- Tuesday was easily the busiest at JPM for diabetes technology, as we heard from Dexcom, Insulet, BD, Roche, Onduo, and WellDoc. Dexcom reported record 4Q17 sales of $218 million (+27% YOY), driven by very strong 24% US growth. CEO Mr. Kevin Sayer expressed confidence that a no-cal G6 US launch could happen in 2H18 (as soon as “mid-year”), followed by the gen-one Verily in late 2018/early 2019. Dexcom will also push to validate CGM in type 2 diabetes this year, and we appreciated new details on the UHC pilot of CGM+coaching in 10,000 type 2s. Dexcom expects FY18 sales of $830-$850 million, rising 16%-19% YOY. From Insulet, we gathered that Medicare Part D formulary talks will progress over the coming months, enabling coverage to formally begin on 1/1/2019. The long-awaited Dash PDM is under FDA 510(k) review (limited launch expected in 2H18), and the Horizon AID was positioned as “probably 2020 timeframe.” BD management was extremely positive on the type 2 patch pump (now named “Swatch”), which is beginning a clinical study with insulin and is expected to launch in October 2018-September 2019 alongside “Briight,” a cool-looking diabetes app with lifestyle guidance and diabetes education. Elsewhere, Roche shared strong confidence in its digital commitment to Diabetes, and mySugr shared with us that it expects to sign the first US payers in the first half of 2018. In Sanofi’s update, we heard that Onduo expects its first revenue this year, while WellDoc will integrate with Voluntis and launch BlueStar C with Samsung in 1Q18. Whew!
- On the therapy side, Sanofi and Lilly both provided extensive commentary on diabetes. Sanofi CEO Mr. Olivier Brandicourt highlighted key pipeline assets including once-weekly GLP-1 efpeglenatide (which could differentiate itself with improved GI tolerability) and GLP-1/glucagon dual agonist SAR425899 (a large phase 3 program in obesity will start this year). GLP-1 was also the primary focus for Lilly CEO Mr. Dave Ricks. He shared that Trulicity’s success has come almost entirely from growing the market rather than stealing share (the company thus has no fears about competition from Ozempic, because of the headroom for whole class growth), and he spoke to continued innovation with high-dose dulaglutide and a phase 2 GLP-1/GIP dual agonist. We also heard a fascinating update on Lilly’s development strategy in obesity at the Biotech Showcase – Senior Director Dr. Brian Bloomquist explained that the company isn’t avoiding obesity, but rather, plans to launch products in diabetes first given the more established regulatory pathway, with an aim to add an obesity indication later. Read also updates from Lexicon (sotagliflozin marketing will focus on endos rather than PCPs), ViaCyte and its new third-gen cell therapy for type 1 diabetes, Amgen, Gilead, and GSK.
Day #2 of JPM 2018 is a wrap, and we detail 15 highlights in this report. Updates abounded from tech companies, and we also heard from key players on the pharma side. We ended the day at a fireside chat with 23andMe CEO Ms. Anne Wojcicki, who discussed a new obesity-focused project.
- Diabetes Technology Highlights
- 1. Dexcom reports record Q4 sales of $218M, driven by 24% US growth; G6 no-cal US launch in “2H18”; Verily in late 2018/early 2019; 2018E sales of $830-$850M (+16%-19%); push to validate CGM in T2D in 2018
- 2. Insulet begins Medicare Part D formulary talks for Jan 1, 2019 coverage start; Dash PDM submitted to FDA, limited launch in 2H18; Horizon AID “probably 2020 timeframe”
- 3. BD T2 Patch Pump (“Swatch”) & Smart Pen Needles to Launch October 2018-September 2019 with “Briight” app; Clinical Study of MiniMed Pro-Set Still Finishing, but in Active Dialogue with Medtronic
- 4. Roche “Definitely Committed” to Diabetes, BGM, CGM, Closed Loop, and mySugr-Based Ecosystem; GE partnership for clinical decision support – diabetes application?
- 5. Sanofi: First Onduo Revenue Expected in “2018 and beyond”; “Very important” for Diabetes franchise in the US
- 6. WellDoc & Voluntis to Integrate; 1Q18 Samsung BlueStar C launch; WellDoc Enters in India in 2017, Funded by World Bank; Expanding into T1, Hypertension, COPD, CHF in 2018
- Diabetes Therapy Highlights
- 1. Sanofi Highlights Several Key Assets in Diabetes: Sotagliflozin Filing for Type 1 in 1H18, Once-Weekly GLP-1 Efpeglenatide w/ Milder GI Profile, Filing for Praluent’s CV Indication in 2H18, Onduo as “Very Important Support” for US Diabetes Business
- 2. Lexicon CEO Mr. Lonnel Coats Shares New Placebo-Adjusted DKA Data on Sotagliflozin in Type 1; FDA Submission Slated for 1H18; Marketing Will Target Endos Rather Than PCPs
- 3. Lilly CEO Mr. Dave Ricks Highlights Trulicity + Next Steps for Innovation in GLP-1 (High-Dose, GLP-1/GIP, Oral); Continued Confidence in Jardiance Despite Steglatro Entry and in Humalog Despite Biosimilar Competition
- 4. Lilly’s Dr. Brian Bloomquist Outlines Company’s Approach to Obesity – Launching in Diabetes First, Given More Established Regulatory Pathway
- 5. ViaCyte Unveils Third-Gen Cell Therapy for Type 1 Diabetes: Immune-Evasive PEC-QT; Exclusive Interview with CEO Dr. Paul Laikind
- 6. Amgen Flaunts New CV Label Update for Repatha, Continuing Focus on Payer Negotiations to Improve Accessibility
- 7. Gilead Shines a Light on NASH Pipeline: Three Candidates Spanning Three Different Drug Classes
- 8. GSK CEO Ms. Emma Walmsley Shares Her Take on Diversity in the Pharmaceutical Industry
- Big Picture Highlights
Diabetes Technology Highlights
In a persuasive and poised presentation, Dexcom CEO Kevin Sayer shared serious optimism on the business leaving 2017, big excitement for a no-cal G6 expected to launch in 2H18, and confidence in the face of competitive and potential pricing headwinds. Download the slides here. Key highlights are below in more detail, including blowout record-high 4Q17 sales (~$218 million, +27% YOY), updated G6 no-calibration global launch plans (2H18), 2018 guidance ($830-$850 million in sales, growing 16%-19% YOY), updated Verily timing (first gen launch in late 2018 or early 2019), more than we’ve ever heard on type 2 diabetes programs (a big focus on reducing/optimizing medications, per the exciting UHC pilot in ~10,000 type 2s), comments on pricing (Dexcom is prepared for pressure), and other major strategic objectives in 2018 (including interoperability with insulin delivery devices, improving cash-based income, launching in Japan and Korea, and continuing the Medicare rollout). The US CGM market has never been more dynamic (see our Reflections piece), but Dexcom is set up to have an especially big pipeline year, while it continues to progress the business’ profitability, payer relationships, and expansion into type 2.
4Q17 and 2017 Sales
- Dexcom’s preliminary 4Q17 sales hit a record ~$218 million, up 27% year-over-year (YOY) on a tough comparison to 31% growth in 4Q16. This was the second straight record sales quarter, smashing the previous $185 million record in 3Q17. It was also Dexcom’s first time crossing $200 million in a quarter – a nice milestone.
- US sales grew a strong ~24% YOY and an impressive 23% sequentially, driving ~77% of 4Q17 growth. The US commercial patient base grew more in 4Q17 than at any point in Dexcom’s history – a big achievement considering the competitive environment. Management emphasized this point in Q&A multiple times, despite all the “theoretical headwinds” and “noise” around competition (i.e., Abbott’s FreeStyle Libre US launch in Q4). Indeed, Mr. Sayer mentioned that some of Abbott’s radio ads for Libre actually resulted in some physicians prescribing Dexcom CGM – “Overall awareness [of CGM] didn’t hurt. It’s a helpful catalyst.” Though the Medicare contribution was not broken out, Mr. Sayer did say the hoped for ~$10 million in Q4 Medicare sales was not achieved; it was really the US commercial business that drove strength. OUS sales continued their momentum, rising >50% YOY for the third straight quarter. Germany continues to be a strong driver.
- Full-year revenue was ~$715 million, a 25% YOY increase over 2016 – this just crossed the bottom of the guidance range ($710-$740 million), though came in ahead of the Street’s estimates. Dexcom also met its patient base goal to exceed 270,000 patients worldwide by the end of 2017, up ~35% from ~200,000 at the start of 2017 (outpacing revenue).
- Dexcom expects 2018 sales in the range of $830-$850 million, a 16%-19% YOY rise over 2017. The business’ key indicators – sensor volumes, OUS revenues, and patient base growth – are expected to exceed 20% growth for the year, again outpacing revenue growth. This near-term outlook contemplates a number of 2018 variables, including the no-calibration G6 launch (see below) and continued Medicare and OUS expansion. Headwinds include the Animas departure and the impact of ongoing competition. Mr. Sayer emphasized the bigger access Dexcom has going into 2018, especially Medicare and Germany – in total, this is an incremental ~1 million patients.
- The guidance also factors in choppy competitive waters and potential pricing headwinds: “We know it’s coming.” Mr. Sayer said some private payers are already approaching Dexcom and asking to move to a similar monthly subscription model as Medicare (~$250/month). Dexcom has not negotiated pricing for the G6 sensor yet, though the longer 10-day wear could give it more flexibility – “We have some room on the pricing front.” Dexcom also has electronics configurations “that will be less expensive than the current ones.” Though pricing is clearly a risk for Dexcom, the company seems quite prepared for where the market is heading.
- Dexcom aims to improve core cash-based operating income in 2018. Gross margins of 65%-68% are expected, with core GAAP operating expenses increasing slower (10%) than revenue growth (16%-19%). This spending guidance excludes investment in the non-intensive diabetes programs.
- The biggest milestone in 2018 will be approval and launch of the no-calibration G6 CGM globally – this is now more firmly expected in “2H18,” and if all goes well with the FDA, it could launch by “mid-year.” Relative to the 3Q17 call – which positioned a no-cal launch “sometime before the end of 2018”– today’s presentation moved up the timing quite a bit. It now sounds more likely that a G6 no-calibration launch will come straight out of the gate in the US, rather than as a follow-on supplement to the under-review one cal/day version; in the 3Q17 call, both options were presented. “Very active discussions” with the FDA continue, and Mr. Sayer shared only positive adjectives: “very, very cooperative,” “interactive,” “so far so good.” Notably, the word “globally” was used for the first time to refer to this 2018 G6 launch; previously, commentary only focused on the US. Dexcom is seeing nice uptake head-to-head against FreeStyle Libre OUS, though the no-cal G6 will provide even stronger competition.
