AZ 3Q18 – Diabetes +17% YOY to $689M; Growth from Farxiga (+25% YOY to $355M), Bydureon (+19% YOY to $152M), Onglyza (+10% YOY to $140M); GLP-1s break $2B (+30% YOY); SGLT-2s +12% YOY to $1.1B – November 8, 2018

Executive Highlights

  • AZ provided its 3Q18 update this morning in a call led by CEO Mr. Pascal Soriot (press releasepresentation slides, clinical trials appendix). AZ’s overall diabetes portfolio grew a very impressive 17% YOY and 4% sequentially to $689 million. 65% of this growth was driven by SGLT-2 Farxiga (+25% YOY to $355 million), 22% was driven by GLP-1 Bydureon (+19% YOY to $152 million), and the remaining 12% was driven by a very impressive rebound in Onglyza sales (+10% YOY to $140 million). It was terrific to see AZ with such a strong quarter and boy did AZ’s CEO sound positive on the field during Q&A: “Going back to Farxiga, I think people sometimes may underestimate the potential of heart failure. I think we all have to understand that heart failure is as costly as cancer in terms of healthcare cost. It’s a major problem in diabetes, and if we can establish that SGLT-2 agents reduce the incidence of heart failure and also have a potentially positive effect on the kidney, then the potential for the SGLT-2 class is enormous. Of course, it is a competitive class, but we believe we have a good chance to succeed and that there’s a lot of opportunities to grow."

  • With these results, we’ve calculated pooled revenue for GLP-1 agonists, SGLT-2 inhibitors, and DPP-4 inhibitors in 3Q18 – combined, the three classes had $5.5 billion, or $22 billion per year annualized:

    • GLP-1 agonists posted $2.0 billion for the first time (wow!), surging a very strong 30% YOY from $1.6 billion in 3Q17 and 7% sequentially from $1.9 billion in 2Q18. We see this as a very encouraging performance from an already high base. Novo Nordisk’s Victoza maintained value leader status with 46% of pooled revenue, followed by Lilly’s Trulicity at 40%. In the US, Trulicity became the volume leader (with 43% of prescriptions) for the first time. AZ’s Bydureon revenue will surely be increasing further in future quarters given the improved application and then we do look for Intarcia to emerge at some stage – payments continue to be a barrier but given that they won’t have to deal with PBMs, presumably, will mean that they also will drive the class, which is now annualizing at $8 billion – and what is striking to us is how in many ways it is just getting started, relative to the impact for patients and providers that we could see.

    • SGLT-2 inhibitors (excluding Merck/Pfizer’s Steglatro, for which revenue has not been reported), climbed 12% YOY and 5% sequentially to $1.1 billion from $935 million and $1.0 billion in 3Q17 and 2Q18, respectively. This is reflective of a bit slower class growth of late, though Lilly management cited a recent jump in US prescription growth from 6.5% in 2Q18 to 9.5% in 3Q18 and we believe 2019 will be a particularly strong year for the class. Additionally, promising CV (DECLARE) and renal (CREDENCE) tailwinds from coming readouts are on the horizon,

    • DPP-4 inhibitors fell a modest 3% both YOY and sequentially, finishing 3Q18 with $2.4 billion in total revenue, down from $2.5 billion in both 3Q17 and 2Q18. For the second straight quarter, DPP-4s outperformed basal insulin, though this time only by ~$2 million – and notably, DPP-4 inhibitors are still outperforming both GLP-1 and SGLT-2 inhibitors.

  • AZ’s SGLT-2 inhibitor Farxiga (dapagliflozin) posted an all-time-high revenue of $355 million in 3Q18, growing 25% YOY from $285 million in 3Q17 and driving 65% of overall diabetes portfolio growth. As expected, there was significant excitement on the call surrounding full results from the positive DECLARE CVOT, which will be presented in just two days at AHA 2018. Moreover, Farxiga has received a positive CHMP opinion for an expanded renal indication based on results from the DERIVE trial (down to an eGFR of 45 ml/min/1.73 m2), and the recently-announced DELIVER trial in heart failure with preserved injection fraction has enrolled its first participant. In somewhat mysterious news, AZ’s press release (page 5) states that regulatory submission acceptance for Farxiga in type 1 diabetes is coming in 4Q18 – we take this as confirmation that AZ has submitted to FDA or will submit Farxiga for type 1 to the FDA by year-end.

  • AZ’s Bydureon (exenatide once-weekly) revenue grew 19% YOY to $152 million in 3Q18 from a base of $128 million in 3Q17. Sequentially, revenue fell a slight 2% against a tough comparison of 12% sequential growth to $155 million in 2Q18. Bydureon sales made up 22% of total diabetes revenue for AZ and drove an impressive 22% of growth in diabetes, the highest mark for the once-weekly GLP-1 on this metric since 1Q17 (26% share of growth, thanks in large part no doubt to the new application). Notably, on the regulatory front, Bydureon’s EU label, via a positive CHMP opinion in September 2018, now includes CV data from EXSCEL. Combined with the recent approval of the BCise autoinjector in Europe, Bydureon has significant OUS tailwinds to lift the franchise in the near future.

