Memorandum

Takeda 3Q16 – Nesina (alogliptin) sales decline 7% YOY; Nesina/metformin combination approved in Japan; No Actos (pioglitazone) sales broken out – November 2, 2016

Executive Highlights

  • Revenue from DPP-4 inhibitor Nesina (alogliptin) fell 7% year-over-year in constant currencies (despite growing 12% YOY as reported) to $114 million (11.6 billion JPY). This was driven by declining sales in Japan and the US, which more than off-set sales growth in Europe/Canada and emerging markets.
  • A Nesina/metformin fixed-dose combination was approved in Japan in September, one year after Takeda submitted a New Drug Application. We’re eager to see how this affects Nesina franchise sales in Japan going forward, especially since combination products seem to be driving DPP-4 inhibitor class growth.
  • For the second consecutive quarter, Takeda did not break out sales for TZD Actos (pioglitazone) – waning popularity for the drug stands in contrast to positive commentary we’ve heard at recent conferences.

Takeda provided its 3Q16 (F2Q16) update in a call led by CEO Mr. Christophe Weber on Friday morning. See below for our top three highlights on DPP-4 inhibitor Nesina (alogliptin), TZD Actos (pioglitazone), and the company’s pipeline.

Top Three Highlights

1. Nesina (alogliptin) sales grew 12% year-over-year (YOY) as reported but fell 7% in constant currencies to $114 million (11.6 billion JPY). Revenue fell 15% operationally YOY in the US, fell 19% operationally YOY in Japan, but nearly doubled operationally YOY in Europe/Canada as well as emerging markets.

2. As in 2Q16 (F1Q16), the company did not break out sales for Actos (pioglitazone) – we expect sales and prescriptions of the TZD agent have continued to fall. That said, we’ve heard interesting positive endorsements of pioglitazone from many diabetes thought leaders at recent conferences, including Drs. Silvio Inzucchi, Jay Skyler, Robert Eckel, George Bakris, and Robert Ratner.

3. On the pipeline front, a Nesina/metformin fixed-dose combination was approved in Japan in September 2016, and the company also has an Altos-partnered drug for gastroparesis (ATC-1906) in phase 1.

Top Three Highlights

1. Nesina (alogliptin): Down 7% YOY to $114 million (11.6 billion JPY)

Nesina (alogliptin) sales grew 12% year-over-year (YOY) as reported but fell 7% in constant currencies to $114 million (11.6 billion JPY). Sequentially, sales of the DPP-4 inhibitor dropped 13% from a base of $123 million (13.3 billion JPY) in 2Q16. By geography, the drug did well in Europe/Canada – revenue nearly doubling YOY in constant currencies to $14 million (1.4 billion JPY) – and in emerging markets, where revenue rose a remarkable 68% YOY operationally to $13 million (1.3 billion JPY). On the other hand, sales were sluggish in Japan and the US, Takeda’s largest diabetes markets. In Japan, revenue declined 3% YOY as reported and 19% operationally to $75 million (7.7 billion JPY). In the US, revenue declined 15% YOY operationally to $12 million (1.2 billion JPY). While 3Q16 was a challenging quarter for Nesina, other agents in the DPP-4 inhibitor class had stronger performances: (i) Merck’s Januvia (sitagliptin) franchise experienced an essentially flat quarter against a very tough comparison; (ii) Lilly/BI’s Tradjenta (linagliptin) franchise grew 22% YOY in constant currencies; and (iii) Novartis’ Galvus (vildagliptin) rose 6% YOY in constant currencies. We’ll be back with a whole class analysis on DPP-4 inhibitors after AZ reports Onglyza (saxagliptin) franchise sales on November 10. Since there was no mention of diabetes during the call itself, we haven’t heard management’s take on the near-future for Nesina, but we’d be curious to learn more about the company’s strategy. DPP-4 inhibitors continue to be extremely useful diabetes drugs – these products showed class growth in 1Q and 2Q16, and their favorable safety and tolerability profile makes them agents of choice for many patients, including the elderly and individuals with renal impairment. The graph below depicts trends in Nesina sales since 4Q10.

