to continue to grow given what we think we can offer relative to other DPP-4s. I think it’s an interesting area to see how things develop. At the same time, when we look at the DPP-4 market, part of that growth may be taken by the SGLT-2 inhibitors. We don’t feel bad about that because we also have an SGLT-2 so we can take that type of opportunity. There are a few things we like about the SGLT-2 uptake, one of those signals is that endocrinologists in the US today start more patients on SGLT-2s than on the entire class of DPP-4 inhibitors combined. People ask, well is that really going to translate into primary care? Well it’s more possible that it will than with an injectable given that it’s an oral medicine. This gives us the chance to participate in what we think will be the two largest oral segments in diabetes by the end of the decade.

Q: Could you provide a bit more commentary on dulaglutide and how you see it competing with the existing payers in the GLP-1 market?

A: We are very excited – we had very good outcomes from the five AWARD trials. Dulaglutide has been studied against exenatide twice daily, against Lantus, against sitagliptin, and against metformin. With the 1.5 mg dose, we have been able to show superiority when it comes to A1c reduction. We think we have a very competitive efficacy profile. We’re also conducting the head-to-head trial against Victoza 1.8 mg. Our expectation is to achieve non-inferiority. We feel that we’re going to be able to disclose the topline data sometime at the end of the first quarter this year. I would say we have a very complete commercial package that we would be able to offer with this product. Clearly dulaglutide, beyond the clinical data, is a once-weekly product and ready to use. We believe that the user experience is going to be excellent. We had a chance to share the device at our annual investment community meeting. We feel that dulaglutide truly brings the best attributes of GLP-1s out there and puts them in one product, and we think this will be a very attractive offering in the GLP-1 space. From our perspective, as we think about the levers to make dulaglutide successful, the number one matter is to get the right price and reimbursement. The AWARD-6 non-inferiority trial is critical to that. Then we need to see dulaglutide be a catalyst for the growth of the class. If our intent were just to think about Victoza, I believe that’d be narrow and too limiting. We’re thinking about the entire injectable space and making dulaglutide a foundational therapy in type 2 diabetes.

Q: You highlight that you have a very broad diabetes portfolio. How do you leverage that breadth? Are there any challenges you face, in terms of challengers who have one major product that is their focus?

A: I think it’s important to clarify that if we look at each of our brands, each one is going to be competitive on its own merits. You can look at Tradjenta, empagliflozin, dulaglutide — they are all attractive products. The portfolio breadth gives us an additional layer of competitiveness. We can provide combinations, such as the combination of linagliptin and empagliflozin, a DPP-4 inhibitor and SGLT-2 inhibitor. We expect to file that combination this year, and think the combination could be significant. Similarly with insulin, there is potential for combinations and mixtures. We also believe that having a complete portfolio changes how we approach the space commercially. It’s not that we don’t seek to build strong brands. We do, but we build them in the context of a portfolio. We can commercialize a portfolio in a more patient-centric way, which we believe will build trust. We have specific strategies for doing this at the provider level. Also with payers, having a diverse portfolio will give us better negotiating and competitive positions in diabetes. I like where we are, and we have a path forward with the portfolio. The first step, though, is to launch all the products successfully.

Sanofi

Chris Viehbacher (CEO, Sanofi, Paris, France)

Sanofi’s presentation, and especially its breakout session, was filled with talk about diabetes. The company’s insulin offerings took center stage — CEO Chris Viehbacher forecast that Lantus (insulin glargine) biosimilars will have a difficult time competing on price, given the sizeable costs involved in their development and manufacture. The presentation highlighted data from Sanofi’s phase 3 program for its new U300 insulin glargine formulation, which has a flatter PK profile and a longer duration of action than Lantus. Management seems to believe that the hypoglycemia benefit seen in some (but not all) of the phase 3 EDITION studies for the U300 glargine does in fact exist, and disclosed that it should be able to include a note about insulin glargine’s proven cardiovascular safety from the ORIGIN trial on the new label. Sanofi’s GLP-1 agonist Lyxumia (lixisenatide) also featured prominently in Sanofi’s presentation. Management disclosed that the product is performing well in Japan (no numbers disclosed), and reiterated its plan for a 2015 resubmission with the FDA after the completion of the ELIXA CVOT. Sanofi is also moving fast on the development of LixiLan, its fixed-ratio combination of Lyxumia and Lantus; it plans to begin phase 3 testing in 1Q14. During the breakout session, Sanofi Global R&D President Dr. Elias Zerhouni expressed his belief that GLP-1 agonist/basal insulin combinations should be the first injectable therapy for most type 2 diabetes patients. Sanofi’s PCSK9 inhibitor for hypercholesterolemia is also on track for submission in 2015.