  • Sales of DPP-4 inhibitor Onglyza (saxagliptin) rebounded in 3Q18, growing 10% YOY to $140 million, from $127 million in 3Q17. This growth was driven by a strong performance (+33% YOY to $40 million, from $33 million) in Emerging Markets, following the product’s entry onto the Chinese NDRL in 2017. Sequentially, revenue was also up 11% on an easy comparison of 28% and 2% sequential losses to $129 million and $126 million in 1Q18 and 2Q18, respectively.

  • We heard a handful of additional small updates on AZ’s diabetes pipeline, which features phase 2 GLP-1/glucagon dual agonist MEDI0382, currently in a phase 2b trial following positive phase 2a data presented at EASD 2018. Management emphasized that they will need to see the phase 2b data before deciding whether to carry the candidate forward. Additionally, some internet sleuthing has led us to believe that phase 1 MEDI7219, while officially undisclosed, is an oral GLP-1 agonist – joining phase 1 candidates from Lilly and Novo Nordisk, both announced this quarter. A phase 1 study of MEDI7219 is now expected to complete in March 2019, pushed back from an original October 2018 estimate. That’s just around the corner!

AZ provided its 3Q18 update this morning in a call led by CEO Mr. Pascal Soriot. Click for the press releasepresentation slides, and clinical trials appendix. Below, you’ll find pooled analyses of the GLP-1 agonist, SGLT-2 inhibitor, and DPP-4 inhibitor classes for 3Q18, followed by financial highlights covering AZ’s overall diabetes portfolio, SGLT-2 Farxiga, GLP-1 Bydureon, and DPP-4 Onglyza. Also included are a summary table with updates on AZ’s diabetes-related pipeline and ongoing clinical trials, plus relevant Q&A from the call.

Pooled Markets Summary for 3Q18 – Entire Therapy Market

Therapy Class

Pooled Sales 3Q18 (billions)

YOY Growth

Sequential Growth

Basal insulin




DPP-4 inhibitors




GLP-1 agonists




Rapid-acting insulin




SGLT-2 inhibitors (no Steglatro revenue)*




SGLT-2 inhibitors (est. Steglatro revenue)*




Basal insulin/GLP-1 fixed-ratio combinations




Sum of branded diabetes drugs (from therapy classes above)




*Merck has not publicly reported revenue for SGLT-2 inhibitor Steglatro. We estimate 1Q18 revenue at $10 million, 2Q18 at $20 million, and 3Q18 at $40 million.

3Q18 Financial Results for AZ’s Major Diabetes Products


3Q18  Revenue (millions)

Year-Over-Year Reported (Operational) Growth

Sequential Reported Growth

Share of Total Revenue

Share of Growth



+25% (+27%)






+19% (+19%)






+10% (+12%)






-13% (-10%)






-20% (-20%)




Total Diabetes






Table of Contents 

Pooled Market Highlights

1. GLP-1 Agonists Climb 30% YOY, 7% Sequentially to >$2 Billion for First Time Ever; Growth from Ozempic, Trulicity, Victoza, Bydureon; Victoza Maintains Global Value Share Leadership as Trulicity Claims Volume Plurality in US

On a pooled basis, GLP-1 agonists sold just over $2 billion in 3Q18, climbing an impressive 30% YOY and 7% sequentially from $1.6 billion in 3Q17 and from $1.9 billion in 2Q18 – this marks the first quarter of >$2 billion in revenue for the class. To be sure, this is a very encouraging performance from an increasingly high base, following $1.9 billion in sales in both 1Q18 (+30% YIY, -1% sequentially) and 2Q18 (+20% YOY, +2% sequentially) and reflecting growth quite broadly across the class. Specifically, Novo Nordisk’s Victoza (+14% YOY, +7% sequentially to $951 million) and Ozempic (+177% sequentially to $84 million) spurred the class on, as did Lilly’s Trulicity (+55% YOY, +5% sequentially to $816 million) and to a lesser extent AZ’s Bydureon (+19% YOY, -2% sequentially to $152 million). All of these products have benefitted from strong underlying volume growth. Indeed, Novo Nordisk cited strong annual market growth within the US GLP-1 agonist market specifically, clocking in a at 28% YOY increase in total prescription in 3Q18. Lilly’s presentation reinforced this figure, and management also noted a similar mid-20s growth rate for the international GLP-1 market. Of high note, this growth rate has been steadily rising since 4Q17 (we imagine Ozempic’s launch is playing a big role, though this is speculation), and this is the highest such rate since about 4Q16 (slide 9). Among branded diabetes drugs (basal and rapid-acting insulin, basal/GLP-1 combos, DPP-4s, SGLT-2s, and GLP-1s), GLP-1 agonists now make up 21% of total drug revenue, which is a sizable increase over 17% in 3Q17 and a small rise from 20% in 2Q18, by our calculations.

  • Market breakdown by value share has shifted considerably over the past year, partially driven by the launch of Ozempic and partially driven by strong growth from Trulicity. In 3Q18, Victoza maintained its status at market leader by value, claiming 46% of total GLP-1 revenue with $951 million in sales, followed by Trulicity at 40% with $816 million. Bydureon claimed 7% value share at $152 million, and newcomer Ozempic took home 4% of the market at $84 million. AZ’s Byetta made up 2% of revenue ($34 million), while GSK’s discontinued Tanzeum and Sanofi’s Lyxumia combined for <1% market share ($4 million and ~$6 million, respectively). This represents a notable shift from the value share breakdown in 3Q17, when Victoza held 54% of sales, Trulicity 33%, Bydureon 8%, Byetta and Tanzeum 2% each, and Lyxumia <1%. Additionally, while these numbers are only marginally different from 2Q18 (Victoza 47%, Trulicity 41%, Bydureon 8%, Ozempic and Byetta 2% each), they do reflect a continuation of the same trends.

