Memorandum

Lilly 3Q14 – Humalog grows 15% to $706 million; Approvals for Jardiance, Trulicity, biosimilar insulin glargine, Humalog U200 – October 23, 2014

Executive Highlights

  • Lilly’s diabetes portfolio grew 10% in 3Q14 to $1.17 billion; Humalog grew a strong 15% to $706 million, driven by volume (!) and demand; Humulin grew 9% to $336 million.
  • Lilly/BI’s newly approved SGLT-2 inhibitor Jardiance posted $5 million in sales in its first few weeks on the market, while Tradjenta’s growth trajectory slowed, in line with the rest of the DPP-4 inhibitor class. Great that management is reporting already (please take note, other Big Pharma companies …)
  • Management heralded the approval of the once weekly GLP-1 agonist Trulicity (US, likely soon in EU), the BI-partnered SGLT-2 inhibitor Jardiance (US/EU), the partnered insulin glargine biosimilar (EU, US pending lawsuit), and the Humalog U200 KwikPen (EU). We knew there was lots happening and the call underscored it.
  • Lilly is now the only company to have an approved basal insulin (albeit ex-US), rapid-acting insulin, SGLT-2 inhibitor, DPP-4 inhibitor, and GLP-1 agonist.

Lilly CEO Mr. John Lechleiter led the company’s 3Q14 financial update in a call on Thursday morning. The company’s overall diabetes portfolio performed quite well in 3Q14, growing 10% year-over-year as reported and achieving $1.17 billion in sales. This majority of this growth was driven by the flagship rapid-acting insulin analog Humalog (insulin lispro), while a contribution from the human insulin Humulin as well – together, the two insulins accounted for ~85% of the diabetes portfolio’s growth in 3Q14.

Perhaps the biggest headline from the past few months was the striking number of drug submissions and approvals – Mr. Lechleiter noted in his introduction that in his 35 years with Lilly, he could not remember a time that was so full of positive regulatory actions. This is not a CEO prone to overstatement, so that was notable to hear. The exciting and remarkably patient-friendly once-weekly GLP-1 agonist Trulicity (dulaglutide) was approved by the FDA and is likely to be approved in the EU by year’s end, the Humalog U200 KwikPen was approved by the EU, the BI-partnered “biosimilar” insulin glargine formulation Basaglar/Abasria was approved in the EU and “tentatively” approved in the US (pending Sanofi’s ongoing patent litigation), and the BI-partnered SGLT-2 inhibitor Jardiance (empagliflozin) was approved in the US and EU. Management expressed confidence in Jardiance’s potential, and noted that the first few weeks of sales data on the US market have been strong – the product posted $5 million in sales in its first few weeks on the market. Trulicity has been shipping a few days in the US, we found.

Following an eventful 3Q14, Lilly is now the only company to have a basal insulin, rapid-acting insulin, GLP-1 agonist, SGLT-2 inhibitor, and a DPP-4 inhibitor approved (in some cases, in partnership with BI). Management noted that 3Q14 brought the company a long way towards its goal of having the widest diabetes portfolio around – arguably, in some ways, it is already there now. Many of Lilly’s new diabetes therapies are not first in class, and we will be interested to see how the products are able to differentiate themselves in an increasingly crowded market.

Other news of note – glucagon is a bigger focus and had big growth to $32 million and DPP-4 inhibitor Trajenta had a rough quarter, perhaps unsurprisingly given all the class pressure.

Included below is a summary of the financial and pipeline highlights from Lilly’s 3Q14 presentation, followed by a selection from Q&A. 