- In Q&A, Mr. Sayer added that “people underestimate the effect G6 will have.” Compared to G5, he said, starting on G6 is like “night and day…It’s a big one.” Much of this will likely come from the improved, less intimidating one-button sensor applicator, though we look forward to seeing how no calibrations, stable sensor performance, smaller transmitter, predictive alerts, and other features are received – especially for those new to CGM. We also wonder if Dexcom will maintain its two-hour warmup for the no-calibration G6 – relative to FreeStyle Libre’s 12-hour warmup, this could be a very meaningful product advantage. Management has not ever commented on warmup time for G6 no-cal.
- In 2018, Dexcom will also “accelerate the fully disposable product pipeline” with Verily. A first-gen “limited launch” is now expected in “late 2018/early 2019,” with a gen two launch to hopefully follow in 2020. This was a refreshingly more specific update than in 3Q17, when gen one Verily timing was unclear and depended on the G6 no-cal timing. Per the above, this also implies G6 no-cal discussions are going very well and there is good visibility ahead. Limited launch” was used for the first time we can recall, implying the initial Verily gen one product might roll out cautiously. Mr. Sayer emphasized that both systems are “the future of CGM,” with 14-day sensor wear, single-use disposable design, Bluetooth connectivity to the phone, and factory calibration. As in previous remarks, he emphasized that the second-gen system is the “key product” for driving costs down.
- OUS expansion will continue in 2018, including additional direct markets and new geographies. Japan will launch in 1H18, while Korea will launch in 2H18. This is the first time in a long while that Dexcom has commented on Asia. EVP Steve Pacelli said Dexcom’s Japanese launch will be more of a “professional use, diagnostic model.” For context, FreeStyle Libre (real-time) has reimbursement in Japan, and FreeStyle Libre Pro is available there.
- This year, Dexcom also aims to confirm the value of CGM through its non-intensive type 2 diabetes programs. The exciting UHC pilot in ~10,000 type 2s with CGM+coaching (ramping up in the next 6-9 months) received several minutes of airtime. A few slides (copied below) showed the concept in more detail than ever. Mr. Sayer emphasized that 24/7 CGM is not feasible in non-intensive type 2 diabetes, so Dexcom is focusing on “programs” that offer coaching, education, and guidance. A point of emphasis was medication costs in type 2 diabetes, something Dexcom CGM + coaching might help payers with. (Dexcom may even share in these savings – a pretty compelling business model.) The goal of the UHC partnership is to develop analytics, data, and programs on how to effectively treat people with type 2. The slide showed a Dexcom G5 and Fitbit tracker, paired with software that educates and teaches skills – e.g., post-meal walking, diet and nutrition, medication optimization, and sleep. Combined with algorithms and predictive models, HCPs will get data on the “ideal” drug therapy, based on a particular patient. A following slide showed a highly compelling before-after CGM example from one of Dexcom’s type 2 studies: the user went from 28% to 79% in range (3x!), and from an average glucose of 212 mg/dl to 150 mg/dl! A third slide showed a nice mix of decision support that mixes patterns (e.g., “You’ve had a spike the last three days at 1pm”) and medication optimization (e.g., “Medication is best taken before bedtime”). It appeared like some gamification could be used too: “Post-meal walking skill unlocked!” This is very exciting and we cannot wait to see what kind of outcomes it can drive in non-intensive type 2 diabetes.
- “We’re doing a pilot with UHC getting 10,000 patients on CGM. We’ll develop a model and analytics for those patients to improve care. What we’ve learned so far is that direct costs are very high in type 2 diabetes – payers care about lots of drugs. There are some simple recommendation we can give people with type 2 diabetes, who have received no coaching other than ‘you eat too much and move too little.’ With insights from CGM, patients can learn a tremendous amount. For instance, one patient learned that his sleep is a major reason his glucose is going too high. We’ve also learned that some of the drugs don’t do a whole lot. There is a lot of learning here, but we know this has be a very targeted program, with very specific cost parameters. It will have to provide returns much greater than what payers spend. Better outcomes, fewer costs.”
- “The revenue model is still being developed. It’s not about numbers of patients using X numbers of sensors. It’s a value-based model. Together with UHC and other payers, to the extent we generate savings – e.g., taking out drug costs – we will share savings with partners and the healthcare system.”
- Following progress in 2017, this year will see continued focus on the rollout of Dexcom CGM in the Medicare population. Medicare did not get much airtime today, so we’re not sure how many more G5 systems were shipped in 4Q17, following the 4,000+ as of November’s call. Based on the sales commentary today, however, it didn’t sound like Dexcom shipped the “close to 20,000” Medicare patients still left in the pipeline (per 3Q17 call in November).
- CEO Kevin Sayer was not surprised by the quick Medicare coverage decision for FreeStyle Libre (announced last week). “We knew that was coming. Once we had the category established, Medicare has a 90-day review. We weren’t surprised about that.” We hadn’t realized CMS review would be this quick once the part B benefit category for therapeutic CGM was in place – given all the administrative hassles Dexcom had in 2017, we’d have guessed it would go slower. This is definitely a positive for other therapeutic CGMs that might come to market.
- 2018 developments will also push further on connectivity, interoperability with multiple insulin delivery systems, and Dexcom’s open data architecture. One slide showed Dexcom CGM running on a phone at the center, surrounded by an unbranded smart pen with a screen, Tandem and Insulet pumps. The bottom of the slide showed Dexcom’s main AID partners in alphabetical order: Beta Bionics, Diabeloop, Insulet, Lilly, and Tandem. Of all the partners, Lilly was mentioned the most times in passing in Q&A – given the two-pronged goal for AID with a pump and insulin dose titration via smart pen. A second interoperability slide showed Dexcom’s app running on the Fitbit Ionic for the first time on a slide, alongside Apple and Android Wear watches. Mr. Sayer said Dexcom has “plans to integrate transmitter-to-Watch over time,” though he did not confirm whether the Apple Watch version of this is currently under FDA review – as a December NYT article reported. Glooko, One Drop, and Tidepool were the longstanding data partners shown on the slide, alongside a new partner, eClinicalWorks. The latter was mentioned for the first time as a data partner that can bring CGM data straight into the EMR – we look forward to learning more!
- EVP Steve Pacelli speculated that Dexcom might have two main product platforms over time – mainly differentiated by software – and leveraging the same core sensor technology for intensive vs. non-intensive diabetes. While Dexcom has shared this bifurcated pipeline idea in the past, this is the first we can recall hearing that the focus would be on software differentiation between the pipeline – this makes a lot of sense for the business and hardware manufacturing simplicity. Mr. Pacelli added that Dexcom may be getting to the point of diminishing marginal returns for sensor accuracy – while there are plans to drive some additional accuracy improvements over G6, Dexcom will need to increasingly focus on building a software, data, decision support, and analytics ecosystem around its sensors.
- “We are currently addressing a focused market.” Dexcom estimates in the US and Europe, there are ~6 million intensive insulin users, with ~5%-7% on real-time CGM – the share is our estimate based on the slide below. We assume FreeStyle Libre is included in “BGM & Other,” as Dexcom consistently refers to it as not a real-time CGM. Zooming out further (second slide), there are ~60 million people with diabetes in the EU and US, with real-time CGM reaching just a tiny fraction of patients. In other words, there is tremendous runway here for many companies to succeed!
Insulet CEO Patrick Sullivan shared an enthusiastic update (download the slides), headlined by detailed timing comments on the just-announced Medicare Part D coverage news: formulary negotiations will take place over the next few months (by April), enabling an official coverage start on January 1, 2019. Until 2019, patients that want Medicare coverage for the Omnipod can try to obtain a formulary exception, as we noted yesterday. The ~11-month gap between the announcement and actual coverage is longer than we had guessed when the news came through yesterday (We thought it would be a few months.) Still, Insulet has already laid the critical groundwork for pharmacy distribution – ~10% of its business is already running through the pharmacy, and it has already negotiated contracts with two of the largest PBMs that serve the US market (60 million covered lives). “Everything we needed to do we have already done. We’ve done tremendous planning. We’re ready to rock and roll.” Notably, half of Insulet’s 20-person managed care team has a pharmacy background. All this means when Insulet does go live with coverage next January, it shouldn’t have the logistical hassles Dexcom encountered – it sounds like the critical groundwork has already been laid. In line with the timing, a meaningful revenue impact from Medicare won’t come until 2019. Still, this could be very big for Insulet, given the estimated 450,000 US type 1s it will now have access to (Medicare + expanded Medicaid). Management also shared big enthusiasm for the pharmacy (Part D) channel over DME (Part B): more convenient patient access to supplies (pick up at pharmacy, just like insulin); likely lower patient out of pocket costs (part D is a copay, where most patients have lower out-of-pocket); a far easier prescribing process for physicians (just write a prescription instead of DME headaches), and less hassle for Insulet (no need to run a background benefits investigation). Notably, current pharmacy channel pricing for the Omnipod “is at or above the DME channel,” and these are the same carriers Insulet will negotiate with for Medicare Part D coverage over the next few months (“We know them and we have pricing already established”).
- In a long-awaited pipeline update, the Bluetooth-enabled Dash PDM and pod were submitted to the FDA “earlier this year,” with clearance expected in 2H18 followed by a “limited market release.” This is roughly on par with the 3Q17 goal to submit “around the end” of 2017. The slide (below) showed a nice graphic of the PDM, display app (user’s phone), and view app (caregiver phone). We like the iOS widget (lock screen), which showed insulin on board prominently and right under Dexcom’s G5 widget. Unlike the G5 transmitter (which can talk to a receiver and the smartphone app), the Dash pod will only talk to one device at launch – the Dash PDM. If a user’s own smartphone is not nearby, the app will display the most recently received data from the Dash PDM. Since the Dash PDM is a locked down Android phone, it will have WiFi, which presumably allows passive data upload to the cloud (Glooko?) and unlocks over-the-air software updates. Both will help Insulet stay competitive with Tandem’s t:slim X2 and Medtronic’s next-gen Bluetooth-enabled pumps.