  • During the breakout session, Mr. Viehbacher expressed doubt that biosimilar insulin glargine candidates such as Lilly’s would see much success. He stated that, in his view, “the investment community is more nervous than companies are.” He pointed out that the development of biosimilars still requires substantial investment for clinical testing and manufacturing, limiting the amount that competitors could discount their products. He likened the entry of biosimilar basal insulins to the entry of a fourth-to-market drug into a class. There is little precedent to look towards regarding the entry of biosimilar insulins, but in the hypercompetitive reimbursement environment where drugs within a category are increasingly viewed as interchangeable, we would think that even small discounts may be enough to drive share away from Lantus.
  • The presentation showcased phase 3 data on Sanofi’s U300 insulin glargine formulation that highlighted its flatter PK profile and longer duration of action. This profile, Mr. Viehbacher stated, will allow patients and providers to more effectively and safely pursue the optimal insulin dose. Sanofi still intends to submit the U300 insulin glargine in the US and EU in 1H14, consistent with previous guidance. Mr. Viehbacher disclosed that the cardiovascular safety statement on Lantus’ label (derived from the results of the ORIGIN cardiovascular outcomes trial) should be transferrable to the U300 formulation.
    • During the breakout session, Sanofi R&D President Dr. Elias Zerhouni hypothesized why the phase 3 EDITION III trial did not show the hypoglycemia benefit that EDITION I and II did. He pointed out that the size of the benefit should be proportional to the insulin dosage used — EDITION I and II enrolled patients who were already on insulin, and thus had relatively high daily insulin needs, while EDITION III enrolled insulin naïve patients who likely needed a lower daily dose. As a result, he suggested, the effect may have been present in EDITION III but too modest to measure. We will be interested to see if pooled phase 3 data confirm the hypoglycemia benefit, as it would be a great differentiating factor for the product against the approaching field of biosimilar insulin glargines.
  • Mr. Viehbacher chimed in on the implications of Express Scripts’ diabetes drug formulary decisions, characterizing it as similar to when a company has a drug knocked into tier three by payers. He seemed confident that major shifts in prescriber choice will be driven by the strength of products rather than pricing. Regarding Express Scripts’ specific decision to replace Novo Nordisk’s Victoza (liraglutide) on its formulary with AZ’s Byetta and Bydureon (exenatide), Mr. Viehbacher sees the change as a loss for patients. “It’s pretty clear that Victoza is a better drug than Bydureon,” he stated during the breakout session, “and making someone go from once-a-day to twice-a-day is a potential compliance issue” (referring to Byetta, which is a twice-daily injection). He continued to say that compliance issues could produce major costs elsewhere down the line – a very good point we hope payers would consider.
  • Mr. Viehbacher mentioned that Sanofi/Zealand’s GLP-1 agonist Lyxumia (lixisenatide) is performing well in Japan, and confirmed a likely 2015 resubmission in the US. As background, Lyxumia is on the market in Germany, the UK, Spain, Japan, and Mexico. In September 2013, Sanofi made the bold move to withdraw its submission for Lyxumia with the FDA to prevent interim data disclosure from the ELIXA cardiovascular outcomes trials. Today, Mr. Viehbacher reiterated that an FDA resubmission is expected in 2015 after the completion of ELIXA.
  • LixiLan (lixisenatide/insulin glargine combination therapy) was highlighted during the presentation. Sanofi completed a phase 2 proof-of-concept study of the fixed-ratio device in 2013. Notably, the company now guides for the initiation of phase 3 testing in 1Q14 (previous estimates had stated 1H14), suggesting that the company is hustling to seize the opportunity of potentially being the first GLP-1 agonist/basal insulin combination on the US market.
    • Global R&D President Dr. Elias Zerhouni believes that GLP-1 agonist/basal insulin combinations will become the first injectable used in the type 2 diabetes treatment cascade. We heard similar sentiments from a host of KOLs at a Novo Nordisk-sponsored corporate symposium at this year’s IDF — see page 8 of our IDF 2013 Day #1 Report for the highlights from that panel discussion. Initiating patients on injectables with a combination therapy would be a major paradigm shift in type 2 diabetes care, but it is hard to ignore the merits of the GLP-1 agonist/basal insulin combination, including remarkable fasting and postprandial glucose-lowering and a more even side effect profile.
  • Sanofi appears very excited about its cholesterol-lowering PCSK9 inhibitor candidate alirocumab — Mr. Viehbacher forecast that PCSK9 inhibitors will become a “mega-class” due to their unprecedented efficacy, especially in statin-intolerant patients. Data from the drug’s phase 3 program is expected in mid-2014 through 3Q14; regulatory submissions will begin in early 2015 outside the US, with a US submission expected later in 2015.