Financial results for Lilly’s major diabetes products in 3Q14

Product

3Q14 Revenue in Millions

Year-Over-Year Reported Growth

Sequential Reported Growth

Humalog

$706

15%

1%

Humulin

$336

9%

-5%

Tradjenta

$79

22%

-13%

Jardiance

$5

-

-

Glucagon

$32

6%

25%

Actos

$12

-20%

24%

Total Diabetes

$1,172

10%

-1%

 

Financial Highlights

  • Sales of Lilly’s overall diabetes portfolio grew 10% year-over-year as reported in 3Q14 to $1.17 billion. By product, Humalog (insulin lispro) and Humulin (Lilly’s human insulin) were responsible for ~85% of the diabetes portfolio’s growth. Growth was fairly balanced in the US (11%) vs. ex-US (9%). Sequentially, sales of Lilly’s diabetes products fell 1% against a somewhat challenging comparison, as sales rose 9% sequentially in 2Q14. See the table above for an overview of Lilly’s major diabetes product sales in 3Q14.

Insulins (Humalog and Humulin)

  • Continuing the positive trend from 2Q14, Lilly’s flagship rapid-acting insulin Humalog was a star performer in 3Q14, with sales rising 15% as reported to $706 million. Sequentially, Humalog sales grew 1%. Despite the introduction of drug classes such as GLP-1 agonists and SGLT-2 inhibitors that (for some type 2 patients) represent an alternative to initiating mealtime insulin, Humalog continues to perform well in 2014 in both the US and ex-US. Through the end of September, global Humalog sales for the year totaled $2.1 billion.
    • In the US, Humalog sales rose 16% as reported to $415 million, driven by increased demand. Growth outside the US was also strong, at 13% year-over-year, driven primarily by increased volume. Given that insulin sales growth in the recent past has stemmed in part from increases in pricing – which has drawn the ire of many providers and influential KOLs (see our Keystone conference report from this year) and countless patients – it was refreshing from a patient access perspective to see a quarter in which price wasn’t the primary drivers.
    • For background, Lilly won a major 2014 formulary contract with the pharmacy benefit management company Express Scripts for Humalog, beating out Novo Nordisk’s NovoLog. Although some discounting was necessary to win the large contract (Express Scripts is the largest PBM in the US), the contract is very likely a contributor to the franchise’s continued strong growth in 2014.
  • Lilly’s human insulin Humulin grew 9% year-over-year in 3Q14 to $336 million. Sequentially, this total represented a slide of 5% against a somewhat challenging comparison (sales rose 11% sequentially in 2Q14). Year-over-year growth was driven by sales outside the US, which grew 17% to $170 million (due to increased volume but partially offset by lower prices), while US sales rose a more modest 3% to $166 million (driven by increased volume). When speaking during the call about whole-company performance, management noted that volume growth in Emerging Markets was particularly strong in 3Q14, especially in China.
  • During Lilly’s 2Q14 update, management mentioned that the concentrated Humulin U500 (500 U/ml) was a driver of Humulin growth. The level of competitiveness in the ultra-concentrated insulin market is much less than the level of competition in the standard-formulation human insulin market. Additionally, with severe obesity on the rise, severe insulin resistance that requires large daily insulin doses is becoming more prevalent. Humulin U500 was not mentioned during the 3Q14 call or in the supplementary materials.