- Ascensia separately announced today that the Insulet Dash-Ascensia Contour Next One development agreement is now a non-exclusive commercial agreement. Per Ascensia’s press release, Insulet will distribute the Bluetooth-enabled Contour Next One with the Omnipod Dash, allowing BGM readings to wirelessly flow into the Dash PDM’s bolus calculator. Recipients of Omnipod Dash will receive a meter and an unspecified number of test strips. Ascensia was not mentioned or shown in Insulet’s presentation today. Of course, Ascensia also provides its Contour Next meter as part of the Dexcom G5 Medicare bundle. (Meanwhile, Roche will exclusively provide the Bluetooth-enabled BGM for future Medtronic pumps.) Though Dexcom is quickly moving to the no-calibration G6 (see above), having a strong BGM partner will be essential for Insulet for a while – especially given the type 2 market.
- The Horizon Automated Glucose Control system (with Dexcom G6) is “probably 2020 timeframe” for launch, on the later side of 3Q17’s “end of 2019” or “early 2020” expectation. Horizon is now in its third IDE study (hotel trial), with a pre-pivotal to come next followed by a pivotal trial – this could mean a Horizon pivotal trial in 2018 is unlikely, possibly placing Insulet’s pivotal behind Tandem’s hybrid closed loop with TypeZero (pivotal expected this year) and Bigfoot/Abbott’s Loop system (pivotal expected to start this year). Notably, Horizon will go down to age two years, a very notable differentiator. Remarks also emphasized the pod’s built in Horizon algorithm and direct communication with Dexcom’s G6, meaning users will stay in closed loop even when the PDM is out of range. We agree this will be a very meaningful form factor differentiator from other systems. The excellent Horizon user interface also seems to have changed a bit since we last saw it, a clear sign Insulet continues to optimize the look and feel.
- The Lilly U500 Omnipod is still expected to launch in 2019 (data at ADA), while U200 is expected in 2020. A new slide broke down the market size for various insulin requirements, showing how these two products will likely double Insulet’s addressable market: Insulet estimates ~300,000 type 2 patients have a total daily dose <60 units (addressable with today’s Omnipod), while an estimated 1.2 million patients fall in the 60-200 units per day segment, and another ~200,000 take >200 units/day. These estimates were triangulated from a number of sources: NIH, CDC, dQ&A, BBC, JDRF Fact Sheet, DDC Diabetes Report Card 2012, and T1D Exchange.
- Like Dexcom, we’ve noticed that Insulet will soon drive innovation as much through software as with hardware. We appreciated this nicely-branded product pipeline slide, which emphasized the valuable innovation platform that will flow from Dash. The strategy has been brilliant to leverage the same pod size and now the same PDM hardware for these important, market-expanding products.
- Echoing the 2016 Analyst Meeting and recent calls, management reiterated the ambitious 2021 targets for $1 billion in revenue (20%+ CAGR), gross margins of 70%, and above-market profitability. The trajectory has indeed been strong under Mr. Sullivan’s leadership team: in 2013, Insulet’s revenue was $185 million, gross margins were at 48%, and the company was not close to operating profitability (-$27 million). Insulet’s 2017 guidance calls for sales of $456-$459 million and gross margins of ~60%. Insulet continue to expect EBIT positive results in 2018. Mr. Sullivan emphasized the topline improvements have come from better sales and marketing execution, while the bottom line has come from strong manufacturing improvements. From here to 2021, it’s all about execution: going direct in Europe starting this July 1, capitalizing on the Medicare and Medicaid opportunities, getting new products on the market (Dash in 2018, U500 in 2019, Horizon and U200 in 2020), and getting the new US manufacturing plant operational starting next year. Notably, “80%” of the company’s current employees were not there when Mr. Sullivan three years ago.
BD CEO Mr. Vince Forlenza called the company’s full-feature type 2 patch pump (“Swatch”) “one of the products we’re most excited about” and “one of the furthest along” (slated for October 2018-September 2019 launch); President Mr. Tom Polen added that a clinical study of the MiniMed Pro-Set with BD FlowSmart technology is “still finishing,” but there is active dialogue with partner Medtronic. We were a little surprised to hear so much optimism concerning the patch pump given that timing was pushed back slightly from “2H18” to October 2018-September 2019 (FY19) on the 3Q17 call, but Mr. Polen told us after the session that the delay is partially meant to time the launch with “Briight,” BD’s diabetes app – see the website here, which we just discovered. It seems that Briight will be a mix of a chat-based digital assistant (like Lark), diabetes data collection, education, recipes, food logging, and more. The app and website look very strong and very built out. The platform could greatly augment BD’s pump, making it competitive out of the gates with Insulet’s Lilly U500 (2019 launch) and U200 (2020 launch) Omnipods coming onto the market in the next two years. Management noted that payer talks regarding Swatch are going well, a clear positive in a market that has historically seen little payer progress on pumps for type 2 diabetes. As for development of the pump itself, a clinical study with saline completed last summer, and a study with insulin is beginning (not yet on Clinicaltrials.gov). The manufacturing line is up and running in Ireland, with “hundreds” of pumps being made per day. Mr. Polen didn’t go into much detail on the smart pen needle product when prodded, but indicated that BD is “still working on that” and that it will also likely launch with the Briight platform (we assume the latest estimate for an October 2018-September 2019 launch still holds). It was fantastic to hear such excitement and optimism about Swatch from top management, who must see a great opportunity in the very unpenetrated type 2 pump market. We did, however, find it odd that the smart pen needle wasn’t a hot topic of discussion. The market is arguably more expansive for injection dose capture and insulin titration, but we understand BD’s desire to hold their cards close as they likely explore various pricing structures, business and service models, and partners. That said, the lack of an update was not confidence-inspiring, especially against the backdrop of Companion Medical’s first-to-market launch, and competitive products in development at Lilly and Bigfoot, not to mention the rest of the burgeoning landscape.
- Mr. Forlenza characterized the MiniMed Pro-Set with FlowSmart as one of two “disappointing” delayed products in the medical segment and said the company is “still working on that, trying to finalize.” A clinical study in patients is still finishing as the company works on developing clinical evidence. No launch update was given – last we heard in early August, a launch was expected by this coming September. It was encouraging to hear that there is active dialogue with Medtronic, as the commercial fate of this set really rests in Medtronic’s hands. Medtronic’s recent updates have mentioned infusion set pricing pressures, and we wonder what the economics are on BD sets vs. Unomedical sets. But if Medtronic continues to push for outcomes-based reimbursement, the BD set, assuming patient concerns have been addressed. Relative to Unomedical sets, will Pro-set deliver better clinical outcomes?
- A vast majority of the presentation and breakout was devoted to the synergistic possibilities from the recently-completed acquisition of Bard. During his remarks, Mr. Forlenza pointed out that the merger will allow BD to play more in the diabetes complications market, as Bard has strong peripheral vascular disease and chronic kidney disease portfolios. He pointed out that patients with diabetes have an especially high risk of developing peripheral vascular disease, and that over half of people with chronic kidney disease also have diabetes. Of course, BD’s core diabetes business is aimed at preventing these complications in the first place, but the company is now in the position to treat them should they develop anyway. Remarkably, combined, BD and Bard have a ~$1 billion annual spend on R&D!
Roche Diagnostics head Mr. Roland Diggelmann didn’t give any additional detail on the company’s Diabetes Care vision, but shared confidence in BGM, CGM, closed loop, and especially the mySugr-enabled ecosystem: “We are very well positioned in the strip business – that’s still the majority of the business. There are a lot of patients that will continue to be diabetic. There are 450 million [sic] today, and that number is expected to increase by 100 million over next 10-20 years. It’s a strong business to be present there, and it’s our responsibility to patients. At the same time, there is a shift to CGM – we’re investing, we have partnerships, distribution agreements, and of course building closed loop. But when you really look at diabetes management, it’ll come down to individual patients managing their diabetes through digital tools – we acquired mySugr last year, which allows patients to manage their status, interact with providers, caretakers. We’re looking at it as an ecosystem, and we’re definitely committed to that business.” We were hoping to hear more in the way of long-term vision – i.e. what the platform and business model will look like, who the primary customers will be, compatibility with non-Roche devices, timing, how the standard BGM/strip business will fit into the ecosystem – but we’re glad to hear management committed to diabetes and digital approaches. Notably, we learned from Frank Westermann (see below) that mySugr’s bundle – unlimited Roche strips + mySugr app + coaching – has “significant traction” with payers in Germany and mySugr expects to sign the first US payers in the first half of 2018. This is great momentum and would be a real win following the direct-to-consumer US launch last year. It will be interesting to watch how Roche and mySugr coexist, especially the extent to which Roche will add value and continue to innovate. Can Roche drive interoperability – e.g., will it apply for JDRF’s Open Protocol Initiative? Value-add through the nascent data ecosystem (connectivity, coaching, insulin titration, provider decision support) is a clear opportunity to differentiate and move toward population health management. Can Roche drive R&D in a meaningful way to create some truly great hardware and software experiences?
- mySugr CEO Frank Westermann shared the following with us: “We see a tectonic shift in how patients, payers and the industry think about diabetes management. mySugr becoming part of the Roche family is a great example of that. We continue to focus our efforts on creating an experience which “sucks less” for patients to manage their diabetes. The mySugr bundle includes therapy management through coaches, unlimited test strips, automated data tracking, and seamless integration with a growing number of medical devices. It has significant traction with payers in Germany, is sold directly to consumers in the US and we expect to sign the first US payers in the first half of 2018. As an open platform, we invite other partners to join us and help improve our product by adding more integrated devices and services.”
- On a separate note, Roche announced yesterday that it has partnered with GE to develop an “integrated digital diagnostics platform” – jointly-branded clinical decision support software. The platform will aggregate in-vivo data from GE’s medical imaging and monitoring imaging equipment, plus in-vitro data from Roche’s diagnostic/genomics portfolio. At this stage, the long-term partnership will focus on oncology and critical care treatment, through clinical decision support software and apps, though this investment is a signal that Roche could consider something similar in diabetes. We could imagine IBM Watson or Verily as potential partners here. More companies in diabetes are realizing the immense opportunity in decision support – both for patients and providers – though we aren’t aware of any gamechanging diabetes provider-facing tools being developed at Roche.