  • Moreover, it’s evident that volume is shifting as well, as least in the US: Also per Novo Nordisk’s presentation deck (slide 9), Trulicity now claims 43% of total US GLP-1 agonist prescriptions, followed by Victoza at 38%, Bydureon at 13%, and Ozempic at an impressive 5% – Novo Nordisk’s combined GLP-1 business is neck-and-neck with Trulicity in the US. Compare this to 3Q17, when Victoza held 44% on this same metric followed by Trulicity at 37%, and 2Q18 when both Victoza and Trulicity held ~42% volume share stateside. Looking at the graph provided, it would seem that Ozempic’s gains have mainly resulted in a volume share loss for Victoza, though there could be other factors at play (and OUS volume shares could be meaningfully different). We only expect Ozempic’s market share to continue to increase in coming quarters, and we’ll being keeping a close eye on how that impacts the rest of the market.

  • Of course, it’s important to remember that all of this is occurring on a background of very strong class-wide growth in terms of both total prescriptions and revenue, and we cannot emphasize enough how much room remains for continued growth across multiple GLP-1 franchises – especially now that the class is endorsed by ADA and EASD as first-line injectable therapy, above basal insulin. Over time, we expect to see the use of GLP-1s even earlier in treatment algorithms – even as the first therapy, period – to increase. The facts are that only ~1.3 million Americans are currently filling a GLP-1 agonist prescription and the class continues to comprise <10% of second-line diabetes prescriptions, leaving significant room for further uptake of these highly and increasingly impressive agents.

Pooled GLP-1 Agonist Sales (1Q06-3Q18)

  • Equaling our enthusiasm over impressive class-wide growth is our excitement over recent clinical developments for GLP-1s, most notably the announcement of positive topline results for Trulicity’s REWIND CVOT earlier this week. Perhaps most importantly, these results are a win for the entire GLP-1 agonist class; Lilly management themselves commented that REWIND confirm a class-wide cardioprotective effect for GLP-1s. REWIND (n=9,901) demonstrated superiority of Trulicity over placebo in reducing risk of three-point MACE; with a median follow up of 5.4 years and 69% primary prevention population, REWIND is both longer and broader than any previous GLP-1 agonist CVOT. As such, the trial will likely have enormous implications for the use of GLP-1s for cardioprotection. While we await specific results, including effects in primary vs. secondary prevention cohorts, REWIND stands to support the use of GLP-1s to reduce CV risk in lower-risk people with type 2 diabetes. On Lilly’s call, REWIND was consistently described as “precedent-setting” by management. However, despite significant interest in the trial during Q&A, management was not able to provide any details beyond what was released in its announcement this Monday – full data will be presented at ADA 2019 and submission to regulatory agencies will occur broadly in 2019. We fully expect Lilly to seek an indication for full three-point MACE reduction in patients with type 2, either with CV risk or established CVD, which would be a first for the GLP-1 agonist class and for diabetes therapy. As a reminder, REWIND is now the third GLP-1 CVOT to demonstrate superiority on three-point MACE (joining LEADER and SUSTAIN-6 for Novo Nordisk’s liraglutide and semaglutide, respectively, and HARMONY-Outcomes for GSK’s albiglutide). Additionally, EXSCEL (for AZ’s Bydureon) is widely considered a positive trial despite a narrow miss on statistical superiority, and ELIXA (lixisenatide) is somewhat of an outlier because of its abnormally high-risk population (recent ACS patients) and the short-acting nature of lixisenatide (half-life of ~3 hours). We’ve seen academic thought leaders strongly coalesce around the idea of GLP-1s being universally cardioprotective and find it reassuring to see industry think likewise.

2. SGLT-2 Inhibitor Class Posts $1.1 Billion with 12% YOY, 5% Sequential Rise; Possible Re-Acceleration of Slowed Class Growth; Tailwinds in Cardio- and Renal-Protection, ADA/EASD Consensus Statement

The SGLT-2 inhibitor market grew 12% YOY and 5% sequentially to $1.1 billion from $935 million in 3Q17 and $1.0 billion in 2Q18. This does not include sales for Merck/Pfizer’s Steglatro, for which revenue has not been reported (we continue to communicate with Merck on this front). We have very very roughly estimated Steglatro revenue at $10, $20, and $40 million in the product’s first three quarters on the market; including these estimations, overall class revenue still rounds to $1.1 billion and YOY and sequential growth jump to 17% and 7%, respectively – this point should be taken as more illustrative than anything, given the uncertainly of these estimates. Predominantly driving this growth were Lilly/BI’s Jardiance (+31% YOY and +13% sequentially to ~$506 million) and AZ’s Farxiga (+25% YOY and +4% sequentially to $355 million). J&J’s Invokana continued its steady decline (-28% YOY and -12% sequentially to $190 million). Overall, SGLT-2 inhibitors’ more mild YOY increase reflects slowing class growth in recent quarters, especially when compared to an overall 27% jump in 2017, ~40% YOY growth in 1Q18, and an ~20% rise in 2Q18. However, sequential growth suggests that the class may be re-accelerating; SGLT-2s posted a 2% sequential loss and 3% sequential growth in 1Q18 and 2Q18, respectively, as compared to 5% (without Steglatro) for 3Q18. Indeed, Lilly made the point to express optimism that SGLT-2s are beginning to rebound, asserting that class growth in the US (based on total prescriptions) has surged to 9.5% in 3Q18, up from 6.5% in 2Q18 – its lowest point in the past two years (slide 30).  That said, other manufacturers were less positive. AZ’s 3Q18 press release stated that US class growth is still slowed down, Merck didn’t mention Steglatro once in its 3Q18 presentation, and J&J cited a familiar combination of patient discounts, high rebating, and share loss in explaining Invokana’s steady decline (of course, Invokana has its own unique challenge in safety concerns, driving these effects).