Questions and Answers

Q: When Lilly launches a biosimilar Lantus in Europe, what kind of discount do you think it would provide?

Mr. Viehbacher: I think we’ll have to wait and see what Lilly does. Nobody really knows what the biosimilar market will do. They haven’t gone anywhere in Europe and don’t exist yet in the US. I personally think that the investment community is more nervous than companies are. There is no good business model in investing a massive amount in clinical development and manufacturing and then selling at low prices. I believe in the rational behavior of people in business. I liken this to a fourth entry into a category.

Q: Does the Express Scripts situation we’ve seen with the shorter acting insulins and Victoza hold any concern regarding competition for single-source formularies?

 A: The Express Scripts situation is an extension of what we saw with third tier coverage. Getting knocked into third tier was equivalent to being excluded. But then we came up with prescription coupon cards and adapted to being in tier three. I think we will wait and see. Personally, for the Victoza decision, although I would prescribe either one of them, it’s pretty clear that Victoza is a better drug than Bydureon, and making someone go from a once-a-day to a twice-a-day is a potential compliance issue. The average diabetes patient costs $12,000 a year. If you reduce compliance, you’ll see major costs elsewhere. PBMs care less about total costs, but others do. When I look at share over the past year, I haven’t seen massive shifts due to any of this because we already have people trying to win on discounting. Changes in share will still come down to what is right for the patient.

Q: Could you provide some additional perspective on what we’ve heard from key opinion leaders regarding the fact that EDITION III data for the U300 glargine was not as robust as in EDITION I and II?

Mr. Viehbacher: The market for insulin and the decision on what insulin gets prescribed is more complex than just hypoglycemia. Hypoglycemic events are vanishingly rare, and hypoglycemia is an element in the back of peoples’ minds but it is not the first, second, or third criteria for the choice of insulin. What is most important is that diabetes is a progressive disease. By the time you are on insulin, you’ve had diabetes for a number of years and have likely failed other therapies. You are also probably progressing to a pretty serious state and are becoming progressively more expensive. People are looking for how to get best level of compliance and control, to avoid the progression and avoid higher costs. That is where U300 comes in. It has a flatter profile, enabling patients to better find the right dose. We have other things going on; that’s why we turned the iPhone into glucose meter, so people understand the glucose dose response. We have to do a better job of getting people to the right dose. You cannot control healthcare costs unless you get type 2 diabetes under control. If you can improve therapies, improve compliance, and improve outcomes, that’s how you win.

Dr. Elias Zerhouni (President of Global R&D, Sanofi, Paris, France): EDITION I and II enrolled patients who were already on insulin at baseline. These patients used more insulin, and so the difference between groups was proportionally greater. In EDITION III, there were insulin naïve patients and therefore lower doses. The direction of the effect was still there, but the effect was smaller. It’s clear to me that you will want to combine insulin and GLP-1 as the first injectable. You will see a change in the paradigm of diabetes management that will position U300 as a significant player.

Q: Could you comment more on emerging markets?

Mr. Viehbacher: The fundamentals are very strong in emerging markets. The China situation led to a temporary depression in the market, but generally these countries are investing significant money into healthcare infrastructure. The economies may slow down, but doesn’t mean that the key growth of the middle class will slow down. We have to be on our toes, because as costs of care rise, governments will occasionally step in and force prices down. I think you have to be more selective than in past. Before, it was just getting feet on the ground. Now it’s no longer a reach and frequency model, but a targeting model. Over a five year timeframe I think growth will be strong, and I don’t think that anyone can afford to not be there.

Q: Can you talk a bit more about the GLP-1 agonist/Lantus combination?

Dr. Zerhouni: So we had started with a fix-flex combination, and then had a fixed-ratio product as a backup. The phase 2 results from the fixed-ratio product are very good in terms of weight and A1c lowering, so we’re launching phase 3 for that strategy, which is easier to launch. The combination really has the right physiological combination, and makes sense. We’re moving into phase 3 in the first quarter of 2014.

