Memorandum

Lilly 4Q14 – Humalog down 1% to $730 million; Strong early launch for Trulicity; Regulatory milestones for empa/lina, peglispro, biosimilar glargine in 2015 – February 2, 2015

Executive Highlights

  • Total sales for Lilly’s diabetes portfolio in 4Q14 were flat at $1.26 billion, largely due to a slow performance (1% decline to $729 million) from Humalog – a tough comparison from 4Q13 also didn’t help. Full-year 2014 sales in diabetes totaled $4.67 billion, up 4% year-over-year.
  • Lilly’s brand-new once-weekly GLP-1 agonist Trulicity posted over $10 million in sales in less than a quarter on the market, outperforming the recently launched SGLT-2 inhibitor Jardiance ($5.6 million) that was launched in 3Q14. Some were surprised by this; we think it’s harder for the “me-too” SGLT-2 than for the “best in class” GLP-1 once weekly.
  • Key expected milestones for Lilly in 2015 include an FDA decision on its SGLT-2/DPP-4 empagliflozin/linagliptin fixed-dose combination (partnered with BI), regulatory submission of its novel basal insulin peglispro, and EU launch of its BI-partnered biosimilar insulin glargine.

Lilly provided its 4Q14 update on Friday morning in a call led by highly respected CEO Mr. John Lechleiter. The company’s overall diabetes portfolio posted flat results for the quarter, largely due to an unusually poor performance (1% year-over-year decline) by the flagship rapid-acting insulin Humalog (insulin lispro) that management attributed mainly to one-time events (wholesaler behaviors and Medicare/Medicaid utilization combined had a negative impact of ~16 percentage points on growth) rather than long-term trends, although we have seen rapid-acting insulin become a more competitive area subject to greater pricing pressures than we’ve seen before (largely driven by Lilly itself). Full-year results were more positive: the diabetes portfolio grew 4% YOY in 2014 to $4.7 billion. We were also very impressed to see Lilly’s very newly-launched once-weekly GLP-1 agonist Trulicity (dulaglutide) bring in over $10 million in sales in less than a quarter on the market. We will be watching closely in 2015 to see how what we see as a next-gen once-weekly GLP-1 will help expand the overall GLP-1 agonist class – its remarkable ease of use will help (we first identified and wrote about this at EASD last year). Notably, Lilly and BI agreed in October on a set of structural changes to their diabetes alliance, in which the companies will independently market products they brought to the alliance in a small proportion (~10%) of markets; the changes will go into effect in 2015. We assume in these cases, collaboration is harder and more trouble than it’s worth.

As noted in Lilly’s 3Q14 update and its more recent 2015 guidance call, 2014 has been an incredibly productive year for the company in terms of regulatory submissions and approvals, and by some metrics Lilly now has the broadest portfolio in diabetes. Lilly has already checked off one of the expected 2015 milestones highlighted in the call with this morning’s approval of Glyxambi (empagliflozin/linagliptin fixed-dose combination), which is the first in this promising new class to reach the market. Key developments are also expected for Lilly’s novel basal insulin peglispro and biosimilar insulin glargine, both of which were the subject of somewhat contentious discussion during Q&A. Management also highlighted Lilly’s recent agreement with Adocia to develop the ultra-rapid-acting BioChaperone Lispro; we are pleased to see a possible successor to Humalog emerge and make progress with the initiation of a phase 1b trial last week. Read on below for more financial and pipeline highlights from the call.

Financial results for Lilly’s major diabetes products

Product

4Q14 Revenue (millions)

Reported Growth from 4Q13 / 3Q14

2014 Revenue (millions)

Reported Growth from 2013

Humalog

$729

-1% / 3%

$2,785

7%

Humulin

$396

7% / 18%

$1,400

6%

Tradjenta

$83

-5% / 5%

$329

32%

Trulicity

$10

- / -

$10

-

Jardiance

$6

- / 24%

$10

-

Glucagon

$25

7% / -22%

$105

7%

Actos

$10

-33% / -17%

$42

-27%

Total Diabetes

$1,258

0% / 7%

$4,672

4%

Financial Highlights

  • Total sales for Lilly’s diabetes portfolio in 4Q14 were essentially flat (up 0.5%) year-over-year (YOY) as reported at $1.26 billion; full-year 2014 sales totaled $4.67 billion, up 4% YOY. The slow performance of Lilly’s flagship rapid-acting insulin Humalog (insulin lispro) likely contributed to the decline, as the product has been responsible for a significant portion of growth in past quarters and posted particularly strong sales in 3Q14 (up 15%, driving 3Q14 growth for the entire diabetes portfolio of 10%). Sequentially, total diabetes sales rose 7% in 4Q14. As in past quarters, year over year quarterly growth was fairly balanced in the US (0.2%) vs. ex-US (0.8%). See the table above for an overview of the 4Q14 and full-year financial results for Lilly’s major diabetes products.