This all said, manufacturers did seem to agree that the ceiling for these therapies is very high and tailwinds are forthcoming. President of Lilly Diabetes Mr. Enrique Conterno identified both (i) the recently-published ADA/EASD recommendation to use SGLT-2s (or GLP-1s) as a second-line therapy for patients with type 2 diabetes and established CV disease and (ii) growing consensus on cardioprotection as a class effect of SGLT-2s as seriously promising for the class. On the latter, we imagine Mr. Conterno was alluding to recent positive results from DECLARE for AZ’s Farxiga (dapagliflozin) as well as recent FDA approval of Invokana’s CV indication for reducing three-point MACE in those with type 2 and established CVD. Despite Invokana receiving a broader indication than Jardiance’s indication for reducing CV death (both based on very similar data), Lilly management was highly positive about the class implications of Invokana’s new indication. Indeed, AZ CEO Mr. Pascal Soriot underscored the financial upside to established benefit for heart failure specifically, which he asserted is as costly as cancer to the healthcare system. Lastly, the ever-increasing excitement for renoprotection as a class effect of SGLT-2 inhibitors is surely promising for the class, with positive results from CREDENCE (canagliflozin in type 2 diabetes with CKD) expected to be released “around Christmastime” or January 2019. Results from AZ’s equivalent trial, Dapa-CKD, are now expected in 2020, and Lilly/BI’s EMPA-KIDNEY is slated to start later this month.

  • By value, Jardiance captured 48% of the SGLT-2 market (when estimating BI’s share of revenue, based on previously released numbers), followed by Farxiga with 34% and Invokana with 18%. Much of Jardiance’s success can be attributed to the US, where the product has a market-leading 41% volume share according to Lilly management. Farxiga, on the other hand, holds the global volume share, with ~41% of worldwide prescriptions in 2Q18 (this number was not disclosed for 3Q18, but we imagine it could be very similar).

Pooled SGLT-2 Inhibitor Sales (1Q13-3Q18)

3. Pooled DPP-4 Inhibitors: Class Falls 3% YOY and Sequentially to $2.4 Billion; First YOY Decline Since 2Q17; Januvia Remains Clear Front-Runner with 61% Market Share by Value

Pooled sales for the DPP-4 inhibitor class fell 3% YOY to $2.4 billion from a base of $2.5 billion in 3Q17. Sequentially, revenue also declined 3% from a base of $2.5 billion in 2Q18. The 3% YOY drop for the class represents the first YOY loss since 2Q17, given that the class has generally been climbing along a very gentle upward slope for the past few years. However, we note that sequential growth for the class has ping-ponged back and forth in a characteristic oscillation around a near steady-state of ~$2.4-2.5 billion quarterly revenue. To be sure, the absence of explosive growth does not diminish the importance of DPP-4s in diabetes treatment, as the class’ quarterly revenue still accounts for a substantial 43% of total diabetes drug sales (excluding insulin) – still the highest share of any drug class. Indeed, despite the emergence of more efficacious drug classes over the past several years, we continue to see an important role for DPP-4s in modern diabetes treatment algorithms – including among the elderly, those with renal impairment, and recently diagnosed patients – and it’s clear that HCPs do, too.

  • By product, Merck’s Januvia remains far away at the head of the class in terms of revenue, commanding 61% of market value in 3Q18. Lilly/BI’s Tradjenta comes in a distant second with 16%, followed by Novartis’ Galvus at 13%, AZ’s Onglyza at 6%, and Takeda’s Nesina with 5%. With a strong quarter, Onglyza has retaken its spot in fourth place after Nesina briefly overtook AZ’s product in 2Q18 for the first time. Otherwise, value shares in the DPP-4 class remain highly stable.

  • The next big landmark on the horizon for the DPP-4 class will be the CAROLINA CVOT comparing Tradjenta to sulfonylurea glimepiride. Lilly reported in its 3Q18 update that results for the study are expected in 2019 (we anticipate early on in the year). Positive results from CAROLINA showing superiority of Tradjenta vs. glimepiride on cardiovascular outcomes could go a long way in further ensuring access to DPP-4s and helping to shift prescribing practices away from problematic sulfonylureas and towards newer medication classes with better long-term durability and outcomes. This, along with impending patent expiries for Januvia and the anticipated emergence of generic DPP-4s, will only serve to increase patient access to the class.

    • Full results from the CARMELINA CVOT comparing Tradjenta to placebo were revealed at EASD 2018. As expected, the result on three-point MACE was neutral; a hazard ratio favoring Tradjenta on hospitalization for heart failure was very reassuring. There was some indication of benefit on albuminuria with Tradjenta in the very high-risk population enrolled, which warrants further examination. 