Jardiance

  • We were thrilled to see Lilly break out sales of it and BI’s brand-new SGLT-2 inhibitor Jardiance (empagliflozin), which posted $4.5 million in sales in 3Q14. This tally represents barely a month of sales, at least in the US, where the product was launched in late August (most of the $4.5 million was from the US). The EMA approved Jardiance in late May, and the product has been launched in some European countries – specific countries were not discussed on the call, but during Lilly’s 2Q14 update management suggested that the UK and Germany were likely to be early launch markets.
    • During Q&A, management characterized Jardiance as off to a “strong start”, based on the first six or seven weeks of sales data. In addition to early sales for Jardiance, Lilly Diabetes President Mr. Enrique Conterno expressed satisfaction in the uptake trends seen with other SGLT-2 inhibitors (J&J’s Invokana [canagliflozin] and AZ’s Farxiga [dapagliflozin]) so far. Interestingly, he stated that the majority of new patient flow to SGLT-2 inhibitors is drawing away from patients that would otherwise have gone to sulfonylureas. We were a bit surprised to hear this, since we assume most patients on SFUs are taking these due to price rather than efficacy, particularly given their poor side effect profile and lame efficacy. We believe it is likely that the class will also draw patient flow away from DPP-4 inhibitors, GLP-1 agonists, and mealtime insulin as well – after all, SGLT-2 inhibitors’ insulin-independent mechanism means that they largely retain their effectiveness in patients with little remaining insulin secretory capacity, which cannot be said for some other diabetes drug classes. As a promising sign regarding Jardiance’s prospects, Mr. Conterno also noted that SGLT-2 inhibitor prescriptions and uptake have accelerated as more compounds have entered the class – this makes sense as we think it is really the early days of education in the class and that all launches will help all the compounds.
      • Neither AZ nor J&J explicitly broke out sales for their respective SGLT-2 inhibitors’ first quarter on the market. We estimated 3Q14 Invokana sales at ~$130 million (mostly US sales), and estimated US Farxiga sales in 2Q14 (its first full quarter on the US market) at $20-$30 million – both are speculation. AZ management suggested during the company’s 2Q14 update that the Farxiga launch in the US has been the most successful oral diabetes drug launch since Merck’s DPP-4 inhibitor Januvia (sitagliptin), which is now a blockbuster drug. To be fair, except for Sanofi’s Lantus (which was launched by an amazing team at Aventis), we’ve never seen anything like the extraordinary success of Merck’s Januvia franchise – for example, Januvia franchise sales in 2006 reached $42 million, 2007 Januvia franchise sales reached $750 million, and 2008 sales reached $1.7 billion. Peak annual sales to date were just reached in 2014 at just under $6.0 billion for the franchise. Since the time that Januvia was launched, of course, there is significantly more pricing pressure and much broader reimbursement difficulties – there are also more choices for patients, of course.
    • Management noted during the presentation that Lilly and BI have submitted a fixed-dose combination of empagliflozin and metformin to the FDA (read our report). The combination is already under review in the EU.

Tradjenta

  • Following a strong couple of years post-launch, sales growth for Lilly/BI’s DPP-4 inhibitor Tradjenta (linagliptin) slowed in 3Q14 compared with previous quarters, reflecting DPP-4 inhibitor weakness. Global sales grew 22% year-over-year as reported, far lower growth than it has seen in 2013 and earlier, and fell 13% sequentially to $79 million. Notably, Tradjenta’s performance was markedly difference in the US vs. ex-US: domestic sales fell 17% year-over-year to $24 million, while ex-US sales rose 54% to $55 million (this trend isn’t unlike recent class performance; in 2013, for example, US DPP-4 inhibitor growth was about 2%, while international growth, from a similar base, was about 15%). Unfortunately, Tradjenta’s performance was not discussed in detail during the call, nor was it addressed in the press release.

Tradjenta sales

 

2012

1Q13

2Q13

3Q13

4Q13

2013

1Q14

2Q14

3Q14

Sales (millions)

$89

$43

$55

$65

$87

$249

$77

$90

$79

YOY growth

-

230%

320%

180%

120%

180%

81%

65%

22%

  • Tradjenta’s slowdown is perhaps not surprising, as the DPP-4 inhibitor class is in a prolonged slowdown that began abruptly in 1Q13 and has remained fairly constant since then. This slowdown, which has been particularly acute in the US, reflects a number of factors, including: (i) the growing focus on cost-effectiveness by payers; (ii) increased price competition due to the entry of more competitors; (iii) the introduction of SGLT-2 inhibitors; (iv) the drying up of patient flow from TZDs; (v) the reverberations of the incretin-pancreatitis scare (which has also impacted the GLP-1 agonist class); and (iv) the theory of a negative class effect on heart failure, based primarily on a finding from the SAVOR CVOT for Onglyza. It is also possible that Tradjenta’s slowdown is due to the reallocation of marketing resources, given the recent launches of Jardiance and upcoming launch of Trulicity.