Insulins (Humalog and Humulin)

  • Humalog sales declined 1% YOY as reported to $729 million in 4Q14; full-year sales rose 7% YOY to $2.79 billion. Humalog has generally performed well in recent quarters (11% growth in 2Q14 and 15% growth in 3Q14), and management attributed the dip largely to one-time effects of wholesaler buying patterns and “adjustments driven by greater utilization in Medicaid and Medicare” that shaved ~16 percentage points off the growth rate. Sequentially, sales rose 3%. Performance was stronger ex-US (1.5% growth) than domestically (2.2% decline), consistent with the explanation that US-only factors (i.e. Medicaid/Medicare utilization) were the major contributors to the overall decline.  
    • Lilly management alluded to contracting pressure and a “highly competitive” diabetes market when discussing Humalog’s performance. Lilly’s ability to secure a major Express Scripts formulary contract for Humalog in 2014 almost certainly bolstered the product’s performance throughout the year, although a higher than usual amount of rebating was surely used to secure that contract. Management mentioned during the company’s recent 2015 guidance call that Novo Nordisk appeared to have made greater gains this cycle in terms of exclusive formulary coverage, and we would expect to see swings in either direction amidst the high-stakes series of formulary negotiations that will continue to occur into next year. On the positive side for Lilly, payer negotiations for the recently launched GLP-1 agonist Trulicity seem to be going very well (see below). The current trend toward high-stakes single-source formulary contracts has been a topic of discussion during almost every recent update from a major diabetes drug company. We are particularly concerned to see providers increasingly forced to make prescribing decisions based solely on which products are covered by their formularies, especially in classes like GLP-1 agonists where different products in the class are less interchangeable. We continue to worry that too harsh a reimbursement environment in diabetes (particularly relative to other disease areas) could drive companies away from the field, potentially depriving patients of much-needed novel therapies – indeed, in a recent call from BMS, management spent much of the call boasting about how smart they were to leave diabetes and boost profitability.
  • Lilly’s human insulin Humulin grew 7% YOY to $396 million in 4Q14; full-year sales rose 6% to $1.4 billion. Sequentially, sales rose a striking 18% against a fairly easy comparison (5% sequential decline in 3Q14). YOY growth for the quarter was stronger in the US (9%) than ex-US (5%), while the opposite was true for the full-year results (5% growth in the US vs. 8% growth ex-US). Management mentioned in 3Q14 that Humulin had performed particularly well in Emerging Markets (especially in China) due to strong volume growth; we are curious if that was also the case in 4Q14.

Trulicity

  • In its first quarter on the market, we were thrilled to see Lilly break out sales of its brand-new once-weekly GLP-1 agonist Trulicity (dulaglutide) and even more pleased that the product brought in $10.4 million in sales after less than a quarter on the market. This figure only includes sales from the US, where Trulicity was launched in mid-November. The product received EMA approval in late November; management said during the call that launches were ongoing in Germany and the UK and expected in additional EU countries over the course of 2015 and 2016.
    • Lilly is currently targeting its Trulicity marketing primarily to endocrinologists but is in the process of expanding the launch to include the primary care segment. Management indicated that the company believes specialists represent ~30% of the market opportunity for Trulicity and that “breadth of prescribing” would be a key metric for evaluating the product’s success. We imagine that many PCPs would find Trulicity to be one of the more appealing GLP-1 agonists available given its very user-friendly delivery device and the convenience of once-weekly administration; these early sales figures certainly bode well for the product’s broader success in 2015. We wonder how much “baggage” exists with PCPs over what may have been their initial introduction to GLP-1 – a harder to use product.
    • We learned during Novo Nordisk’s 4Q14 update that Trulicity is off to a good start in terms of formulary access (including Express Scripts’ national formulary) with a list price comparable to Victoza (liraglutide). Mr. Conterno spoke very enthusiastically about payer discussions for Trulicity during Lilly’s recent 2015 guidance call, suggesting that payers understand the product’s value and that companies should not be forced into the sort of price or rebate wars that have developed in the basal insulin market – this was very interesting to hear it characterized this way since patients see pricing as anything but low. A key question in our view is to what extent payers (and patients and providers) will view once-weekly GLP-1 agonists as distinct from their once-daily counterparts. Novo Nordisk management seems to believe that Trulicity and Victoza will largely appeal to different populations, suggesting it is unlikely “that one of them will…take the whole market.” Both companies have also predicted that the Trulicity launch will increase uptake of the entire GLP-1 agonist class rather than simply dividing the existing market.