Pooled DPP-4 Inhibitor Sales (1Q07-3Q18)

Financial Highlights

4. Overall Diabetes Portfolio Climbs 18% YOY and 5% Sequentially to $689 Million, Driven by Farxiga (65%), Bydureon (9%), Onglyza (22%); DECLARE Results and BCise EU Approval Highlighted

AZ’s diabetes portfolio rose 17% YOY and 5% sequentially to $689 million in 3Q18, from $589 million in 3Q17 and $657 million in 2Q18, building on impressive 8% sequential growth in Q2. YOY growth was driven by GLP-1 agonist Bydureon (22% share of growth, $152 million), DPP-4 inhibitor Onglyza (12% share of growth, $140 million), and SGLT-2 inhibitor Farxiga (65% share of growth, $355 million). This is more balanced than has been typical of late; in 1Q18, Farxiga drove 100% of growth, while in 2Q18 Farxiga drove 91% and Bydureon 9% of growth. AZ’s other two diabetes products, GLP-1 agonist Byetta and amylin analog Symlin experienced YOY declines to the tune of 13% and 20%, respectively, selling $34 million and $8 million each. That said, every product in AZ’s diabetes portfolio apart from Bydureon (-2% sequentially) experienced sequential growth. By geography, US sales of $375 million accounted for 54% of total diabetes revenue, rising 16% YOY from $324 million in 3Q17 and 12% sequentially from $335 million in 2Q18. OUS revenue continued to grow overall, posting 18% YOY growth to $314 million from $265 in 3Q17, but dropped 2% sequentially from $322 million in 2Q18. While these figures might suggest the US market is the primary driver of AZ diabetes’ growth, management was pointedly optimistic about sales in Emerging Markets, particularly in China where Farxiga was launched in 2017 as the country’s first approved SGLT-2 inhibitor.

  • Notably, AZ’s diabetes portfolio is the second fastest-growing among the largest five companies in the industry (Novo Nordisk, Lilly, Merck, and Sanofi also included), with 6% YOY growth in 1Q18, 10% in 2Q18, and now 17% in 3Q18. Only Lilly bests these numbers, with impressive YOY increases of 38% in 1Q18, 29% in 2Q18, and 18% in 3Q18. By comparison, Novo Nordisk’s diabetes portfolio grew 5% in 3Q18 (after falling 2% YOY in 2Q18 and 5% YOY in 1Q18), and Sanofi’s diabetes portfolio continued its steady decline with an 11% YOY drop in 3Q18, driven by Lantus’ loss of exclusivity. Merck was stable at -1% YOY in 3Q18, following 7% and 4% YOY growth in 1Q18 and 2Q18 (with the caveat of unclear Steglatro revenue). In 3Q18 This said, AZ also has the smallest diabetes revenue of these companies at $689 million in 3Q18, followed by Merck with $1.5 billion, Sanofi with $1.6 billion, Lilly with $2.4 billion, and Novo Nordisk with $3.6 billion.

AstraZeneca’s Total Diabetes Portfolio Sales (4Q12-3Q18)

  • Major diabetes pipeline news includes topline results from the DECLARE CVOT for dapagliflozin (full results coming this weekend AHA 2018) and European approval of the Bydureon BCise autoinjector. Much of the call and Q&A was devoted to DECLARE, which demonstrated superiority over placebo on the co-primary endpoint of hospitalization for heart failure and CV death while being perhaps the boldest CVOT to date in terms of statistical plan, study size, primary prevention enrollment (59%), and length (more just below, under Farxiga). Turning to Bydureon, BCise’s US launch in early 2018 has bolstered the Bydureon franchise stateside, according to AZ management, and we would expect an upcoming European launch to drive further growth. With the autoinjector’s enhanced ease of use, BCise has the potential to boost AZ’s share of the ever-growing GLP-1 class and even class growth itself. To this end, AZ management has boasted that in the US, one-half of patients on Bydureon BCise are new to the class, while another one-third are transitioning from the Bydureon pen. Taking all of this together, it certainly seems as though AZ has committed to Farxiga and Bydureon as the cornerstones of its diabetes franchise for the foreseeable future. We’re so glad to hear this for patients – and HCPs, who do so much better prescribing modern therapy.

5. Farxiga Posts $355 million, Up 25% YOY and 4% Sequentially; Excitement for DECLARE Results and Planned 1H19 Regulatory Submission; Type 1 FDA Submission; Positive CHMP Opinion on Expanded eGFR Indication

SGLT-2 inhibitor Farxiga (dapagliflozin) posted an all-time-high revenue of $355 million in 3Q18, growing 25% YOY (27% operationally) from $285 million in 3Q17 and 4% sequentially from $340 million in 2Q18. Altogether, the product drove an impressive 65% of AZ’s overall diabetes growth in 3Q18 while accounting for 52% of total sales, though this actually is the lowest share of growth from the product since 52% in 2Q15 (only including quarters when the portfolio grew, of course), by our calculations. US sales totaled $154 million in 3Q18, rising 16% YOY (from $133 million in 3Q17) and 11% sequentially (from $139 million in 2Q18) and driving the entirety of Farxiga’s sequential growth. Management highlighted improving within-class share across healthcare plans as the major driver of growth during the call, indicating that volume gains continue to be an important driver of growth for Farxiga.