Sanofi CEO Mr. Olivier Brandicourt remarked during the breakout that the first revenue from Onduo is expected this year – this is the first sales commentary we’ve heard on the joint venture with Verily. We imagine the revenue could come from the 1Q18 pilot with Blue Cross Blue Shield (announced in November 2017), the early 2018 pilot using Telcare, Voluntis, and Glytec (also announced in November 2017), and perhaps others like it. Will revenue come from generating positive outcomes/savings for payers? Sanofi/Verily announced their initial $500 million investment in Onduo back in September 2016, and the ~two-year turnaround time to generate revenue is fairly fast, given the goal to build a platform that curates a lot of products and drives digital health into type 2 diabetes. There’s no guarantee that early revenue will be high (we’d be surprised if it was since pilots are early and revenue is presumably split with Verily), but Mr. Brandicourt did state that “Onduo is going to be a very important support for our diabetes franchise in the US,” showing distinct confidence in the longer-term plan. These remarks lead us to wonder what the relationship between Sanofi’s core diabetes drug business and Onduo looks like…will Onduo support Sanofi’s US business (i.e., direct patients to Sanofi medications, exclusively, to boost sales) or take a more molecule-agnostic and digital approach that augments revenue? Presumably if Onduo can generate positive savings and outcomes, it will be paid regardless of what products it uses. It’s great to see this news come across, implying Onduo has big visibility at the very top of Sanofi.
WellDoc CEO Mr. Kevin McRaith provided a slew of updates concerning the type 2 diabetes management software, BlueStar: Most notably, (i) A commercial agreement with insulin dose titration provider Voluntis (announced this morning); (ii) a 1Q18 Consumer BlueStar C launch on US Samsung phones through Samsung Health; and (iii) a launch last year in India with Max Healthcare funded by a grant from the World Bank. The combining of Voluntis’ basal insulin titration technology with WellDoc’s platform is great to see – the two companies plan to approach health systems and health plans as soon as late 1Q18, though rollout will be phased. We’re not sure what the integration will look like, but it seems most logical to incorporate Voluntis’ dose titration algorithms directly into BlueStar Rx. BlueStar Rx already has a bolus calculator to complement Voluntis’ FDA-cleared basal insulin titration – the other versions of BlueStar do not require a prescription and seem unlikely to incorporate basal titration. The addition of Voluntis’ Insulia software promises to boost outcomes from use of BlueStar, which has already shown meaningful A1c impact in several publications and posters. Voluntis, who establishes it’s fifth publicly-disclosed partner (in addition to Livongo, Ascensia, Sanofi, and Onduo), adds another revenue channel. We wonder if non-compete clauses or other factors prevented WellDoc from going with Amalgam Rx, whose founders, Mr. Ryan Sysko and Dr. Suzanne Clough, are former WellDoc executives.
- We are excited to hear that a consumer-facing launch with Samsung is within sight (this quarter), since the longstanding relationship began in 2014 and the integration agreement was announced April 2017. Per the agreement, BlueStar C – the non-regulated consumer version of the BlueStar app for type 2 diabetes – will be integrated with Samsung Health and Samsung gear (e.g., smart watches, fitness trackers). Last we heard, a price had not been set for the integrated offering – Samsung Health is a free app, so we could envision a “freemium” model, whereby people download the app and then pay a monthly subscription cost for BlueStar C. Alternatively, we wonder if payers would pay for certain members to have the app. The opportunity here is big, as Samsung was the market leader in smartphones shipped in the first three quarters of 2017, capturing 20%+ of the market in each (83.3M units shipped in 3Q17 alone). Samsung also has a partnership with Medtronic, but we’ve not heard an update on it since MiniMed Connect Android came out a while ago. We hope the WellDoc Samsung app gets a lot of play, especially in prevention and prediabetes!
- BlueStar has been in the US and Canada for some time, entered India in 2017 with Max Healthcare (funded by a World Bank grant!!), and is looking to expand with partners in 2018. India represents another huge potential market opportunity for WellDoc, as >60 million are expected to develop diabetes in the next >30 years. It is impressive that the World Bank enabled this maneuver, both because we assume WellDoc survived a rigorous application process, and because it shows a strong interest in diabetes from the Group, which focuses on “international development, poverty, and sustainability.”
- In other partner news, Mr. McRaith said the LifeScan partnership is progressing despite potential that J&J will sell the business. This makes sense for LifeScan, as the WellDoc partnership is a valuable asset, and for WellDoc, Verio Flex BGM sales will likely continue if the LifeScan business is sold to someone. The other big partner update is that Solera (a DPP curator, of sorts) will feature WellDoc (curiously, not a DPP, showing Solera is branching out). Human API and AADE were also listed as WellDoc partners.
- Mr. McRaith presented engagement data from two short pilots of BlueStar – one in India, and the other in Medicare patients. In the 10-week India pilot (n=117; average age 52 years-old), people engaged on average 13 times per week (nearly two times per day). 56% of engagements were via mobile, and 44% were web-based. Notably, there were two-times more food entries recorded per week than the next top item logged, blood glucose. In the eight-week Medicare pilot (n=162; average age 72 years-old), patients engaged 21 times per week (three times per day) – Mr. McRaith emphasized that 65% of users were primarily using the web interface of BlueStar and that elderly people are not necessarily tech averse, as many believe. (Something Omada has also emphasized in its work.) While WellDoc management says that engagement is one metric that payers care about, we are reminded of Onduo CEO Dr. Josh Riff’s catchy quote from last March: “Engagement is for Angry Birds; outcomes are for healthcare companies.” This is also a soapbox issue for Livongo’s Glen Tullman, who consistently argues that patients want to be less engaged and spend less time on their diabetes. WellDoc has previously demonstrated outcomes in both controlled studies and the real-world setting, which will need to be married to strong, sustained engagement that doesn’t rely on too much manual entry.
- Last year, WellDoc published a paper in JMIR Research Protocols detailing the best practices for creating digital therapeutics to treat chronic disease; today, Mr. McRaith announced that the company would be expanding into type 1 diabetes, hypertension, COPD, and congestive heart failure (CHF) in 2018. Because the framework is already established, Mr. McRaith called the move “more of a content and regulatory play,” implying that the general formula will be essentially true to that of the type 2 app. We’re of course most intrigued by the move into type 1 – we imagine this could resemble aspects of what others are aiming to do (e.g., mySugr, Glooko, Livongo, One Drop) with logging, bolus calculation, basal insulin titration courtesy of Voluntis, and gamification. It would also make sense – since type 2 diabetes is so highly comorbid with hypertension, CHF, and poor COPD outcomes – for WellDoc to allow patients/HCPs to select the conditions they have, and tailor the intervention accordingly.
- Management is proud of the recent health economics analysis it published with Truven Health Analytics (an arm of IBM Watson Health), and shared that a jointly-authored white paper will be coming at some point this quarter. This partnership has the potential to yield reimbursement- and uptake-promoting data cuts.
- The newfound Medicare reimbursement for remote patient monitoring is a “sweet spot” for WellDoc – providers can now be paid for reviewing the BlueStar SMART Visit Report. This is a big win for WellDoc as it looks to drive HCP adoption.
Diabetes Therapy Highlights
Sanofi CEO Mr. Olivier Brandicourt delivered wide-ranging remarks on the company’s pharmaceutical business, and emphasized that even though time didn’t permit a discussion of every disease area, he wasn’t going to neglect diabetes. Despite substantial headwinds against Sanofi’s diabetes portfolio in 2016 and 2017, Mr. Brandicourt set an optimistic tone for 2018 and 2019. From the pipeline, he called out once-weekly GLP-1 agonist efpeglenatide: Phase 3 was initiated in early December, and we learned during Sanofi’s recent Analyst Day that the company has already developed a proprietary autoinjector for the drug. During the breakout session, Sanofi’s EVP of Diabetes & Cardiovascular Mr. Stefan Oelrich highlighted milder, shorter-lasting GI side-effects with efpeglenatide compared to existing GLP-1 agonist options, and he alluded to models predicting equivalent efficacy to Novo Nordisk’s semaglutide (Ozempic). Mr. Brandicourt also mentioned best-in-class potential for Sanofi’s GLP-1/glucagon dual agonist candidate (SAR425899). A large phase 3 program in obesity and a proof-of-concept study in NASH will both be launched in 2018. In phase 2, the agent stimulated >3.5 kg (~8 lbs) weight loss after four weeks, and while “cross-trial comparison can be misleading,” Mr. Brandicourt suggested that this level of weight loss is at least as good if not better than what’s achieved with liraglutide (Novo Nordisk’s Victoza) or semaglutide. Speaking of dangerous cross-trial comparisons, Sanofi’s model pitting phase 2 efpeglenatide data vs. a broader range of semaglutide data should also be interpreted with caution – equivalent efficacy is a bold claim to make at this stage before any real head-to-head studies, but we are excited to see clinical (and hopefully, commercial) progress for another once-weekly GLP-1 agonist given that this class is still vastly under-utilized. As the bar rises for new diabetes therapies, efpeglenatide will likely have to show cardioprotection in order to compete on the market (we await CVOT details) and will have to differentiate itself within the GLP-1 market in some way: Newly-approved semaglutide promises stronger potency, AZ will launch a patient-friendly autoinjector for Bydureon (exenatide once-weekly) in 1Q18, and Sanofi seems to be promoting efpeglenatide with claims of superior efficacy + greater tolerability.
- Mr. Brandicourt highlighted planned regulatory filings in 2018 for SGLT-1/2 dual inhibitor sotagliflozin (partnered with Lexicon) and PCSK9 inhibitor Praluent (partnered with Regeneron). Lexicon led the inTandem program investigating sotagliflozin in type 1 diabetes, and Sanofi will now submit an NDA in 1H18. Mr. Brandicourt lit up with excitement talking about mechanism here – by also inhibiting SGLT-1 in the gut, sotagliflozin reduces postprandial excursions and can thus have a greater overall glucose-lowering effect compared to SGLT-2 inhibitors, which work primarily via glucose excretion in the kidneys. He mentioned the “broad phase 3 program underway” for sotagliflozin in type 2 diabetes as well, with the first readout expected in 2019. Sanofi has high hopes for sotagliflozin in patients with renal impairment, and thus many participants with CKD will be enrolled in the type 2 trials. For more on sotagliflozin, see our coverage of Lexicon’s JPM presentation below.