Jardiance

  • Lilly/BI’s SGLT-2 inhibitor Jardiance (empagliflozin) posted $5.6 million in sales in 4Q14, bringing total 2014 sales to $10.1 million. Most of the sales ($4.6 million in 4Q14 and $9 million for the year) came from the US, where the product was launched in late August. Jardiance was approved in Europe in May and in Japan within the past month; management did not provide details on the progress of the international launches, but Lilly had indicated in 2Q14 that the UK and Germany were likely to be early launch markets.
    • The SGLT-2 inhibitor class continues to perform well overall, with the introduction of new products serving mainly to increase uptake of the class. J&J’s Invokana (canagliflozin) reached $201 million in sales in 4Q14, bringing full-year 2014 sales to ~$500 million (according to our estimates from previous quarters). AZ has not yet reported 4Q14 results, but the company reported continued positive trends for Farxiga (dapagliflozin) in its 3Q14 update as commented that the addition of its SGLT-2 inhibitor to the market served to accelerate growth for the entire class rather than drawing patients from Invokana.
    • We were somewhat surprised to see Trulicity outperform Jardiance in 4Q14; total 2014 sales for the two products were essentially equal despite Jardiance having been on the market for several more months. This may be due to the fact that Trulicity has convenience advantages in a more heterogeneous class whereas Jardiance is less easily differentiated from its more established SGLT-2 competitors. Of course, the launches of both products are at a very early stage and these early results may not represent a long-term trend – we will be watching closely in 2015 to see if it continues.

Tradjenta

  • Sales of Lilly/BI’s DPP-4 inhibitor Tradjenta (linagliptin) declined in 4Q14 for the first time since the product’s launch, falling 5% YOY to $83 million. Full-year results were more positive (32% growth YOY to $329 million), largely reflecting strong growth in the first half of the year. Sequentially, sales rose 5% in 4Q14 vs. a fairly easy comparison (13% sequential decline in 3Q14).  
    • Tradjenta’s performance was markedly worse in the US vs. ex-US, consistent with recent results for the overall class. Domestic sales fell a striking 35% to $27 million while ex-US sales rose 22% to $56 million. The DPP-4 inhibitor class has experienced a fairly constant slowdown in the US since 1Q13, while international performance has been more variable. The slowdown could reflect a number of factors, including increased pricing pressure from payers, greater competition, expanded uptake of SGLT-2 inhibitors, and the impact of controversies over pancreatitis and heart failure. On heart failure, we hope that the soon-to-arrive primary results from Merck’s TECOS CVOT for Januvia (sitagliptin) can provide some clarity.

Other Products

  • Sales of Lilly’s glucagon formulation rose 7% YOY to $25 million in 4Q14; full-year sales rose 7% to $105 million. Sequentially, sales declined 22% after a strong performance in 3Q14. The vast majority of the product’s sales are in the US. Lilly’s glucagon and other approved glucagon products will likely be challenged in the future by new formulations (from Xeris, Zealand, and Biodel, among others) that do not require reconstitution. However, management revealed during the call that Lilly has a new candidate for hypoglycemia in phase 1 trials, suggesting that the company may be planning to compete in the next-generation glucagon market.
  • Lilly’s share of Actos (pioglitazone) sales totaled $10 million in 4Q14, down 33% YOY. Full-year sales fell 27% YOY to $42 million. Actos is now generic; even outside this, it has performed poorly in recent years due to both established safety signals (heart failure and bone fractures) and allegations of a link to bladder cancer. Lilly is currently a co-defendant with Takeda in several lawsuits regarding the disclosure of bladder cancer safety data for Actos – a judicial ruling this fall reduced the punitive damages in one such lawsuit to $27.6 million for Takeda and $9.2 million for Lilly (the original damages were a whopping $6 billion for Takeda and $3 billion for Lilly).