However, the press release also reminds us that changes to AZ’s affordability and discount programs in 2017 resulted in decreased participation from 3Q17 onwards – a disheartening fact that, while improving profitability, has likely decreased access for many patients. This possibly also accounts for the slower US YOY growth in 3Q18 compared to 1Q18 (+44%) and 2Q18 (36% as reported), comparisons against quarters when participation in these programs was likely higher. Worth noting is that AZ’s press release asserts that US SGLT-2 class growth is slowing, a remark that somewhat contradicts Lilly comment during in its 3Q18 call that class growth in the US (based on total prescriptions) has surged to 9.5% in 3Q18, up from 6.5% in 2Q18 (slide 30). This said, it’s entirely possible that AZ was considering the longer-term trend in the class, and it’s certainly true that growth has plummeted from the >25% rate maintained through 2017.

OUS revenue, which accounted for 58% of total Farxiga sales, increased a similarly impressive 32% YOY (from $152 million in 3Q17) but was flat sequentially at $201 million following 17% sequential growth in 2Q18. In particular, management highlighted 51% year-to-date growth in Emerging Markets following Farxiga’s 2017 launch in China, as well as 35% and 48% year-to-date increases in revenue from Europe and Japan, respectively. Due to its strong success outside of the US, Farxiga has maintained global volume leadership within the SGLT-2 class, according to AZ’s press release. In 2Q18, Farxiga also owned a market-leading 41% of global volume share (not broken out in 3Q18), but Lilly/BI’s Jardiance continues to hold the pole position in value share, to our understanding due to greater dominance in the US (see SGLT-2 pooled highlight above).

Farxiga Sales (4Q12-3Q18)

  • There was significant excitement on the call surrounding full results from the DECLARE CVOT, which will be presented in just two days at AHA 2018. For context, AZ announced in September that Farxiga achieved superiority over placebo on one of DECLARE’s co-primary endpoints – hospitalization for heart failure and cardiovascular death – making it the first SGLT-2 inhibitor to demonstrate heart failure benefit as a primary endpoint result. During Q&A, AZ CEO Mr. Pascal Soriot underscored the financial upside to established benefit for heart failure, which he asserted is as costly as cancer to the healthcare system – we certainly believe this, given that heart failure is the most common cause of hospitalization in those over 65 years old. On three-point MACE (CV death, heart attack, and stroke), Farxiga showed non-inferiority but not superiority vs. placebo, though AZ’s press release reports that results trended in favor of Farxiga (we view this as a positive). No hazard ratios or p-values were provided in the press release. It’s important to note that a p-value <0.025 was required to confer superiority on either of the primary endpoints.

    • AZ’s press release (page 5) projects 1H19 submission of DECLARE results to regulatory agencies for a CV indication for Farxiga. It is not specified whether this is for the US, EU, or both (we imagine both). Regardless, we can then expect a decision from regulatory officials broadly in 1H20, assuming a standard review period.

    • Many inquiries during Q&A related to the unique design of DECLARE, which is perhaps the boldest CVOT we’ve seen to date (at least from a statistical perspective, given the split on the co-primary endpoints) and is most definitely the largest (n=17,160). With respect to size, the primary prevention cohort of DECLARE alone (n=10,189) is bigger than the total enrolled populations of EMPA-REG OUTCOME (n=7,020, <1% primary prevention) or CANVAS (n=10,142, ~34% primary prevention); we’re very curious as to how this might affect Farxiga’s potential CV indication and hope to see a breakdown of the results by these cohorts at AHA. DECLARE is also the longest of the three SGLT-2 CVOTs, with median 4.5 years of follow-up, while EMPA-REG OUTCOME and CANVAS had average follow-ups of 3.1 and 3.6 years, respectively. We very much hope that patients can and will continue to be tracked for years to come.

  • AZ’s press release (page 5) somewhat mysteriously states that regulatory submission acceptance for Farxiga in type 1 diabetes is coming in 4Q18. Presentation slides (slide 39) more broadly state either submission or acceptance to come in Q4. To date and to our knowledge, Farxiga has only been submitted for type 1 in Japan and the EU (2Q18), but AZ has been very quiet on offering more precise timing than 2H18 for US submission. If Farxiga has been submitted to FDA, it joins Sanofi/Lexicon’s Zynquista (sotagliflozin) as the second SGLT-2 inhibitor for type 1 diabetes currently under review in the US. We would expect AZ to more directly and prominently announce submission, and we also find the wording of “submission acceptance” odd. Nevertheless, it’s reassuring to see this update, which reinforces our understanding that Farxiga submission for type 1 will come this year. According to Lilly’s 3Q18 call, the company is currently evaluating next steps for regulatory submission of Jardiance (empagliflozin) in type 1 with partner BI. All type 1 submissions for Farxiga would be based on positive data from DEPICT-1 and DEPICT-2 (52- and 24-week results presented at ADA, respectively), which demonstrated significant reductions in A1c and improvements in time-in-range with dapagliflozin in adults with type 1 diabetes, though with an increased risk of DKA.