- On Praluent (alirocumab), Mr. Brandicourt confirmed plans to file for a CV indication in 2H18 based on ODYSSEY Outcomes data (expected in 1Q18). He implied that this CVOT could be a game-changer. CV outcomes are expected to be positive, in line with FOURIER for Amgen’s PCSK9 inhibitor Repatha (evolocumab), and because aggressive lipid-lowering should reduce CV risk (in other words, the biological mechanism for cardioprotection is already quite clear). But even if the field is anticipating CV benefit from ODYSSEY Outcomes, having a second positive CVOT on the books will be very meaningful in payer negotiations and for guidelines. According to Mr. Brandicourt, PCSK9 inhibitors have yet to be firmly established within treatment algorithms. He argued that HCPs need better guidance on when to prescribe a PCSK9 agent. During Q&A, he acknowledged the role Sanofi must play in educating cardiologists, as this community is not accustomed to prescribing injectables. The high cost of these drugs, coupled with abysmal reimbursement, has been another commercial hurdle for the PCSK9 class. But avoiding CV complications and hospitalizations signals cost-savings, and ODYSSEY Outcomes + FOURIER will hopefully provide a combined dataset that really motivates payers. For more on Praluent, see our coverage of Regeneron’s JPM presentation from day #1.
- Although “delivering outstanding launches” is one of four strategic pillars on Sanofi’s roadmap for 2020, Mr. Brandicourt admitted that the Soliqua launch has been a bit of a disappointment (that’s an understatement, in our view). The basal insulin/GLP-1 fixed-ratio combination (insulin glargine/lixisenatide) became available in the US around this time last year. Sales in the past 12 months have trended below expectations (only $9 million in 3Q17, Soliqua’s third quarter of recorded revenue). Mr. Brandicourt addressed the surrounding issues in more detail during Q&A. He explained that Soliqua was launched with essentially zero payer coverage – like with Admelog (biosimilar insulin lispro), Sanofi missed contracting season for 2017. The Soliqua commercial team has been on the grind to establish better reimbursement status for 2018, and the drug is now covered for 65% of commercial lives and for 25% of Medicare Part D lives (Mr. Brandicourt pointed to room for improvement in this segment). Besides reimbursement, provider-facing education efforts will also be critical to Soliqua’s success. HCPs are unfamiliar with the concept of a fixed-ratio combination, and in diabetes care especially, tend toward sequential rather than simultaneous drug delivery. Mr. Oelrich spoke to these challenges in the breakout, confirming the message we’ve heard from management on recent earnings calls: The company remains confident in Soliqua, but uptake will be gradual given that Sanofi must “fundamentally change” the way providers treat diabetes. To Sanofi’s credit, the company has launched peer-to-peer and medical education efforts to promote Soliqua. Novo Nordisk also markets a stellar basal insulin/GLP-1 combo Xultophy (insulin degludec/liraglutide), but has de-prioritized it in favor of standalone degludec (Tresiba) and standalone liraglutide (Victoza). Ideally, both companies would work side-by-side to shift paradigms in diabetes management toward combination therapy.
- Mr. Brandicourt remarked during the breakout that the first revenue from Onduo is expected in 2018 – this is the first sales commentary we’ve heard on the joint venture with Verily. We imagine the revenue will come from the pilot with Blue Cross Blue Shield (announced in November 2017) and others like it. Sanofi/Verily announced their initial $500 million investment in Onduo back in September 2016, and the ~two-year turnaround time to generate revenue is fairly fast, given the goal to build a platform that curates a lot of products and drives digital health into type 2 diabetes. There’s no guarantee that early revenue will be high (we’d be surprised if it was since pilots are early and revenue is presumably split with Verily), but Mr. Brandicourt did state that “Onduo is going to be a very important support for our diabetes franchise in the US,” showing distinct confidence in the longer-term plan. For more on this Onduo update, see our diabetes technology highlights above.
Questions and Answers
Q: You invested a lot of money with Verily Life Sciences in diabetes back in 2016, and we haven’t seen anything concrete yet. Can you tell us when we will see something? What are your expectations for Onduo?
Mr. Olivier Brandicourt (CEO, Sanofi): On Verily, we’re progressing very nicely. As you know, when we announced this endeavor, we had everything left to do – developing devices, hiring the appropriate talent, etc. Now we’re at the stage where we are operational, and you should see the first revenue from Onduo in the coming year and beyond. I can assure you that we didn’t waste any time here. Onduo is going to be a very important support for our diabetes franchise in the US.
Q: And a follow-up on diabetes: Can you comment on the biosimilar rapid-acting insulin?
Mr. Brandicourt: We have our registration, but we missed the payer contracting period for Admelog. We’ll be on the market in 2018, we will have some sales, but the real kick I think will come in 2019, after we have a chance in 2018 to negotiate our contracts.
Q: What are your plans for once-weekly GLP-1?
Mr. Stefan Oelrich (EVP of Diabetes & Cardiovascular, Sanofi): Yes, I can comment on efpeglenatide. We started phase 3 trials in 4Q17, so we’re well on track to deliver a once-weekly GLP-1 agonist and we’ll compete on efficacy with what is by then the leading molecule in the class (semaglutide). This is one of the most dynamic classes in diabetes right now – weekly GLP-1 specifically – and we’ll have a molecule that’s extremely competitive on efficacy with potential to have a better gastric profile than what’s currently on the market. We’re extremely excited about this opportunity.
Q: You mentioned Soliqua only briefly, admitting that launch was underwhelming. How are you thinking about uptake in 2018?
Mr. Brandicourt: By definition, we didn’t have any access when we launched Soliqua. We negotiated access in 2017 for 2018, and now we cover 65% of commercial lives and 25% of Medicare Part D lives (that can be improved). It’s a challenging paradigm – physicians in the US are not in favor of fixed combinations. We believe we’ll see gradual Soliqua uptake over time, but it needs a lot of education in order to get there. That’s the reason we’re disappointed by the numbers so far, but we feel optimistic about Soliqua overall.
Mr. Oelrich: HCPs are used to sequencing one product after another in diabetes management, so they’re slow to take up a fixed-ratio combination. Physicians tend to move when patients lose control, and what we’re proposing with Soliqua is that they use a different approach, and that’s taking some time in terms of fundamentally changing the way providers treat diabetes.
Q: You touched on Praluent and the ODYSSEY Outcomes study that’s coming. What are your hopes for that trial? What can it do for the commercial situation?
Mr. Brandicourt: We’re hoping to get results by the end of 1Q18. If everything goes well, guidelines should be updated – not immediately, mind you. It will take some time, but after a little while, both FOURIER results and our results should be incorporated into the guidelines, and we should be very clearly positioned in the treatment pathway. That’s what’s missing today. ODYSSEY Outcomes should be a new kick-start for Praluent. At the end of the day, alirocumab is one of the most phenomenal discoveries in CV medicine. In a sophisticated society like the one we have in the US, at one point or another, people are going to want access to it.
Q: But what about the apathy of cardiologists? These doctors don’t just change what they’ve been doing for the past 30-40 years. How do you break through that?
Mr. Brandicourt: It has to be education. It’s us doing our jobs, Regeneron doing its job, and frankly, our competitor (Amgen) also doing its job to break that apathy. The strength of data will make a difference.
Q: Are you looking to do more in digital health, beyond Onduo?
Mr. Brandicourt: We’re looking at digitalization across all work streams – research, development, medical, manufacturing, etc. We have real-world evidence studies on a very sophisticated platform. You’re going to see data generated from this RWE database relatively soon, and you’ll start seeing more and more. We’re going to use digital in commercial activities across the world, including in China, and we’ll be doing that more and more which means less and less of the traditional face-to-face marketing model. That’s what we’re exploring, with pilots everywhere.
With a Sanofi-led filing of SGLT-1/2 dual inhibitor sotagliflozin planned for 1H18, Lexicon continues to prepare strong clinical data. In his JPM remarks, Lexicon CEO Mr. Lonnel Coats presented a new analysis of placebo-adjusted DKA rates from inTandem vs. DEPICT 1, suggesting numerically fewer DKA events with sotagliflozin vs. dapagliflozin in type 1 diabetes. Notably, Lexicon has been commenting extensively on AZ’s program for SGLT-2 inhibitor Farxiga (dapagliflozin) in type 1 diabetes since DEPICT 1 reported at EASD 2017. In this latest analysis, placebo-adjusted DKA rates were 0.6% and 2.4% with high- and low-dose sotagliflozin vs. 1.7% and 2.5% with corresponding doses of dapagliflozin in DEPICT 1. To our understanding, this calculation reflects the fact that some participants experienced multiple events, and it could provide some reassurance for those who balked at the ~3% DKA rate associated with 400 mg sotagliflozin in inTandem1 and inTandem3. Looking ahead to an Advisory Committee meeting, DKA is the primary concern we anticipate from FDA, and although we continue to believe that this risk should be manageable in the real world, based om extensive discussion with highly-respected clincians, we do think showing FDA the specifics of what “management” means will be important – this is an addressable issue, but it’s also true that many patients have no idea what ketones ever are, do not know how to test them, or what the levels should be. Addressing and recovering from DKA itself is also not intuitive. Making sure that there is appropriate HCP and patient education will be critical. While inTandem trials and DEPICT 1 shouldn’t be overtly compared due to differences in study design/protocol, the overarching message from both is one of manageable risk – the companies now need to show that this can be provided in the “real world”. The sense we get from Lexicon is that sotagliflozin will come with detailed care instructions around DKA risk mitigation, and we expect the company will work closely on these with Sanofi and with FDA. Clearly, it is also true that if the drug is not approved, many type 1 patients will still take it off label and arguably will be at greater risk of DKA. Mr. Coats further emphasized that trial participants who discontinued due to DKA often returned to the study drug. While inTandem had low discontinuation rates due to DKA (generally <0.1%, but 1.6% for inTandem3), Mr. Coats commented that many of these patients resumed therapy (which says something about treatment satisfaction, at the very least). Ultimately, this underscores the favorable risk-benefit profile of sotagliflozin for patients with type 1 diabetes. Pooled CGM data from inTandem1 + inTandem2 showed 1.3 and 2.8 additional hours per day in range with 200 mg and 400 mg doses of sotagliflozin, respectively. We imagine this will be the biggest draw for patients, more so than a ~0.4% A1c reduction, and the importance of time-in-range as a glycemic outcome should not be understated. Lexicon management has commented multiple times that they’re working around the clock to shorten the timeline for submission as much as possible. If the filing comes on time (1H18), the first oral adjunct therapy for type 1 diabetes could be on the market by 2019.