Pipeline Highlights

Biosimilar Insulin Glargine (Basaglar/Abasaglar)

  • Lilly/BI’s insulin glargine formulation is expected to launch in the EU in 2015; the timing of a US launch is dependent on the outcome of ongoing patent litigation by Sanofi. The product (trade name Abasaglar in Europe, Basaglar in the US) was approved as a biosimilar in Europe in early September, and country-by-country launches are expected to begin once Sanofi’s patent for Lantus expires in mid-2015. We also learned during the call that the drug recently received approval in Japan. In the US, Basaglar received tentative FDA approval in August, but Sanofi’s patent lawsuit triggered a stay of final approval. Unless a court rules in Lilly’s favor before then, Basaglar would likely not be approved until mid-2016. We learned in Lilly’s 2015 guidance call that a pre-trial Markman hearing (in which a judge determines the meaning of words in patent claims that are under dispute) in the lawsuit occurred in December; the court date is scheduled for late September 2015.
    • During Q&A, management pushed back against the suggestion that “price is really the only selling point” for the biosimilar glargine. Management refuted an analyst’s suggestion that the product would be need to be priced “at whatever it takes to compel payers and prescribers to get on board,” saying it represents an “important alternative” in the basal insulin market and should hold significant appeal for consumers. While the introduction of biosimilar insulins is widely expected to lead to at least some reduction in costs, these comments are consistent with Lilly’s previous statements that the company plans to market Basaglar as it would any branded product. Price is far from the only area of uncertainty surrounding biosimilar insulins – it remains to be seen how much confidence patients, providers, and payers will have in the products’ safety and clinical equivalence to existing products, and how powerful the effect of brand loyalty to Lantus will be.

Basal Insulin Peglispro

  • Lilly continued to express confidence in its novel basal insulin peglispro (PEGylated insulin lispro), which should be submitted to regulatory authorities as early as 1Q15. As in 3Q14, management highlighted the phase 3 trial results in type 1 and type 2 diabetes showing superior A1c reductions with peglispro compared to Lantus (“something that has never been shown before”). However, during Q&A one analyst bluntly stated that Lilly’s excitement is “not congruent at all” with how investors view the product and that the safety signals seen in phase 3 trials “could basically take down [its] commercial prospects.” In response, management said only that full results (to be presented at ADA in June) would better illustrate peglispro’s full benefit/risk profile and that the benefits of such substantial A1c reductions should not be underestimated. In our view, peglispro is best characterized as a high-risk/high-reward candidate; we imagine that its impressive efficacy (advantages on weight and nocturnal hypoglycemia vs. Lantus in addition to superior A1c reductions) could hold great appeal for certain groups of patients, but the drug’s worrying effects on liver enzymes and cardiovascular parameters will likely present significant challenges for its approval. As a high-risk/high-reward candidate, Peglispro is an example of a drug candidate that could greatly benefit from a conditional or subgroup approval, something that is unfortunately not an established option in type 2 diabetes.

BioChaperone Lispro

  • During the call, management highlighted Lilly’s recent partnership with Adocia to develop the ultra-rapid-acting BioChaperone Lispro. Management described the candidate as “the most compelling asset” in its class and expressed confidence in its faster-on, faster-off profile and potential to reduce hypoglycemia and glycemic variability. As a reminder, Adocia recently initiated a phase 1b trial that will evaluate the effect of BioChaperone Lispro vs. Humalog on postprandial control in patients with type 1 diabetes. The product has already shown positive results in two phase 2a trials, which we assume helped convince Lilly that BioChaperone Lispro could represent serious competition for Humalog. Given the increasing commodification of the rapid-acting insulin analog space, it is good to see a possible successor to Humalog emerge.
    • Other companies developing ultra-rapid-acting insulins include Novo Nordisk, Biodel, and MannKind/Sanofi. Novo Nordisk reported topline results from a second phase 3 trial of FIAsp (ultra-rapid-acting insulin aspart) in its 4Q14 update; results showed superior A1c reductions (0.9% greater from a baseline of 7.9%) with the addition of FIAsp vs. basal insulin and metformin alone. Biodel recently announced positive phase 2a results for its U400 ultra-rapid-acting human insulin BIOD-531; the beginning of phase 3 trials for its U100 ultra-rapid-acting human insulin BIOD-123 is gated by the search for a partner. Though MannKind/Sanofi’s inhaled insulin Afrezza (available in some US pharmacies as of this week!) is not technically considered more rapid-acting than injected rapid-acting analogs according to the label, some patients’ real-life experiences have indeed been different, as some PK/PD data has shown action profiles similar to endogenous insulin.

