Memorandum

EMA grants final marketing authorization to Merck/Pfizer’s SGLT-2 Steglatro (ertugliflozin) franchise – March 28, 2018

Executive Highlights

  • Merck/Pfizer just received EMA approval for SGLT-2 inhibitor Steglatro (ertugliflozin) as well as fixed-dose combos Steglujan and Segluromet. This is the latest in a string of exciting news for the Steglatro franchise, and is also exciting for patients, who now have four choices for SGLT-2 therapy (also Lilly/BI’s Jardiance, AZ’s Farxiga, and J&J’s Invokana). All three ertugliflozin products were FDA-approved in December 2017, with a US launch in 1Q18. CHMP recommended ertugliflozin for EMA approval this past January, and this final marketing authorization comes on time with the expected 1H18.
  • Notably, Merck will be in charge of all commercialization activities in Europe. Steglatro and the fixed-dose combos are scheduled to launch in the first EU countries by end of 2018.
  • The official EU product labels aren’t yet public, but as soon as they are, we’ll take a look at the language around amputations. So long as the EMA’s class-wide amputation warning is in effect (first implemented in February 2017), we suspect this will apply to Steglatro, Steglujan, and Segluromet, but we can only speculate for now. To-date, FDA has only added a boxed warning for lower limb amputations to the Invokana (canagliflozin) label. The US label for Steglatro notes an imbalance in amputations across the VERTIS clinical program (11 on ertugliflozin vs. 1 on placebo), but emphasizes that this was not a statistically significant signal, and that no causation has been shown between ertugliflozin and amputations.
  • We’ll be curious to see how Steglatro, Steglujan, and Segluromet are priced in different European markets. We presume (and hope) that Merck will use the same pricing strategy implemented in the US, where Steglatro and Steglujan are both significantly cheaper than their competitors. We elaborate on this in much more detail below. We also include commentary on Steglujan’s prospects to revitalize the SGLT-2/DPP-4 class (which includes Lilly/BI’s Glyxambi and AZ’s Qtern) – sales have been sluggish so far, but our sense is that prescribers in Europe may be less reluctant to try fixed-dose combination products, and we wonder if Steglujan can gain significant traction in the EU.

The EMA gave final approval today for Merck/Pfizer’s SGLT-2 inhibitor Steglatro (ertugliflozin), fixed-dose combination Steglujan (ertugliflozin/sitagliptin), and fixed-dose Segluromet (ertugliflozin/metformin). This exciting news follows a positive CHMP opinion for all three products in January. Full marketing authorization for Steglatro, Steglujan, and Segluromet in Europe comes on schedule with the expected 1H18.

Launch in select European countries will begin this year, though Merck hasn’t shared any specific details on timeline and hasn’t disclosed which countries will be first. Questions also remain on pricing and reimbursement for these new drugs, which we discuss further below.

This ertugliflozin family of medicines will be promoted exclusively by Merck’s sales force (and not Pfizer’s) in the EU. In general, we’ve noticed more emphasis on Steglatro from Merck compared to Pfizer; this is strictly our observation, but we think it’s worth mentioning. The Steglatro franchise was a significant focus of Merck’s 4Q17 earnings call, following FDA approval in December 2017, while Pfizer management only mentioned Steglatro in passing during their 4Q17 call. Merck debuted Steglatro in the ENDO exhibit hall earlier this month, while Pfizer’s booth at the conference had no material on ertugliflozin.

We aren’t reading too much into this since we aren’t privy to all the nuance in Merck/Pfizer’s clinical and commercial partnership. Per their original agreement announced in 1Q13, the two companies are meant to share manufacturing and commercialization responsibilities, with Merck collecting 60% of total global revenue. This may have changed in one way or another over the past five years, though there haven’t been any public updates on the topic, as far as we’re aware.

Moreover, we recognize that Merck has more experience and more current leadership in diabetes, since the company’s DPP-4 inhibitor Januvia (sitagliptin) is the most-prescribed branded diabetes drug after 10+ years on the market. We’re eager to see how the Steglatro franchise can strengthen Merck’s diabetes business going forward – all three products were launched in the US in 1Q18, though reimbursement may be weak until 2019 (due to timing of the payer contracting cycle and the late 2017 FDA approval), and we’ll likely have to wait until next year for meaningful sales in Europe as well.