- Mr. Coats also discussed weight loss data from inTandem3, which featured a “real-world” design with no insulin optimization period. Noting that sotagliflozin’s weight loss curve hadn’t leveled off at week 24, he expressed excitement for longer-term weight benefit. After 24 weeks, mean weight loss with 400 mg sotagliflozin was 4.9 lbs. This finding suggests that sotagliflozin may provide better weight loss than SGLT-2 inhibitors, though it’s unclear whether that potential difference would be due to the dual inhibition or the population being studied. To this end, we’re interested to see weight loss data from Sanofi’s extensive phase 3 program for sotagliflozin in type 2 diabetes (first readout in 2019). To be sure, many people with type 1 diabetes stand to benefit from weight loss; 25% of people with type 1 >25 years-old are affected by obesity, and many more are affected by overweight.
- “This is not a GP product.” During the breakout session, management explained that sotagliflozin will be marketed to endocrinologists rather than general practitioners. With this decision, there’s a chance that Sanofi/Lexicon could initially miss a huge chunk of the type 1 population, people who only see a PCP. Endos are in increasingly short supply. On the other hand, the cost-benefit ratio of targeting PCPs would be extremely high, and Lexicon plans to use no more than 100 reps to target endocrinologists. Moreover, we think Lexicon could lead a concerted effort (e.g. through social media) to get the tight-knit type 1 diabetes community on board – certainly, many are already taking SGLT-2s off-label. Access and trust will only increase with an agent indicated for type 1 diabetes. As background, Lexicon announced in 2Q17 that it will exercise its co-promotion option in the US, which means the company will take on 40% of commercialization costs (and responsibility) stateside; Sanofi will contribute the remaining 60%. With this move, Lexicon has once again shown fierce commitment to making sotagliflozin a commercial success. As management stated on the 2Q17 earnings call, “the best way to ensure that you commercialize a product well is to participate in it, particularly if you have royalties at risk.”
- We asked Lexicon how FDA is approaching this first-in-class therapy, and Mr. Coats was distinctly positive about the company’s experiences with regulatory agencies in the US, EU, and Sweden. In fact, he shared that some folks at Sanofi were surprised about how “open, frank, and helpful” FDA has been, having assumed there would be resistance. In particular, we were excited to hear news of ongoing conversations about outcomes beyond A1c. We do think the time-in-range results will be critical in demonstrating sotagliflozin’s value to patients, and it would be a shame if FDA overlooked the CGM data. Of course, when we asked about CDER’s stance on CGM data, Mr. Coats tempered his response: “There’s still a divide between openness and a real pathway.” While advocacy from patients has led to openness among US regulators, there’s still a question of how to create the pathway. Because of the high degree of off-label use, FDA knows patients are going to keep using similar agents, and that makes it all the more important to help people understand how to maximize benefit and minimize risk.
- Not forgetting the early-stage pipeline, Mr. Coats expressed particular optimism for phase 1 SGLT-1 inhibitor LX2791. Phase 1a is complete, and phase 1b data is expected in 1H18. This candidate has been shown to cause no significant urinary glucose excretion, which is exciting due to the unfortunate genital mycotic infections commonly seen with SGLT-2 inhibitors. Mr. Coats also pointed out that the GI specificity offers multiple options for pairing the compound with other agents that act in the gut; while he didn’t name any specific potential pairings, we’re excited to see where this candidate goes.
GLP-1 agonist Trulicity (dulaglutide) was once again a primary focus of Lilly’s JPM presentation and breakout, and CEO Mr. Dave Ricks discussed next-gen opportunities in GLP-1 as well. Lilly provided its 2018 financial guidance last month, maintaining projections for ~5% annual growth between 2015-2020. Mr. Ricks positioned Trulicity as a significant growth driver underlying this guidance. Notably, he expressed very high confidence in diabetes in general, which is now the most profitable portfolio for Lilly. According to Mr. Ricks, Lilly also passed Merck in terms of total diabetes revenue in 3Q17 ($2 billion vs. $1.5 billion) and is now in second place for overall diabetes sales (presumably, following Novo Nordisk with ~$3.5 billion in 3Q17). He explained that Trulicity’s commercial success has come almost entirely from market expansion rather than stealing share from other GLP-1 agonists. Most new therapy starts are in primary care, and he highlighted that Trulicity is an easy-to-prescribe product for PCPs given its once-weekly dosing, low hypoglycemia risk, and convenient device. He added that the IDEO-designed pen has been extremely popular with patients (we’ve definitely heard positive feedback), particularly since the needle remains invisible throughout injection. Lilly is thus unconcerned about upcoming competition from Novo Nordisk’s once-weekly Ozempic (semaglutide), Mr. Ricks affirmed, because that product should also grow the class. Of every three type 2 diabetes patients requiring an injectable therapy (after A1c remains above goal on oral medications), only one takes a GLP-1 agonist instead of basal insulin. “That number could double,” Mr. Ricks argued, emphasizing that “there’s a lot of headroom for growth.” We certainly agree and were glad to hear that Lilly’s priority is expanding the GLP-1 market rather than focusing on in-class competitors. A Diabetes Care article published last Fall reported that only ~7% of second-line diabetes prescriptions in the US go to a GLP-1 agonist – it’s clear that so many more patients could be benefiting from one of these products and the associated A1c-lowering, weight loss, and possible cardio- and renal protection. There was no mention of upcoming CVOT data on Trulicity, though Lilly management shared a positive outlook during the recent 2018 financial guidance call. Topline REWIND results are expected by year-end. Moreover, Mr. Ricks did not address SUSTAIN 7 which found semaglutide to be superior vs. dulaglutide on A1c and weight loss. That said, only topline data has been announced so far, and understandably, management may be waiting for full results before commenting on the implications.
- Moving forward, Mr. Ricks described how Lilly will continue to innovate in GLP-1. First, with high-dose dulaglutide at 3 mg or 4.5 mg once-weekly. Phase 3 studies in type 2 diabetes are slated to begin in 2018, and the positive phase 2 data will also be presented at a scientific meeting this year. Next, he mentioned the company’s GLP-1/GIP dual agonist. A phase 2 trial is expected to complete in May 2018, and Lilly is keenly interested in the weight loss findings. As Mr. Ricks put it, “we want to have successors to Trulicity that beat semaglutide particularly in regard to body weight reduction.” Certainly, weight loss is one of the key benefits to GLP-1 therapy, and it’s a key outcome beyond A1c with spillover effects on adherence, patient satisfaction, and quality of life. “Of course, everyone is wondering, what about oral?” Mr. Ricks acknowledged during the breakout session. He reviewed Lilly’s approach to its preclinical oral GLP-1 candidates, explaining that step no. 1 is looking at ways to improve bioavailability, which would in turn bring down cost of goods (“we don’t want just 1%-2%”).
- Lilly/BI’s market-leading SGLT-2 inhibitor Jardiance (empagliflozin) received less air time during Mr. Ricks’ fireside chat, but the CEO did highlight the ongoing program in heart failure and the upcoming study in CKD. The dedicated kidney outcomes trial is scheduled to begin something this year, following Lilly’s press release announcement last June. A question on Merck/Pfizer’s new market entry Steglatro (ertugliflozin) came up during the breakout, but Mr. Ricks showed no sign of concern. “We have a unique benefit, a mortality benefit, and no one else does,” he argued, referring to Jardiance’s CV indication (added to the label in December 2016). Notably, the list price for Steglatro is significantly lower than the list price for Jardiance and other existing SGLT-2s ($8.94/day vs. ~$17/day), and we expect this will be a competitive advantage for Merck/Pfizer, even as the newest entry. Mr. Ricks didn’t address these pricing dynamics (we understand time is limited at JPM), but we’ll be very curious in watching these unfold after Steglatro is launched this month.
- Similarly, Mr. Ricks was not worried about competition for Humalog from Sanofi’s new biosimilar insulin lispro (Admelog). As we’ve heard from Novo Nordisk and Sanofi management as well, Mr. Ricks cited the high frequency of exclusive 1:1 contracts in the rapid-acting insulin category. Payers view products in this class as highly-interchangeable, and as a result, they restrict patient choice to one preferred drug, excluding the other options. Mr. Ricks suggested that Sanofi will face reimbursement challenges in 2018 (Sanofi management has acknowledged this, too, and has shared expectations for Admelog to be more of a growth driver in 2019 instead). Further, he explained that pricing pressure is so intense around mealtime insulins that Humalog and NovoLog are “already on the floor, with some of the lowest pricing in the market.” This is what distinguishes the Humalog/Admelog story from the Lantus/Basaglar story, in that Humalog may already be priced competitively and may be able to maintain its current reimbursement status. In contrast, the decline in Lantus sales was greatly accelerated by exclusion from the CVS Health and UnitedHealthcare formularies in 2017.
- In the breakout, Mr. Ricks reaffirmed the pharma giant’s commitment to diabetes technology and digital health, and he explained the rationale behind opting to build a pump from scratch: “We have a very different idea on this system compared to what people experience today. We want to harness cloud computing and digital experience to create a self-managed system. That’s the vision we’re pursuing – not just to make a pump, but to make a solution that doesn’t exist today. We saw building as a much more attractive option, and a much less expensive option. We’re doing it with partners.”
- We’d be remiss not to mention Mr. Ricks’ resounding call-to-action around rising cost of prescription drugs. While industry players have taken steps in the right direction, with position statements and transparency reports, he advocated for more dramatic and more rapid change – “2018 is the time for action.” Specifically, Mr. Ricks discussed the promise of value-based pricing and rebate pass-through, wherein the money returned from manufacturers to payers/PBMs makes it way to the consumer, reducing a patient’s out-of-pocket payments. We appreciated that Mr. Ricks carefully considered what more industry can do, rather than pointing the blame at PBMs, even if it’s deserved.
- Lastly, on tax reform, Mr. Ricks suggested that the policy changes won’t impact Lilly’s capital allocation strategy all that much (“our goals remain the same”). He announced that more specific effects of tax reform on company structure and procedures will be disclosed on Lilly’s 4Q17 earnings call at the end of the month (January 31).
Questions and Answers
Q: I want to start with a question on Jardiance. You’ve gained a lot of share from J&J, but are you happy with the overall category growth? At what point do you pivot toward market growth instead of share growth? And what are your expectations now that there’s a new player coming into the market?
A: I’d say we’re pleased, but we’re not satisfied with SGLT-2 class growth. SGLT-2 inhibitors account for roughly 6% of the oral diabetes market right now, and that is multiples too low. It’ll take a big education effort to broaden and deepen prescribing. We’ll continue to work with our payer friends to improve access. Steglatro doesn’t change our plans. We have a unique benefit, a mortality benefit, and no one else does. Jardiance is easy to use, and we have broad access.