Other Products

  • Sales of Lilly’s glucagon product rose 6% year-over-year and 25% sequentially (rebounding from a challenging 4Q13 and 1Q14) to $32 million. The vast majority of the product’s sales are in the US. Although current glucagon products (including Lilly’s) require reconstitution, some companies (including Xeris and Zealand Pharma, among others) are working on ready-to-use stable liquid glucagon or glucagon receptor agonist formulations.
  • Lilly’s share of Actos (pioglitazone) sales totaled $12 million, down 20% year-over-year. Lilly is a co-defendant with Takeda in some patient lawsuits in the US regarding the disclosure of bladder cancer safety data for Actos – that issue was not raised during the call.

Pipeline Highlights

Trulicity

  • In a quarter with a huge number of regulatory approvals for Lilly, we can’t help but see the FDA’s approval of the once-weekly GLP-1 agonist Trulicity (dulaglutide) as the most exciting and the most meaningful for the company. After highlighting Trulicity’s FDA approval during the presentation, management also noted that Trulicity recently received a positive opinion from the EMA’s CHMP, which paves the way for likely approval by the end of the year. In the US, management shared that the product began shipping earlier this week. Lilly has also submitted dulaglutide for regulatory review in Japan, and expects a decision in 2H15.
  • We haven’t tried it yet but Trulicity looks to be among the very most patient friendly of the currently approved once-weekly GLP-1 agonists. As management emphasized during the call, Trulicity comes as a ready-to-use formulation in a single-use pen, which does not require any mixing, measuring, or needle attachment. The auto-injector conceals the needle until the device is pressed against the skin; with a single push of a button, the device inserts the needle, administers the injection, and withdraws the needle in a matter of a few seconds. Trulicity can be administered at any time of the day, independent of meals. Reiterating statements from previous updates, management suggested that Trulicity will be a catalyst for growth for the entire GLP-1 agonist class. AZ’s Bydureon (exenatide) and GSK’s Tanzeum/Eperzan (albiglutide) currently both require reconstitution, although the process is encapsulated within a pen and both are working on ready-to-use liquid formulations. Novo Nordisk’s once weekly GLP-1 semaglutide is being developed as a liquid formulation.
  • During Q&A, management addressed how access and payer coverage will impact Trulicity’s launch. Lilly Diabetes President Mr. Enrique Conterno estimated that roughly 50% of the US commercial plans should allow for access, though perhaps with a higher copay. Roughly 25% of commercial plans will require step edits, in which patients will need to start on another GLP-1 agonist before being able to use Trulicity. The final ~25% will be off-formulary, at least unless Lilly can negotiate with those formularies. Management indicated that it is possible that Trulicity might be able to obtain Medicare Part D coverage in 2015, but due to the complexity of working with Medicare acknowledged that most current discussion are around 2016 coverage. 
  • For more details on Trulicity, see our report on the drug’s FDA approval.
  • Interestingly, during Lilly’s 2Q14 update, management suggested that Lilly sees oral GLP-1 agonists as an “attractive” area that the company is examining. We wouldn’t expect to hear much on this front for quite a while, but the statement is evidence of the massive advantages that oral administration could provide for what is already seen as a fairly effective and safe class. Competitor Novo Nordisk has long been at work on this front and we are curious where Lilly is.

Biosimilar Insulin Glargine (Basaglar/Abasria)