Bristol-Myers Squibb

Lamberto Andreotti (CEO, Bristol-Myers Squibb)

In his opening comments, Mr. Lamberto Andreotti briefly commented on BMS’ strategic rationale for selling its diabetes business to partner AstraZeneca: he said that selling the diabetes business has freed up resources “for promising growth opportunities” like the company’s atrial fibrillation drug Eliquis and hepatitis C programs (with the underlying inference here being that diabetes was a less promising growth opportunity); it has increased BMS’ financial flexibility and has made more money available for other capital allocation priorities; it has simplified the company’s organizational operating model by narrowing focus on specialty care; and finally, Mr. Andreotti remarked that AZ, as a primary care-focused company, is better equipped to optimize the diabetes portfolio for the benefit of patients (and to the benefit of BMS who will continue to receive milestone payments and royalties on assets in the portfolio). Quite bleakly, in our view, Mr. Andreotti stated at one point during his presentation, “I’m convinced that one of our competitive advantages then and now has been to face reality and to change, evolve, and reinvent ourselves while staying true to our [BioPharma] strategic foundation.” We took this to mean that “facing reality” meant that despite having invested $7.0 billion in the Amylin acquisition just a couple of years ago and an ever-growing 26-million patient base of people with diabetes, BMS found the regulatory and reimbursement pressures so constraining that it was better to cut their losses and get out now. We do agree that AZ alone will be able to steward the diabetes portfolio better. We are excited to see AZ take advantage of its sole ownership of the diabetes portfolio and the improved efficiency that eliminating the joint venture could confer.

Questions and Answers

Q: You’ve essentially ripped out a large number of cash cows and transformed into a growth company. That’s an enormous cultural change. What are your challenges going forward?

A: There are two types of cash cows we have lost. There have been the regrettable losses like Plavix, which is not something we organized but we accepted. Then there was the proactive divestiture of a number of mature brands and finally the decision in diabetes. To be honest, diabetes was not going to be a big cash generator for us in the short term, but could have been a cash generator in the long term. The decision to move out of diabetes as I said before was a strategic decision because we believe that we can become a leading company by focusing in other areas. And it also made sense from a financial point of view. AZ is going to pay us upfront and several milestones. One regulatory milestone already happened [the US approval of SGLT-2 inhibitor Farxiga]. And then we will also receive royalties. So we do strategic things and we do them only in a good sense from a financial point of view. I view us as a company that is going to evolve into a different model of operation, and we’re looking to fine tune the different model of operation.

Orexigen

Mike Narachi (President and CEO, Orexigen, La Jolla, CA)

Orexigen CEO Mike Narachi underscored throughout his presentation and subsequent breakout that Orexigen is very confident that the FDA will approve Contrave (PDUFA dates is June 10, 2014) and that the subsequent launch by Takeda will be “differentiated” from that of Vivus’ Qsymia and Arena/Eisai’s Belviq. (It appears the Mr. Narachi successfully convinced attendees to be similarly optimistic as Orexigen stock was up ~9% shortly after the session.) We were most excited to hear that Orexigen is considering a diabetes/obesity fixed-dose combination of Contrave and a DPP-4 inhibitor (we assume it will be Takeda’s Nesina [alogliptin]). Orexigen has completed the needed preclinical formulation studies, and is ready for human equivalence studies. Mr. Narachi noted that such a fixed-dose combination would likely have a “really short” clinical development pathway. Additionally, Orexigen and Takeda are discussing the potential of a diabetes indication for Contrave. At this stage, both are potential lifecycle opportunities, and there is no ongoing clinical work on either opportunity.

  • Orxigen has received no indication that the FDA will call an advisory committee meeting for Contrave. Mr Nrachi did not address the potential public disclosure of interim CVOT results if a meeting were held. As a result, we left the session with the impression that the results could be publicly announced if an advisory meeting is held, which could compromise the full trial results’ robustness. Mr. Narachi noted that in order to meet Contrave’s PDUFA date of June 10, 2014 the FDA would need to announce an Advisory Committee meeting in the next couple months. Mr. Narachi remarked, “I do not see what they would need advice on;” however, we find the FDA is often unpredictable on such things. Though the scenarios vary some from company to company, we note that the Advisory Committee meetings were held for the resubmission of both Vivus’s Qsymia (phentermine/topiramate) and Arena’s Belviq (lorcaserin), and the FDA has scheduled an advisory meeting for MannKind’s Afrezza resubmission. For context, Sanofi decided to withdraw its NDA for lixisenatide from the US because of the potential risk to ELIXA integrity should the FDA have disclosed interim results in a public forum such as an Advisory Committee meeting. Given that Orexigen is a smaller company than Sanofi and does not have any products on the market, we understand its decision to submit with the interim data and hope that the FDA is sensitive to the negative impact public disclosure of these results could have.
  • In COR-Diabetes (n=505 overweight and obese people with type 2 diabetes), people randomized to Contrave experienced an average A1c reduction of 0.6% from a baseline of 8.0%. For comparison, the placebo arm had an average A1c drop of 0.1%. Mr. Narachi highlighted that Contrave’s A1c drop is comparable to that associated with a DPP-4 inhibitor and that Contrave had the added benefit of 5.0% weight loss (compared to 1.8% on the placebo). We think it will be particularly interesting to see the A1c drop associated with a fixed-dose combination of Contrave and a DPP-4 inhibitor.
  • For some additional color, Mr. Narachi stated that Orexigen is temporarily returning to Contrave’s earlier name NB32 so as to ensure discussion is not mistaken for pre-approval promotion.