  • Farxiga has received a positive CHMP opinion for an expanded indication based on results from the DERIVE trial, which examined safety and efficacy in patients with type 2 diabetes and stage 3A CKD (moderate renal impairment). This label update should allow Farxiga to be used in patients with an eGFR down to 45 ml/min/1.73 m2. Currently, FDA does not recommend the therapy for patients with an eGFR <60 ml/min/1.73m2 and is also reviewing DERIVE for a similar update in the US. DERIVE was first presented at ENDO 2018, and you can read our coverage here.

  • Management provided updates to the many ongoing trials investigating Farxiga in heart failure and CKD (see summary table below, slide 35, and pages 44-45), a testament to AZ’s commitment to its SGLT-2 inhibitor as a growth driver for the foreseeable future. Highlighted in the call were Dapa-CKD (dapagliflozin in chronic kidney disease), Dapa-HF (dapagliflozin in HFrEF), and the recently announced DELIVER trial (dapagliflozin in HFpEF). Results for the first two are now expected in 2020, with DELIVER coming later. Notably, both Dapa-CKD, DELIVER, and Dapa-HF all include patients without diabetes. Check out our summary table below for all of the updates to Farxiga’s clinical trial pipeline (highlighted in yellow); most notably in our opinion, Dapa-CKD results are now expected in 2020. Since CREDENCE (renal outcomes trial for J&J’s canagliflozin) was stopped ~one year ahead of schedule due to overwhelmingly positive results, there’s been much hype about SGLT-2s in the renally impaired population, and we’re excited to see whether dapagliflozin confers similar results – our sense is that the anticipated answer is yes, but imminent DECLARE results should guide expectations a bit better.

Ongoing Farxiga Clinical Trials


Estimated Enrollment


DECLARE (cardiovascular outcomes)


Topline data September 2018; Full data to be presented at AHA 2018

Dapa-HF (heart failure with reduced injection fraction)


Initiated February 2017; Enrollment completed July 2018; Results anticipated in 2020

Dapa-CKD (chronic kidney disease)


Initiated February 2017 and expected to complete November 2020; Data readout expected 2020

DELIVER (heart failure with preserved injection fraction)


First patient dosed in 3Q18; Data readout expected 2020+

DELIGHT (Farxiga vs. Qtern in people with diabetes/DKD)


Completed April 2018

DEFINE-HF (heart failure biomarkers in people with comorbid diabetes/heart failure)


Expected to complete February 2019 (delayed from September 2018)

PRESERVED-HF (heart failure biomarkers in people with prediabetes or diabetes alongside chronic heart failure)


Expected to complete March 2019

DAPASALT (evaluating 24-hour sodium excretion following dapagliflozin treatment)


Expected to complete February 2019 (delayed from August 2018)

  • There was no mention of either: (i) the triple combination pill of Farxiga, Onglyza, and metformin (dapagliflozin + saxagliptin + metformin) which was submitted to EMA in 2Q18; or (ii) Qtern (fixed-dose combination of Farxiga with DPP-4 inhibitor Onglyza). This marks the third straight quarterly call without a Qtern reference or broken-out revenue; to our understanding, Qtern revenue continues to be wrapped into Farxiga revenue. In 4Q17 the product brought in an underwhelming $5 million (the one quarter in which sales were announced). As it stands, our sense is that the many barriers (reimbursement/higher OOP costs, resistance to combination therapy, component drugs can be accessed cheaply and separately titrated) outweigh the upsides (with these, mainly lower pill burden and convenience) in the eyes of many patients and providers; we imagine cost is the most significant hurdle, which is absurd from our view given the value. The triple combination was originally slated for FDA submission also in 1H18, though we haven’t heard an update and wonder if this was delayed – we have no idea. Lilly also had plans to file a triple combination SGLT-2 + DPP-4 + metformin tablet with FDA in 2018, though we heard nothing of this product in the company’s 3Q18 call. We find it interesting that these companies are moving forward with triple combinations when the double combinations in their portfolios (AZ’s Qtern and Lilly/BI’s Glyxambi) haven’t gained much commercial traction to-date; perhaps this is the reason for the recent reticence by both companies on these products. On the other hand, the added convenience of three pills in one may be the additional edge needed to really push combination orals into the limelight. Of course, we’ll keep a close eye on these going forward. Basically we blame lack of awareness and poor payors for the lack of success here. We’re ashamed for them all that they are not helping more. 

6. Bydureon Climbs 19% YOY to $152 Million Driven by Strong BCise Launch in US (+26% YOY to $126 Million); BCise Approval + EXSCEL Label Update in EU Poised to Boost OUS Sales