  • Lilly/BI’s biosimilar insulin glargine formulation was another compound that received a regulatory thumbs-up in the past few months, although path to market is somewhat murky in the US. In the US, the FDA granted the formulation (provisional trade name: Basaglar) tentative approval, meaning that the compound meets the requirements for approval in terms of safety and efficacy. However, a Sanofi patent lawsuit triggered a stay of final approval. The lawsuit means that the FDA may not be able to provide final approval until mid-2016, unless the court rules in Lilly’s favor or finds Sanofi’s patents unenforceable before then. During the call, management once again expressed confidence that Lilly/BI did not infringe upon any valid enforceable patents, and that the company would “prevail.”
    • Sanofi’s 2Q14 update provided some insight into the timeline of the litigation against Lilly. According to management, a pre-trial “Markman” hearing, in which a judge determines the meaning of words in patent claims that are under dispute, is scheduled for this fall. The actual trial is scheduled to take place in September 2015, and barring a “summary judgment” (when a judge issues a ruling without a full trial), a ruling would likely not occur before 2016 (in line with what Lilly management suggested).
    • In general, this is all a bit of a black box for patients. Our sister market research company dQ&A has done extensive surveying on biosimilars – contact richard.wood@d-qa.com for more information.
  • More positively for Lilly, the biosimilar insulin glargine formulation was fully approved in Europe in early September, with the provisional trade name Abasria. Management highlighted that Abasria was the first insulin to be approved under the EU’s relatively new biosimilar pathway. A European launch will not occur until Sanofi’s Lantus patents expire next year, but this early approval gives Lilly/BI time to prepare for a launch and educate prescribers about biosimilar insulins. Lilly/BI plan to pursue a single global trade name for the insulin glargine formulation, which it will announce at a future date.
  • It remains to be seen how patients and providers will view the coming wave of biosimilar insulins over the long term. Dr. Philip Home (Newcastle University, Newcastle upon Tyne, UK) spoke on this topic at this year’s Barbara Davis Center conference in Keystone, CO. He suggested that it is difficult for physicians and perhaps even regulators to directly monitor the manufacturing quality of a biosimilar, and that the reputation of the manufacturer will serve as a stand-in for quality in many peoples’ minds. This is good news for Lilly/BI due to Lilly’s insulin legacy (Lilly will be manufacturing the insulin glargine product), but perhaps not as positive for other prospective biosimilar insulin manufacturers such as Biocon/Mylan that may not be as familiar in the US and EU. Merck/Samsung Bioepis have an insulin glargine biosimilar in phase 3.

Basal Insulin Peglispro

  • Lilly has completed its set of registrational clinical trials for its novel basal insulin peglispro (PEGylated insulin lispro), and is on track to submit the candidate in the US and EU by the end of 1Q15. This is in line with the company’s most recent guidance in 2Q14. In early September, Lilly disclosed topline phase 3 data from two type 1 diabetes trials, following topline type 2 diabetes data that was disclosed in May. These topline results paint the picture of a remarkably differentiated, relatively high-risk/high-reward candidate. In every phase 3 trial, peglispro provided statistically superior A1c reductions vs. Sanofi’s Lantus, and the candidate also appears to have benefit in terms of weight and nocturnal hypoglycemia vs. Lantus. However, the candidate led to statistically significant increases in liver enzyme levels and some worrying (though relatively modest) changes in lipids. In the type 1 diabetes trials, peglispro led to a higher rate of overall hypoglycemia, driven by daytime hypoglycemia.
  • On a reassuring note, pooled phase 3 data has already excluded a MACE hazard ratio of 1.3, and the point estimate is below 1. However, because of the changes in lipids, as well as the short duration of a phase 3 program relative to CVOTs, it remains an open question whether the agency would ask for a CVOT – it very well might, given its conservative approach towards insulin as evidenced by its decision on Novo Nordisk’s Tresiba (insulin degludec). Lilly is not prospectively planning to conduct a CVOT for peglispro. 

Humalog U-200

  • Management briefly mentioned the EU’s recent approval of Humalog U200 (200 U/ml) in the KwikPen – read our report from earlier this month. Humalog U200 is the first U200 mealtime insulin to reach the market and will be targeted toward patients with high (>20 units per day) rapid-acting insulin requirements per meal. 
  • Lilly will resubmit its application for Humalog U200 to the FDA by the end of the year, consistent with previous guidance.

