Memorandum

GSK 3Q17 – GLP-1 Tanzeum sales fall 24% YOY to $29 million; No additional details on plans to withdraw support for Tanzeum – October 25, 2017

This morning, GSK provided its 3Q17 update in a call led by CEO Ms. Emma Walmsley. Sales of GLP-1 agonist Tanzeum (albiglutide) totaled £22 million ($29 million), which represents 24% YOY decline (25% in constant currencies) from £29 million ($38 million) in 3Q16. Revenue also fell sequentially, down 4% from £23 million ($30 million) in 2Q17. As usual, Tanzeum sales came almost entirely from the US market – £20 million ($26 million) vs. £2 million ($3 million) ex-US. The marked drop in 3Q17 was thus also driven by falling US sales, down 29% YOY and 9% sequentially. Outside the US, Tanzeum sales actually doubled YOY (from a very low base) and sequentially. By our calculations, Tanzeum claimed only 2% of the GLP-1 agonist market by value in 2Q17 – for a more recent comparison, sales of Lilly’s Trulicity (dulaglutide) more than doubled YOY in 3Q17 to $528 million. Based on this sluggish financial performance, management announced during GSK’s 2Q17 update that the company would “withdraw support” for Tanzeum as part of a restructuring to focus 80% of R&D on respiratory and HIV/infectious diseases. Plans for “withdrawing support” were left rather vague (cease manufacturing, complete agreed-upon clinical trials, and work with HCPs to transition patients to alternative therapies – but no timing information on any of this), and disappointingly, there were no further details shared on the 3Q17 call. It’s unfortunate to see Tanzeum struggle commercially as the GLP-1 agonist market continues its impressive growth – up ~32% YOY in 1H17, driving a remarkable 56% of growth for the overall diabetes industry. Moreover, there are many more patients who could benefit from GLP-1 agonist therapy than are currently taking it, and as we recently learned from Lilly management, prescription volume for the GLP-1 class represents <30% the volume of the basal insulin class. On the other hand, our sense from clinical data is that albiglutide lacks potency compared to dulaglutide, Novo Nordisk’s liraglutide (Victoza), and other in-class competitors, including Novo Nordisk’s upcoming once-weekly candidate semaglutide. GSK management seemed to acknowledge this difference in clinical profile as well, during Q&A on the 2Q17 call, suggesting that perhaps albiglutide development should have stopped sooner. We wonder if albiglutide could be sold to Walmart (or the equivalent)…  

 

-- by Ann Carracher, Payal Marathe, and Kelly Close