Q: You mentioned building on Trulicity, perhaps with oral GLP-1 or with a higher-dose of dulaglutide. Where are we with that? Can you speak to timelines?
A: Trulicity is very beneficial. It has a high ability to reduce A1c and body weight, it’s simple to use, and patients like the device because they don’t see the needle. Real-world evidence suggests that patients prefer Trulicity. We’ve also titrated Trulicity into higher doses to achieve even more A1c decline, even more body weight loss – we’ll present those data later this year, as the studies have been completed. What we want to do is have successors to Trulicity that beat semaglutide particularly in regard to body weight reduction. Our next agent in this space is a dual agonist of GLP-1/GIP in phase 2. We’ll get the data later this year to see if we can achieve more body weight reduction. Of course, everyone is wondering, what about oral? We know Novo Nordisk’s oral semaglutide will read out in 2018. We are focused on looking into various options to improve bioavailability, because we don’t want just 1%-2%. Bioavailability will have to be much higher to reduce cost of goods. We also haven’t given up on the small molecule approach to a GLP-1 agonist.
Q: You listed diabetes, dermatology, and pain management as contributing a lot to your success. Are they roughly the same size for you in terms of opportunity?
A: Migraine’s in front of us; we haven’t launched yet in migraine. We’ve been in diabetes for 95 years. We have ambitions to grow that. As you know, there’s a lot of suffering for tens of millions of Americans with this chronic disease, and we hope to help them.
Q: There have been many rumors that amazon is going to come into the pharmaceutical supply chain as a distributor. Have you had any discussions with potential new entrants into the distribution of pharmaceuticals?
A: It’s hard to deal with hypotheticals. If we were having private discussions with entities, we probably wouldn’t disclose that in a setting like this. We’re all for competition in all areas of the business – the more actors the better. If a non-traditional player wanted to enter the supply chain, we’d welcome it, and we’d sit down and talk to them. We’re here to innovate. However that innovation gets to patients, I’m sort of agnostic to that. The exception being, if distribution ends up distorting value and doesn’t allow patients to access medications, I’d like to change that, and that sometimes happens in our current system.
Over at the Biotech Showcase, Lilly Senior Director Dr. Brian Bloomquist shared that obesity is a priority, but that the company will always go after a diabetes indication first. “We’re definitely looking for glucose+, though we’d still focus on diabetes because the regulatory pathway is more defined. We wouldn’t launch for obesity off the bat, but we’d develop in this area and also in NASH following a launch in diabetes – potentially very aggressively.” This was a fascinating and somewhat unexpected statement. Historically, Lilly has shown laser focus on type 1 and type 2 diabetes rather than obesity. As recently as 4Q17, the company said it would advance high-dose dulaglutide into phase 3 for diabetes instead of obesity; although high-dose GLP-1 has shown tremendous value as an obesity drug (Novo Nordisk’s Saxenda), Lilly has said firmly in the past that it is a company focused on diabetes, not obesity or prevention. Now, it appears that Lilly plans to build obesity indications into the label of existing diabetes products. High-dose dulaglutide would be a prime candidate for obesity after the type 2 diabetes studies; could Lilly eventually seek an obesity indication for its phase 2 GLP-1/GIP dual agonist as well? CEO Mr. Dave Ricks did emphasize the weight loss benefit of GLP-1 agonist agents, including the combination with GIP, during his JPM presentation (see above). Dr. Bloomquist asserted that “obesity is very important to Lilly,” that “great advances are coming in obesity treatment,” and that “these developments could make a huge difference for metabolic syndrome overall.” With extensive clinical and commercial expertise (95 years in diabetes!), Lilly could drive serious innovation in obesity care once it starts investing meaningfully – we look forward to those days, which now seem closer than previously expected.
- Dr. Bloomquist was on a panel of industry leaders discussing major barriers in diabetes drug development, focusing especially on regulatory requirements. Dr. Harith Rajagopalan, Co-Founder and CEO of Fractyl, described the “steep pre-approval burden” on diabetes therapies. FDA is asking for hard outcomes before approving a new drug (the 2008 CVOT guidance is one example), and the clinical process for collecting these is time consuming, expensive, and generally resource-intensive. For a smaller company, diabetes drug development is thus an intimidating proposition. Metacrine CEO Dr. Ken Song elaborated on the downstream effects of this steep pre-approval burden: “Here’s the rub. If you’re trying to develop a diabetes drug, investors are not going to touch you, because you’ve got a very conservative division within FDA requiring extensive safety studies. VCs are not investing in early-stage diabetes companies. Investors and bankers don’t want to hear about diabetes. The tide may turn given the size of the epidemic, but for now, if you’re an early-stage diabetes company, it’s going to be a difficult road without partnering.” These challenges extend to NASH as well, where the regulatory environment is especially uncertain, since no drugs have been FDA-approved yet. And, they extend to prediabetes. One audience member criticized treatment inertia, and argued that we’re waiting too long to treat a diabetes diagnosis when we could be catching hyperglycemia earlier on. Of course, capturing hard outcomes will be even more time consuming, expensive, and resource-intensive in a prediabetes population – Dr. Bloomquist provided this quick response to a “complex question.” Having therapies in use for prevention could make a sizeable dent in the diabetes epidemic, reducing rates of diabetes complications and ultimately saving the healthcare system substantial amounts of money (according to IDF’s 2017 Atlas, one in eight global healthcare dollars is spent on diabetes, for a sum of ~$727 billion, and that figure only includes direct costs). Unfortunately, as we’ve heard repeatedly on the conference circuit, FDA has been reluctant to consider a prediabetes indication for metformin, which is probably the drug with the most support from thought leaders and the most empirical evidence showing prevention efficacy.
At the Biotech Showcase, ViaCyte CEO Dr. Paul Laikind unveiled plans for third-generation PEC-QT, an immune-evasive beta cell replacement therapy to complement the company’s first-generation PEC-Direct (stem cell-derived beta cell replacement involving immunosuppression) and second-generation PEC-Encap (stem cell-derived beta cell replacement with an updated device that eliminates the need for immunosuppression). PEC-QT would hinge on the development of genetically engineered, immune-evasive stem cells which, once differentiated into mature beta cells, would not trigger an immune response upon implantation (a major challenge of any beta cell replacement therapy). ViaCyte recently announced a $1.4 million grant from the California Institute for Regenerative Medicine (CIRM) to begin work on the development of such stem cells, using ViaCyte’s existing CyT49 pluripotent stem cell line as a starting point. We were excited to hear of this exciting new endeavor in stem cell research when the grant was first announced in December, and we’re even more enthusiastic to now learn that this is in fact the basis of a full-fledged new therapy for ViaCyte.
- “This third-generation strategy is where the type 1 cures field will go,” forecasted Dr. Laikind in a separate interview with our team. He characterized the CyT49 stem cell line as perhaps the “most-studied and best-tested stem cell line in existence.” Importantly, ViaCyte’s PEC-Direct and PEC-Encap already involve inducing beta cell differentiation and implanting cells into the body – Dr. Laikind thus explained that once gene editing techniques render the line less immunogenic, the rest will be relatively easy. We asked about the split of investments between type 1 cures and treatment-oriented approaches like closed loop. Dr. Laikind noted, “I think the field is still hungry for that cure – and we’re excited to be in a position to deliver it.” As he put it, advancements in type 1 diabetes care over the past 100 years have been all about administering exogenous insulin, and while there have been some remarkable improvements, ViaCyte wants to be at the forefront of a paradigm shift in disease management. We note that a type 1 cure is still a challenging scientific proposition, and that all three generations of ViaCyte’s candidate remain early-stage, but we were inspired by Dr. Laikind’s vision for the next wave of disruption in type 1 diabetes.
- Phase 1/2 PEC-Direct is the most advanced and highly-prioritized project in ViaCyte’s pipeline. This therapy involves the use of stem cell-derived pancreatic progenitor cells – designed to mature into beta cells and other components of a pancreatic islet – placed in a small encapsulation device that is surgically implanted into the body, where it eventually vascularizes and supports fully-functional insulin- and glucagon-producing islets. The first in-human trial of PEC-Direct is currently ongoing (completion expected in December 2020, with completion of enrollment expected in December 2018), and only last week hit a major milestone with the first patients receiving a therapeutic dose of the islet cell therapy. The major downside of PEC-Direct is the need for chronic immunosuppression to avoid an immune reaction to the implanted stem cell-derived beta cells; given this trade-off, the therapy has been reserved to-date only for a small subset of people with severe hypoglycemia unawareness or other complications of type 1 diabetes (ViaCyte places this estimate at about 10% of the type 1 population). However, if phase 1/2 results are positive, Dr. Laikind suggested that PEC-Direct technology could be expanded to the population of people with diabetes (type 1 and type 2 alike) who have undergone kidney transplants as a treatment for end-stage renal disease, as they are already on immunosuppressive therapy so the use of this to support PEC-Direct would pose no additional risk.
- ViaCyte’s second-gen PEC-Encap is distinguished from PEC-Direct by an encapsulation device that fully encloses the stem cell-derived beta cells, thereby circumventing the trade-off of chronic immunosuppression and making the therapy palatable to anyone with type 1 diabetes (rather than just the 10% with severe complications). However, results with PEC-Encap engraftment have not been as robust or reproducible as expected, related to technical challenges around Foreign Body Response (FBR) to the implant. Dr. Laikind explained that after surgical implantation macrophages hone in on the surface of the PEC-Encap device; they lay down a layer of cells that interfere with the vascularization required on the surface of the device, thus depriving the cells inside of oxygen and nutrients, leaving them unable to thrive. (FBR occurs with the PEC-Direct device as well, but it has no impact on the viability of the beta cells within since the device’s open channels allow easy and direct vascularization of the implanted cells in the device.) He noted that this finding was not unexpected and clinical work was required to determine how aggressive the response would be. To circumvent this, ViaCyte has teamed up with the materials science company W.L. Gore to develop an improved encapsulation device that has a reduced foreign body response and promotes better vascularization of the encapsulated cells. Dr. Laikind expressed optimism about the progress of this collaboration during our interview. Prototypes in animal models have shown a reduced foreign body response, but the timing for an improved version of PEC-Encap remains unspecified.
- If ViaCyte’s effort to develop immune-evasive stem cells is fruitful, PEC-QT could very well rise to the top of the company’s agenda as an approach to beta cell encapsulation that is both applicable to a wide range of patients and free of the complications of immunosuppression. Indeed, for combining the best of both worlds from PEC-Direct and PEC-Encap, Dr. Laikind predicted that “in the long-term, third-gen PEC-QT will be the last generation” in ViaCyte’s type 1 cure efforts.