Other Pipeline Highlights

  • The exciting topic of SGLT-2 inhibitor/DPP-4 inhibitor fixed-dose combinations (FDCs) received only one brief mention during the call. Management expressed optimism about the opportunity that Lilly has to be first to market with this FDC category – empagliflozin/linagliptin is currently under FDA review, and if approved on schedule it would indeed be first to market in the US. Lilly/BI plan to submit the combination in the EU in 2015. The main competitor in this FDC category is AZ’s saxagliptin/dapagliflozin, which is on track to be submitted by the end of the year in both the US and EU.
  • Management noted that the company is evaluating data on its PCSK9 antibody to assess whether it has the potential to be a best in class agent. Given that there are very impressive candidates ahead of Lilly’s, it is not surprising that the bar is set very high for the candidate. During Lilly’s 1Q14 update, management noted that Lilly’s PCKS9 inhibitor might be able to take advantage of less frequent dosing than the other candidates in the field. During the 2Q14 update Q&A, management noted that based on phase 2 results, the company will decide whether to proceed “full speed ahead,” share the risk with a partner, or divest itself of the candidate.
  • There were no major changes to Lilly’s phase 1 & 2 pipeline. This pipeline includes a phase 2 oxyntomodulin (GLP-1/glucagon dual agonist) for type 2 diabetes and a glucagon receptor antagonist for type 2 diabetes – management suggested this might be a focus candidate for the company moving forward. Lilly has another GLP-1/glucagon dual agonist in phase 2, in partnership with Transition Therapeutics. In phase 1, Lilly has three undisclosed biologics for diabetes and one small molecule for chronic kidney disease.

Questions and Answers

Big Picture:

Q: With the new launches ahead, will there be a need to expand the sales force?

A: When it comes to diabetes, we’ve had a very significant footprint in a worldwide basis. We expect to leverage this footprint. There will be some increases, but they will be limited relative to the overall sales force. There will be some increases in the US, but it will be more marginal when it comes to Europe.

Trulicity:

Q: In terms of your expectations for US coverage and access for Trulicity, what are your hopes on overall access, unrestricted access, and Medicare coverage?

A: I won’t be able to give you exactly what our access goals are, but like I mentioned before, roughly 50% of commercial plans allow for access, maybe with a higher copay. In 25% of the class there are step edits: in the GLP-1 agonist class, there will be a step edit where patients will have to be on a GLP-1 agonist before going on to the new GLP-1 agonist like Trulicity. In roughly 25% of the commercial market there is really no coverage until the payer makes the formal decision to do that. On Part D, the situation is different because of the schedules. While we are working to try and get coverage some time in 2015, discussions are typically around 2016 coverage for Part D, and it would be a matter of accelerating that into 2015. We have been having discussion with payers regarding Trulicity, and I think we have a very strong value proposition, which is what our payers are sharing with us.

Insulins:

Q: As you near the launch of the Lantus lookalike, the insulin glargine product, could you give us your assessment of the commercial opportunity both here in the US and in Europe? In the past, the market share potential you cited was much higher than how Sanofi described it, and they continue to minimize the threat to their product from your program. When will we learn more about the EU specifics like pricing and launch timing?

A: I don’t think that we have discussed previously what we believe our share uptake is going to be. We have shared that we believe insulin glargine will continue to be a very important product. Clearly, there is a very significant opportunity. How biosimilars in Europe or the US will compete will be critical to see, specifically what the share of the biosimilar market will be. We are the first to enter that marketplace but we will not be the only one. For us, we like our chances because we have the commercial footprint, the expertise in diabetes, and the manufacturing capacity and devices we can use to make sure that we provide an excellent customer experience and go toe to toe with Sanofi. We do have expectations for this product; we have to recognize that this is a very significant opportunity overall, and any level of market share would be meaningful from a revenue perspective.

Q: For the basal insulin peglispro, could you give us a sense of what group of patients would be the best patients for that drug, especially given the side effects you are seeing on triglycerides, HDL, and LDL?

A: We have conducted studies across type 1 diabetes, type 2 diabetes, drug-naïve patients, switches from insulin glargine, and in combination with mealtime insulin. Consistently, we have seen superiority when it comes to A1c. As you mentioned, there is the signal with lipids, but we are encouraged when we look at some of the cardiovascular data – we have already excluded a hazard ratio of 1.3, and our observed hazard ratio point estimate is below 1. We are pretty excited about what this product will offer patients. Regarding the specific benefit/risk assessment across patient types, that is a discussion we can have when we disclose detailed data at ADA.