Other Pipeline Updates

  • Lilly highlighted the expected FDA decision and EU submission of its BI-partnered empagliflozin/linagliptin fixed-dose combination (FDC) as key 2015 milestones. Excitingly, Lilly can already check the first of those milestones off its list, as the FDA approved the product (trade name Glyxambi) this morning. This approval makes the product the first SGLT-2/DPP-4 FDC to reach the US market. The main competitor in this class is AZ’s saxagliptin/dapagliflozin FDC, which was recently submitted in both the US and the EU. We have been eagerly awaiting the arrival of these combinations for some time and are curious to see whether they will live up to the hype. Pricing remains a major unanswered question; in particular, we wonder whether Lilly/BI will attempt to price the products according to the sum of their parts, as this could place them out of reach for many patients.
  • Management shared that two new diabetes-related candidates entered phase 1 in 4Q14, one for hypoglycemia and one for diabetic nephropathy. Lilly has not disclosed the identity of these compounds (both biologics), and we did not find any trials posted on ClinicalTrials.gov. We assume the hypoglycemia asset is some sort of stable glucagon formulation – see our Biodel F4Q14 report for an overview of the competitive landscape in this area.  
    • Lilly’s early-stage pipeline includes several other diabetes-related candidates. The company has a GLP-1/glucagon dual agonist (oxyntomodulin) and a glucagon receptor antagonist for type 2 diabetes in phase 2, as well as another phase 2 GLP-1/glucagon dual agonist in partnership with Transition Therapeutics. In phase 1, Lilly has three undisclosed biologics for diabetes and one small molecule for chronic kidney disease in addition to the compounds mentioned during the call. Very intriguingly, during Q&A, management coyly acknowledged that oral GLP-1 agonists are an area of interest for Lilly. All in all it is good to early-stage progress in Lilly’s diabetes pipeline, which was largely emptied with the recent wave of approvals.
  • Lilly confirmed that the Humalog U200 KwikPen has been resubmitted in the US. The product was approved in Europe in October, making it the first U200 mealtime insulin to reach that market. As a reminder, we learned in 1Q14 that Lilly had received a Complete Response Letter from the FDA for Humalog U200 and that a US resubmission was planned for 2H14. Lilly also has a U500 formulation of Humulin that was highlighted as a driver of insulin growth in 2Q14.

Questions and Answers

Big Picture:

Q: You have several drugs for diabetes either in the pipeline or that have recently been approved. This includes your new GLP-1, your insulin glargine, your novel basal insulin, empagliflozin, and then various iterations of those products. Of the four that I’ve just listed, which one product excites you the most in terms of the future commercial potential five years out?

A: I really believe that I can make a strong case for each one of these products that you have mentioned. We just discussed Trulicity with the question about the launch (see below). Let’s look at Jardiance for a second. We have the empa/lina fixed-dose combination coming up. We have a cardiovascular safety study that we expect is going to read out in the middle of the year. Those to us are very significant events when we look at that brand. I’ll come in on insulin glargine in just a second (see below). And of course, we do believe that with our innovative basal insulin peglispro, we have been able to show reductions in A1c vs. the standard of care in basal insulin therapy, which is something that has never been shown before. So I can make a very good case for each one of these products. We have to basically launch the products and see how they’re accepted by our customers.

Marketed Insulins:

Q: On diabetes, with all the pricing pressure talk, can you remind us of the net price increases you’ve been taking for 2014 and recently and if you think that’s sustainable going forward?

A: I assume your question refers to our insulin franchise. We have taken fewer price increases but we have also increased our rebates; that’s basically how we contract with payers. As we look at the results for Humalog in the US, where we basically saw -2% comparing 4Q14 vs. 4Q13, there are a couple of things I would have you keep in mind. Yes of course we did have pressure from managed care contracts. But we had two special events impacting those results. We had wholesaler buying patterns that contributed about nine points to the decline, and then adjustments primarily driven by greater utilization in Medicaid and Medicare contributed about seven points. So you can think of those as anomalies for the quarter, but clearly we do see a highly competitive market when it comes to diabetes.

Q: Can you update us on what you’re seeing globally in the premix market, how market share is evolving here, and what you see from a demand perspective for a once-daily premix product?