Figure 1: Nesina Sales (4Q10-3Q16)

2. Actos: No Revenue Reported

As in 2Q16 (F1Q16), the company did not break out sales for Actos (pioglitazone), indicating waning sales and prescriptions of the TZD agent. Takeda ceased reporting ex-Japan Actos sales in 4Q15, followed by the decision in 2Q16 not to break out Actos revenue for any region. This was not entirely surprising to us, as Lilly similarly stopped breaking out Actos sales in 1Q16 and as there have been several significant high-profile safety controversies related to the agent and the TZD class as a whole (from bladder cancer, to heart failure, to bone fractures). The drug also lost patent exclusivity in 2012. Moreover, Actos seems to be difficult to prescribe, contributing to and exacerbating negative perceptions of the agent among HCPs. We’re not so quick to write-off pioglitazone, especially because of its now-generic status and the all-important low-cost feature that comes with that. We’ve heard positive endorsements of pioglitazone from many diabetes thought leaders of late, and we wonder if the uptick in discussion might signal a renewed popularity for pioglitazone – that said, we’d expect most prescriptions would be for generic formulations.

  • The IRIS trial associated low-dose pioglitazone with reduced risk for stroke and MI, among other benefits. At EASD 2016, Dr. Silvio Inzucchi (Yale University, New Haven, CT) urged providers and guidelines-writers to consider these results, as Actos could be a practical option for many real-world patients with diabetes. We could see IRIS having a positive, upward impact on pioglitazone sales and prescriptions, although factoring these trial results into diabetes care guidelines might be an essential step in spreading awareness of pioglitazone’s confirmed safety and potential benefits.
  • At CMHC 2016, several diabetes experts shared that they write prescriptions often for low-dose (15 mg) pioglitazone. Dr. Robert Eckel (University of Colorado, Denver, CO) suggested that pioglitazone should be “near the top” of treatment algorithms, explaining that bladder cancer is no longer a major concern and that bone fracture risk is only an issue at higher doses. Dr. Eckel, along with panelists Drs. Jay Skyler (University of Miami, FL), George Bakris (University of Chicago, IL), and Robert Ratner (ADA, Arlington, VA), highlighted that pioglitazone and rosiglitazone are distinct agents – the latter sparked tremendous concern over TZDs and heart failure, even though the CV risk was associated with rosiglitazone only. Furthermore, Dr. Eckel pointed to pioglitazone’s efficacy in treating non-alcoholic fatty liver disease (NAFLD) and non-alcoholic steatohepatitis (NASH). In our view, this could be a particularly valuable benefit to pioglitazone given that no therapies are yet approved for NASH, a common comorbidity of type 2 diabetes and an area of high unmet need – we’re not sure Takeda or Lilly necessarily have the incentive to undertake a large, expensive trial of pioglitazone in NASH to investigate this potential benefit further however.

3. Pipeline Updates

On the pipeline front, a Nesina/metformin fixed-dose combination (FDC) was approved in Japan in September 2016, and the company also has an Altos-partnered drug for gastroparesis (ATC-1906) in phase 1. The FDC of alogliptin/metformin is approved in the US under brand name Kazano, and Takeda first submitted the combination to Japan’s regulatory agency in September 2015. We look forward to seeing if the FDC boosts sales for Takeda diabetes in Japan – we imagine it will have a definite positive impact, as combination products are driving DPP-4 inhibitor franchise growth and whole class growth. We’re also excited to see the company working on a treatment for gastroparesis, a common and often-overlooked diabetes complication with severe symptoms. The phase 1 candidate is very early-stage, of course, but Takeda hopefully has the resources to push the drug (an oral dopamine D2/D3 receptor antagonist) through clinical development, as gastroparesis begs for more research focus and viable therapies – we were pleased to see Allergan’s recent acquisition of Motus Therapeutics and its commitment to advance the gastroparesis candidate relamorelin in phase 3 following positive phase 2b results. Lastly, as a reminder, Takeda terminated a distribution agreement for obesity drug Contrave (naltrexone/bupropion extended-release) in early August of this year, transferring all responsibility for the product back to former-partner Orexigen.

-- by Payal Marathe, Helen Gao, and Kelly Close