Q: For your gross margin, particularly on your insulin lines, there are some changes you are making to improve efficiency. What impact will we see on the gross margin, and what will the timing be?

A: Improving our gross margin for the insulin portfolio is critical for us. We are in the process of implementing our insulin technical agenda to do that. What we have shared in terms of the benefits and improvement is that we will start seeing limited benefits in 2015 and more fully in 2016. Over time, because of learning curves, we expect this to be very significant, and our gross margin on insulin should improve by several percentage points. It’s an important initiative for us, and provides the flexibility that will help our facilities produce different types of insulin.

Oral Drugs:

Q: On the near-term diabetes launches, could you help us set some expectations about the shape of the launch curves? We’ve seen some non-first-in-class primary care launches begin slowly and go on to be very successful. Is that a reasonable way to think about how these products will launch? Is there anything you can do from a payer perspective that would change the launch curves?

A: I can offer some comments on the structure of the market, which impacts how we view the uptake of new products. These dynamics are regardless of whether a product is first, second, or third in class. When we look at access, about 50% of the market in the commercial space is available for access when it comes to any new products, whether they are first-in-class or not. You will likely be on a lower tier when it comes to the copay, but it is not off-formulary. About 25% of the commercial market will have some restrictions, like step edits or a restriction that goes beyond the copay. The rest of the market will be off-formulary. We need to consider that when we think about uptake in today’s world. In Part D, the situation is different because it takes a lot longer to get into the Part D formulary, and it is not as simple a process to get onto the formulary in the middle of the year. As a look at empagliflozin and the SGLT-2 inhibitor class, I have to say that I am very encouraged by the uptake of the class – not just the overall volume of prescriptions, but we also see an acceleration of the uptake with additional players coming into the market. Not only is the quantity of the prescriptions is interesting, but also the dynamics of those prescriptions, because they are coming at the expense of the sulfonylureas. Primarily the substitution that is happening when it comes to new patients is that patients, instead of going to an SFU, are going to an SGLT-2. That, to me, is extremely interesting because SFUs today continue to be used widely after metformin. It’s early for me to make comments about Jardiance, but based on six or seven weeks that we’ve had on the market that we are off to a strong start.

Q: Could you speak about the Tradjenta outcomes trial? I was wondering if hospitalization for heart failure will be a prospectively evaluated endpoint. That has become an endpoint of interest to the physician and Wall Street community.

A: We are expecting the empagliflozin CV trial to report next year, and when it comes to the Tradjenta trials, 2018. Both have trials have similar measures, looking at CV death, MI, and stroke. In addition, the Tradjenta trial has hospitalization for unstable angina as an endpoint. Those are the prospective measures. We have the ability to look at hospitalization for heart failure, which is an important measure. We will know about the DPP-4 inhibitor class when Merck’s TECOS study reports.

Pipeline – Other:

Q: On your PCSK9, you indicated that you would assess to see if the compound could be best in class. Are you setting the bar so high for expense reasons? What will the go/no-go decision be based upon?

A: We are all very enthusiastic about this class based on initial phase 3 data from several competitors, including preliminary data on positive MACE outcomes. We will have a very high hurdle on this agent in terms of the LDL-lowering efficacy, duration of action, convenience of injection, volume, regimen, and so on. We have not yet made those evaluations.

Q: As we move into 2015, can you qualitatively discuss the pushes and pulls on R&D spending?

A: Positive phase 3 readouts trigger additional opportunities for line extensions and combinations, which we are currently discussing in areas like oncology, diabetes, and autoimmune diseases. We are also very keen on sustainability of the pipeline, and looking at additional phase 2 investments. […] In diabetes, we have a phase 2 glucagon receptor antagonist, an oral first-in-class agent. […] We are evaluating our PCSK9 antibody to see if it could be a potential best-in-class molecule.

 

-- by Manu Venkat and Kelly Close