A: Clearly the premix market has been, in many areas of the world, declining, with the exception of emerging markets where we see continued growth of this category. When we look at the share performance, Lilly has done fairly well. So we are gaining share in this market, whether it’s in the US, Europe, Japan, or emerging markets. I’m not sure how to comment on whether a once-daily premix would be a strong benefit. We will have to see what the clinical data for that is. If I’m speculating about what you’re talking about, a premix needs to provide at least non-inferior control to whatever the standard treatment is when it comes to diabetes. And this particular premix that I think you’re talking about did not meet the primary endpoint when it comes to A1c vs. basal-bolus therapy. So clearly, all is going to depend on the actual clinical data.

Trulicity:

Q: On Trulicity, you’ve been very bullish on the opportunity in the past given the ideal mix of attributes, so I was hoping you could give us some early metrics on launch success beyond the simple IMS type of data we all see?

A: I think we have to keep in mind that in mid-November we launched this product in the US to specialists. Specialists roughly represent about 30% of the market opportunity. We are in the process of launching as we speak in primary care right now and as I have shared in the past, for us it is critical that we basically expand the GLP-1 market. We believe that Trulicity can be an important catalyst for the overall growth of the GLP-1 class. So we basically have to wait for that. In terms of metrics, we mainly want to make sure that there is a strong breadth of prescribing, particularly among primary care customers.

Q: Novo Nordisk is obviously trying to develop their GLP-1 as an oral formulation. Is there a reason why you would or should not do the same thing for dulaglutide?

A: I cannot comment on our specific plans when it comes to oral GLP-1s, but we have expressed that this is an area of interest to us.

Biosimilar Glargine:

Q: I’d love to hear how you think the commercial rollout of your version of insulin glargine will play out both in Europe and the US, ignoring any of the legal challenges that are being mounted against you. I know you can’t comment on price specifically, but can you confirm that generally speaking, price is really the only selling point with a product like this and therefore you’ll likely price it at whatever it takes to compel payers and prescribers to get on board?

A: Is price the only way to compete? I would say no. And I won’t share how we intend to compete when it comes to our commercial rollout, but clearly we do have a portfolio of diabetes solutions. We know that in diabetes, price does play a role. We have delivery devices, and we think that we will be able to offer our customers an important alternative when it comes to glargine.

Q: Can you talk about Lilly’s preparedness ahead of the EU launch of the new insulin glargine product this year?

A: I’m not sure what I can say other than we are ready. Clearly, we expect to launch in Europe this year post the expiration of the Lantus patent.

Basal Insulin Peglispro:

Q: On your novel basal insulin, you continue to talk bullishly about it. On your early January guidance call, you said this remains a very important product for the company. And that’s just not congruent at all with how consensus views the drug. Consensus is very skeptical, recognizing that there might be some positive efficacy attributes but that there are also some unique and potentially worrisome toxicities like fatty liver. And in a competitive category like insulin, I think that unique side effects could basically take down the commercial prospects for the product. So I’m hoping you can tell us what you think analysts are missing with this program?

A: On the efficacy side, I think what we basically have is five positive phase 3 trials against Lantus. Now let’s keep in mind that we have not disclosed what the level of improvement is, but statistically significant improvement in A1c in five trials is unprecedented. A1c reduction has a tangible benefit when it comes to outcomes, particularly the development of microvascular complications. So we see these as extremely important. You spoke of some of the signals that we saw in our phase 3 programs. At this stage, I think we have to wait to disclose the data at ADA for you to be able to see exactly what is the benefit/risk profile of this product.

BioChaperone Lispro:

Q: On BioChaperone insulin lispro, can you possibly characterize the profile of that product? What phase of development is it in and when do you anticipate it might go into clinical trials? And how might it contrast with the insulin oligo being worked on by one of your peers?

A: This product is already in the clinic. We do have some phase 1 data. And the reason we did a partnership is, as we looked at both our internal programs as well as what was out there, we felt this was the most compelling asset when we looked at the profile. We’re looking for something that is faster on and faster off with the benefits that that could bring, including lower rates of hypoglycemia and lower variability when it comes to overall blood glucose.

Q: What needs to be proven to advance the BioChaperone program into phase 3?

A: I unfortunately won’t be able to discuss the program we have for our BioChaperone. What you should expect is we need to make sure that this product is going to be effective in both type 1 and type 2 diabetes. And we intend to conduct the right clinical studies to ensure that we can have a thoughtful phase 3 commercial decision. As I mentioned, clearly, we already have multiple insulins on the market. So we need to show some benefit when it comes to differentiation vis-à-vis what’s already marketed, but we won’t be able to comment on that because we believe that’s important competitive information.

--by Emily Regier, Manu Venkat, and Kelly Close