 

Biotech Showcase

Xeris Pharmaceuticals

Douglas Baum (CEO, Xeris Pharmaceuticals, Austin, TX)

Xeris CEO Mr. Douglas Baum discussed the company’s three-pronged liquid glucagon program. Most notably, Xeris completed the phase 2 study of the G-Pen (severe hypoglycemia auto-injector) – results showed bioequivalence to Lilly’s reconstituted glucagon (to be submitted as a late breaker at ADA 2014). Xeris will soon submit a request for an end of phase 2 meeting with the FDA, though the agency has indicated that the phase 3 study would only require 30 healthy volunteers. The phase 3 trial is expected to occur in the third or fourth quarter of 2014, back slightly from the previous 2Q14 estimate. Following an expected NDA submission in the first quarter of 2015, Xeris believes approval and launch of the G-Pen auto-injector could occur in the fourth quarter of 2015. Throughout his talk, Mr. Baum emphasized that all the work for the auto-injector program can be leveraged for the glucagon mini-dose and pump opportunities – indeed, these are moving along nicely. The IND for the mini-dose pen has cleared, and Xeris is initiating a phase 2 trial next month at Baylor (on par with previous estimates). On the pump side, Xeris has applied for an orphan drug application for congenital hyperinsulinism. An IND application for the pump program is expected by December 30 (slightly behind the previous mid-December timeline), and a clinical trial is expected in late 1Q14 at Oregon using the Insulet OmniPod. To date, Xeris has only needed $12 million ($6 million from investors and $5 million from grants); the company is fully funded through phase 2 studies, but is looking to raise another $10-12 million to get to the G-Pen NDA submission. Partnerships discussions with big pharma are ongoing, but management did not share any details. The company may also look to commercialize on its own, given that a small endocrinologist sales force is feasible for commercializing glucagon. Regarding the competitive landscape, Xeris is a bit further along than the closest competitor, Locemia (a phase 2 nasal formulation of glucagon) – see below for a complete summary.

  • Though no timing was provided, Xeris has an ultra-fast insulin in the pipeline. Notably, the company’s non-aqueous approach enables a monomeric insulin formulation. Mr. Baum envisioned this ultra fast insulin would be available in a dual-hormone insulin-glucagon pump.
  • In addition, Xeris technology would enable a Symlin/insulin co-formulation – this has been a dream of many in artificial pancreas development. The non-aqueous approach allows for co-formulations of drugs at different pH levels. Similar to the insulin program, no timeline was provided.
  • Xeris’ presentation included a slide on the glucagon competitive landscape, emphasizing Xeris’ non-aqueous presentation and two-year stability. We had not previously heard Locemia discussed publicly – the nasal formulation approach is certainly an interesting take on glucagon delivery, and we look forward to seeing how this is positioned (i.e., for severe or moderate hypoglycemia?). The below table makes some slight modifications to Xeris’ slide with the most updated timelines and details we are aware of. The slide did not include Enject or PhySci (Marcadia)/Roche.

Company

Details

Stage

Xeris

Positive topline phase 2 data. Projected two-year stability at room temperature.

Phase 2 complete

Locemia (AMG Medical)

Nasal formulation. Phase 3 study (n=75) evaluating immunogenicity expected to complete in January 2014.

Phase 3 (ClinicalTrials.gov NCT01959334)

Biodel

Auto-reconstitution pen (EZMix)

Liquid glucagon multipacks (Uniject).

Pivotal study in 2H14, NDA submission in 2015

Following EZMix device. See Biodel F4Q13

Latitude

Aqueous glucagon formulation for use in pumps. Six-month stability at room temperature.

Clinical testing to begin in 2014. JDRF partnership announced at ADA 2013.

Arecor

Aqueous formulation requiring refrigeration.

???

Zealand

Glucagon analog.

Preclinical data presented at ADA 2013

Enject

Automated reconstitution device (lyophilized glucagon)

NDA filing by end of 2015.

PhySci (Marcadia)/Roche

Glucagon analogs

To our knowledge, this program has been discontinued.

 

-- by Adam Brown, Hannah Deming, Jessica Dong, Hannah Martin, Manu Venkat, and Kelly Close