Pricing and Reimbursement

  • We’re curious to see how Steglatro, Steglujan, and Segluromet will be priced in different European markets. These are questions that always comes to mind when a new drug is approved: Will the product be accessible and affordable for real-world patients? Will it be compelling to payers? How will it compete with what’s already on the market? With Steglatro now available in the US, we’re looking at a four-product SGLT-2 inhibitor class. Strategically (at least, we view this as very strategic), Merck/Pfizer have priced Steglatro in the US at a substantial discount to other standalone SGLT-2s, including Lilly/BI’s Jardiance (empagliflozin), AZ’s Farxiga (dapagliflozin), and J&J’s Invokana (canagliflozin). At our local CVS, the list price for Steglatro is $319 per month or ~$10.63/day vs. ~$17/day on average for the other SGLT-2s. List price only means so much without considering insurance coverage and patient discounts – that said, we imagine $6/day of cost-savings ($180/month) could make Steglatro a very attractive option in payers’ eyes. This is also a win for patients; how wonderful (!) would it be for more type 2s in the US and globally to have access to SGLT-2 therapy? As things stand, only 7% of second-line diabetes prescriptions in the US are written for an SGLT-2 inhibitor, which we attribute in part to affordability/reimbursement issues (disappointingly, the majority of second-line scripts are still written for a sulfonylurea). We applaud the decision to price ertugliflozin at a discount, and we presume Merck will opt for a similar cost structure in Europe, though the company hasn’t confirmed this.
  • Notably, Merck/Pfizer have also priced Steglujan at a discount to other SGLT-2/DPP-4 fixed-dose combos in the US. A 30-day supply of Steglujan costs $620 at our local CVS, which corresponds to ~$20.67/day. Merck/Pfizer previously announced a list price of $17.45/day, but nevertheless, Steglujan is cheaper than its competitors: Lilly/BI’s Glyxambi (empagliflozin/linagliptin) costs ~$22/day while AZ’s Qtern (dapagliflozin/saxagliptin) costs $24/day. This translates to $1-$3 of daily cost-savings with Steglujan vs. Glyxambi or Qtern. On a monthly basis, Steglujan could save the patient/payer $30-$90 – not at all trivial. Again, we’ll have to wait-and-see if this pricing carries over to Europe.

Can Steglujan Take Off in Europe?

  • Sales of SGLT-2/DPP-4 combinations have been sluggish to-date, but in our view, Merck is well-positioned to make Steglujan a commercial success. Indeed, both Merck and Pfizer have expressed distinct enthusiasm for the fixed-dose combination of ertugliflozin and sitagliptin, given that sitagliptin (Merck’s DPP-4 inhibitor Januvia) is so familiar among diabetes care providers. Our sense is that HCPs are reluctant to prescribe fixed-dose (or fixed-ratio) combo products because they are still relatively new on the market, but the well-known sitagliptin component of Steglujan may help sidestep this issue. We’ve also heard that combination therapies seem more daunting to the prescriber (even though there’s no titration required with oral SGLT-2/DPP-4s!) and that they ignite concerns over parsing out side-effects (even though combo products actually offer a milder side-effect profile vs. either monotherapy) – but these have been cited as challenges more so in the US than in Europe, so we’re eager to see if Steglujan takes off first within EU clinical practices. Merck has clearly gained meaningful expertise in diabetes by marketing Januvia for more than a decade, and we’re hopeful that the company can replicate this success for Steglujan, as we see important benefits to fixed-dose combination treatment (lower pill burden, more patient convenience, greater adherence, improved efficacy as well as tolerability, etc.).

Uncertainty around Amputation Labeling

  • The EMA labels for these three ertugliflozin products haven’t been posted yet (the approval news is really hot-off-the-press!), but we’ll be interested in the language around amputations. In February 2017, EMA extended a warning for lower limb amputations to all SGLT-2 inhibitors. This was a relatively conservative response, since only Invokana (canagliflozin) was associated with increased amputation risk in clinical trials, and since FDA only added a black box warning to Invokana medicines, leaving the Jardiance (empagliflozin) and Farxiga (dapagliflozin) labels unchanged. The US label for ertugliflozin acknowledges a numerical but statistically insignificant imbalance in lower-extremity amputations in the VERTIS program: 11 events for participants on ertugliflozin vs. one event for a participant on placebo. The US label language is explicit in stating that there was no causal link established between ertugliflozin and amputations. So long as the EMA’s class-wide amputation warning is in effect, we suspect this will apply to Steglatro, Steglujan, and Segluromet as well, but we’ll report back once the official EU product labels are made available online.

 

-- by Payal Marathe and Kelly Close