Amgen CEO Mr. Bob Bradway touted Repatha’s recent label update for the prevention of CV events, reiterating that this should bolster the company’s ongoing efforts to improve reimbursement for the PCSK9 inhibitor (evolocumab). The FDA expanded Repatha’s label to include the prevention of heart attack, stroke, and coronary revascularization in early December 2017, on the basis of the FOURIER trial, in which Repatha reduced risk for the composite primary endpoint (CV death, non-fatal MI, non-fatal stroke, hospitalization for unstable angina, or coronary revascularization) by 15% (p<0.0001 vs. placebo) and for the key secondary endpoint of three-point MACE (CV death, non-fatal MI, or non-fatal stroke) by 20% (p<0.00001). Access remains the defining hurdle for Repatha and the PCSK9 inhibitor class as a whole, with poor reimbursement translating to low prescription volume. Mr. Bradway expressed hope that this label update – the first indication of its kind for a PCSK9 inhibitor – will improve the product’s value proposition in payers’ eyes since it shows Repatha’s benefit on concrete, costly outcomes like heart attack, stroke, and ensuing hospitalizations. Negotiating with payers to improve Repatha reimbursement is a much-discussed “top priority” for Amgen, so the company’s intention to leverage this new CV indication in these efforts comes as no surprise. When pressed during the breakout session about the progress of these payer negotiations, Mr. Bradway cited that the utilization management criteria for insurers under CVS Health have fallen from 45 questions down to 12 (in effect, providers have to jump through 33 fewer hoops to get Repatha covered for their patients). The ODYSSEY Outcomes trial for Sanofi/Regeneron’s Praluent (alirocumab), the only other PCSK9 inhibitor on the market, is expected to read out by the end of 1Q18, and positive results here could be another key piece of leverage in these payer negotiations, underscoring compelling cardioprotective benefits for the class as a whole.
- As has been the trend among pharma CEOs, Mr. Bradway expressed enthusiasm for recent US tax overhaul, characterizing the corporate tax cuts as “appropriate, and in fact, overdue.” In the breakout session, Amgen management cited this as a major boon for R&D but provided no specifics on how exactly this extra cash will be allocated among the company’s development programs. We expect to learn more about this during 4Q17/full-year 2017 earnings season, and we hope this cash influx will be invested where it makes impact for patients.
Questions and Answers
Q: What are your expectations on Repatha post-label update? Where are you now in your conversations with payers relative to when the CVOT data first came out?
Mr. Tony Hooper (EVP of Global Commercial Operations, Amgen): We spent 15-20 years changing clinical practice to bring statins to the market, bending the curve on CV disease. We’ve maxed out the ability to change the course of that disease with statins, but Repatha on top of statins produces dramatic improvements, as we saw in FOURIER. All 2018 contracts with payers are signed. With CVS Health, our utilization management criteria are down to 12 questions from 45, so things are moving in the right direction. We continue to work on this and are also working aggressively to get the message out to cardiologists. We held 213 speaker programs in between the label update (December 1) and Christmas, which must be a record! We’re looking forward to continued progress in 2018.
Q: How does the pending ODYSSEY data for Praluent affect your outlook?
Mr. Bob Bradway (CEO, Amgen): It would be good for the class and not to mention good for medical practice and standard of care to see a result from Sanofi/Regeneron that’s consistent with ours.
7. Gilead Shines a Light on NASH Pipeline: Three Candidates Spanning Three Different Drug Classes
Gilead CEO Dr. John Milligan positioned liver disease as one of the most promising areas for future growth in the company’s broad pharmaceutical pipeline, which includes three NASH candidates. He called particular attention to the recent readout of positive phase 2 results for ACC inhibitor GS-0976. This 12-week study (n=126) investigated two doses (5 mg and 20 mg) of GS-0976 and was the first RCT of an ACC inhibitor in NASH patients with fibrosis stages F1-F3 (a less advanced form of NASH). The higher dose of GS-0976 (a once-daily oral formulation) was associated with significant reductions in hepatic steatosis (fat buildup, as measured by MRI) and a noninvasive marker of fibrosis (TIMP-1) vs. placebo. Other measures of liver stiffness and markers of fibrogenesis were not significantly improved. Dr. Milligan also highlighted the ongoing phase 3 STELLAR program for the company’s leading NASH candidate, ASK-1 inhibitor selonsertib. STELLAR 3 (n=~800, expected to complete October 2023) will study the candidate in people with NASH and F3 bridging fibrosis while STELLAR 4 (n=~800, expected to complete October 2023) will enroll patients with more severe F4 cirrhosis of the liver due to NASH. Dr. Milligan additionally highlighted the company’s FXR agonist GS-9674, currently in phase 2 development with a study expected to complete this month, though we’ll have to wait until later in 1H18 for the full data readout. Overall, we remain impressed by Gilead’s investment in NASH. With three promising drug candidates spanning three separate drug classes (ACC inhibitor, ASK-1 inhibitor, and FXR agonist), Gilead is well-position to investigate unique combination therapy approaches with two or even all three of these agents. This is certainly an area for NASH enthusiasts to keep an eye on. See our NASH competitive landscape for a complete overview.
8. GSK CEO Ms. Emma Walmsley Shares Her Take on Diversity in the Pharmaceutical Industry
While GSK has moved on from GLP-1 agonist Tanzeum (albiglutide), discontinued last year in an overall restructuring, and while the company’s commitment to and interest in diabetes is smaller than it was in the Avandia days, we very much relished the opportunity to see CEO Ms. Emma Walmsley in action. At a conference where female presenters comprise <4% of the 540 people speaking, Ms. Walmsley is high profile not only in her leadership of one of the world’s pharmaceutical giants, but also as one of a handful of women to take the stage in the Grand Ballroom. After Ms. Walmsley’s presentation on GSK’s sharpened focus in HIV, respiratory, and infectious diseases, one attendee closed the breakout session by asking for her thoughts on diversity. Ms. Walmsley replied eloquently, “This is obviously a really important question, and I welcome the transparency being brought. These jobs come with an enormous privilege and tremendous responsibility, which is all about the discovery, development, and distribution of truly differentiated medicine – and then there’s a responsibility to our shareholders. I tend to define myself by my ability to deliver on those points, but I also recognize myself as a certain leader and I want to represent diversity in that sense, and it’s clearly needed in this industry. But that’s not the only point of diversity that needs to be represented; I’m just as focused on representation of LGBTQ people, race, and even personality. You cannot be a modern employer in an industry that should be much more aggressively future-facing without being demanding on this topic. One job as a CEO is to set the tone of what you expect, and I do think part of our Trust priority is being a modern employer. We should all be much more proactive about supporting all types of diversity.” It’s disappointing that we haven’t heard a male CEO receive a question about diversity, but we were nevertheless impressed by Ms. Walmsley’s perspective.
Big Picture Highlights
1. CEO Ms. Anne Wojcicki Presents 23andMe’s New Weight Loss Intervention Study
Ms. Anne Wojcicki, powerhouse CEO of the personal genetic testing company 23andMe, argued that we’re at a tipping point in digital health with people seeking to take ownership of their own health data. 23andMe exemplifies this perfectly: The business model around the company’s $99 genetic testing kit hinges on people’s innate curiosity about their ancestry and disease risk, and desire to understand, have access to, and make lifestyle changes based on their own genomes. Ms. Wojcicki underscored that modern health and wellness is less about visiting your physician, and more about the lifestyle decisions you make everyday – a powerful argument for giving people direct access to their health data, provided it is framed in an approachable, easy-to-understand way. Of course this task is “not trivial,” and takes an incredible amount of time and care to get right, Ms. Wojcicki explained.
- Enthusiastic about the potential of precision medicine, Ms. Wojcicki highlighted 23andMe’s new Weight Loss Intervention Study, which aims to determine which genetic variants are associated with weight loss and the effectiveness of different diet/exercise methods based on an individual’s genetic background. This is the first-ever interventional study from 23andMe, and it also represents the first-ever attempt at generating a genome-wide association with behavioral weight loss. Participants with overweight will be recruited from a group of >one million 23andMe customers who consented to research studies. These individuals will be assigned to one of three behavioral weight loss interventions. Data on any correlations between genotype and weight loss success will be announced on an ongoing basis beginning within just a few weeks of study initiation. The analysis will continue for at least one year according to the company website. Notably, this is not 23andMe’s first foray into obesity: Less than one year ago, the company launched its Genetic Weight Report, a machine learning project that calculates a person’s genetic predisposition to weigh more or less than average. The Genetic Weight Report relies on opt-in surveys, and Ms. Wojcicki previously reported that surveys of this kind have an >80% response rate, illustrating how eager people are to contribute to scientific knowledge and in turn, to learn more about themselves. It’s certainly noteworthy that 23andMe’s first foray into producing original research addresses obesity – a scientifically challenging area made even more difficult by extreme stigma and low public awareness of obesity as a disease. As revealed in the landmark ACTION study, only 24% of people with obesity in the US are offered follow-up care for weight loss after raising this as a concern with their physicians, and indeed, few physicians know how to effectively advise patients about losing weight (an issue that’s complicated by unpredictable response/non-response rates to various obesity interventions – diet, exercise, and pharmacotherapy alike). If there was ever an area where innovative companies like 23andMe could make an impact, this is it.
- Ms. Wojcicki characterized 23andMe as a “data company” rather than a genomics company, explaining that her chief goal is to generate insights. 23andMe’s massive database is currently the largest re-contactable repository of genetic information in the world (a whopping 85% of 23andMe users opt-in to having their data used for research purposes). The main implications of this now are 23andMe’s offerings of personalized information about ancestry and disease risk, but Ms. Wojcicki underscored that this is just the beginning. 23andMe opened a Therapeutics Division in 2015 that aims to identify novel drug targets using the database. CV disease was listed as a key focus area for these innovative drug discovery efforts (alongside oncology, skin, and respiratory).
- We’d add that it was fantastic to catch one of the only 20 (of 540) presentations at JPM 2018 delivered by a female CEO. According to STAT, 94% of this year’s presenters are male (and in our estimation the composition of the audience is not much different).
-- by Adam Brown, Ann Carracher, Megan Clyne, Abigail Dove, Brian Levine, Payal Marathe, and Kelly Close