Bydureon (exenatide once-weekly) revenue grew 19% YOY to $152 million in 3Q18 from a base of $128 million in 3Q17. Sequentially, revenue fell a slight 2% against a tough comparison of 12% sequential growth to $155 million in 2Q18. Bydureon sales made up 22% of total diabetes revenue for AZ and drove an impressive 22% share of growth, the highest mark for the once-weekly GLP-1 on this metric since 1Q17 (26% share of growth). AZ’s line for the Bydureon of late has been “return to growth” (+19% YOY in 3Q18 and +6% YOY in 2Q18), following two consecutive quarters of YOY declines (-9% in 1Q18 and -1% in 4Q17). While Bydureon revenue has essentially been fluctuating around a base of ~$150 million since 2Q15 and has yet to surpass its 3Q15 all-time-high of $162 million, the ever-growing GLP-1 agonist class and recent developments in the AZ franchise specifically (more on this below) reflect potential for meaningful growth going forward. Strong US revenue growth following launch of the new Bydureon BCise autoinjector in US markets at the beginning of 2018 gives us particular cause for optimism: In 3Q18, US sales of Bydureon grew an impressive 26% YOY to $126 million, up from a base of $100 million in 3Q17 (sequential growth was a modest 2% against 11% sequential growth to $123 million in 2Q18). In both quarters, AZ management has attributed these marks to a strong BCise launch as well as underlying class growth; of note, BCise launch has been accompanied by a “surround sound” commercial strategy – a comprehensive approach to marketing/education through online channels as well as HCP offices, which started in January 2018. Encouragingly, management noted that over half of patients new to Bydureon are starting on the BCise autoinjector, indicating a strong patient preference for this device over the traditional pen (and reconstitution kits, which are being phased out). This is a different estimation from that given in 1Q18 and 2Q18, when management remarked that “roughly one-half” of BCise patients were new to the GLP-1 class as a whole, while approximately one-third are switching over from the older Bydureon pen (we image this metric remains roughly the same).

Outside the US, however, sales were less encouraging: OUS revenue dropped 7% YOY and a striking 19% sequentially to $26 million, from $28 million in 3Q17 and $32 million in 2Q18. To be sure, OUS sales continue to make up the minority of Bydureon revenue (only 17% in 3Q18 – a strong contrast to SGLT-2 Farxiga), and this performance drove the 2% sequential loss in the overall franchise. That said, AZ management expressed optimism about the upcoming launch of the BCise autoinjector in Europe, as the device gained final EMA approval in August 2018; hopefully, European launch will help AZ negotiate better reimbursement for Bydureon on national formularies, offering a further boost to worldwide sales of the GLP-1 in coming quarters. All in all, we continue to see real promise in the BCise launch and hope to see its positive impact extend across the ocean.

Bydureon Sales (3Q12-3Q18)

  • Bydureon’s EU label, via a positive CHMP opinion in September 2018, now includes CV data from EXSCEL – this is a big deal! This request, via a type II variation application, did not require final approval from the European Commission, so Bydureon’s label currently reflects this update in Europe. With this update, the label gained data on the primary endpoint from EXSCEL, which just missed the statistical threshold for superiority vs. placebo on 3-point MACE (non-fatal heart attack, non-fatal stroke, CV death) with a hazard ratio of 0.91 (95% CI: 0.83-1.00, p<0.001 for non-inferiority, p=0.06 for superiority). The label will also gain data for the secondary endpoint of all-cause mortality, for which Bydureon demonstrated a statistically significant but technically exploratory 14% risk reduction compared to placebo (HR=0.86, 95% CI CI:0.77-0.97, p=0.016). We hope that the inclusion of this data on the label will serve as another tailwind for Bydureon in expanding growth in Europe; however, we do note that the lack of a CV superiority indication puts Bydureon at a disadvantage compared to other class members. Victoza boasts a formal indication in both the US and the EU, and we note that Novo Nordisk is allowed in Europe to promote SUSTAIN 6 results as demonstration of CV superiority for Ozempic (in contrast to the US, where FDA considers it only a safety study). Stateside, an sNDA for EXSCEL data inclusion on the label was submitted in 2Q18.

    • Speaking of EXSCEL, the CVOT continues to spark interesting discussion surrounding trial design, statistical rigidity, and a cardioprotective class effect for GLP-1s. On this front, we note that a very illustrative post-hoc analysis presented at EASD 2018 by Dr. John Buse demonstrated that accounting for open-label drop-in medications (including protocol-violating concomitant GLP-1 prescriptions) shifted EXSCEL results to superiority on three-point MACE. This analysis fits in with the broader understanding we’ve heard from numerous KOLs since EXSCEL results were first released: Bydureon most likely does offer cardioprotection, in alignment with a class-wide cardioprotective effect for GLP-1s, but aspects of trial design (no run-in period to exclude low adherence, high primary prevention population, real-world/pragmatic design, use of Bydureon reconstitution kits) prevented demonstration of this benefit.

  • Sales of Byetta (exenatide twice-daily) fell 13% YOY to $34 million from a base of $39 million in 3Q17. Sequentially, revenue actually increased an impressive 17% from a base of $29 million in 2Q18, albeit from a low base and against a relatively easy comparison of 6% sequential decline that quarter. Byetta experienced a strong quarter in US markets relative to an otherwise downward trajectory in recent quarters stateside, holding steady at $23 million YOY (unchanged from a base of $23 million in 3Q17) but growing 35% sequentially from $17 million in 2Q18. Notably, Byetta has not posted a positive YOY growth rate since 4Q15, and the 13% YOY decline in 3Q18 is actually its most favorable mark since 4Q17, when Byetta also dropped 13% YOY. Still, we don’t expect Byetta’s drop to stop anytime soon, seeing as more competitive and efficacious GLP-1s continue to take over the market by offering patients a lower injection burden, superior glucose-lowering and weight reductions, and proven CV risk reduction – and indeed, Bydureon is the agent most patients would themselves choose. We wish it were possible for patients with fewer resources to get Byetta at a lower price.

7. Onglyza Posts 10% YOY Growth to $140 Million (Third YOY Increase in Three Years); Consistent Losses Buoyed by Emerging Markets (+33% YOY to $40 Million) as AZ Continues to Prioritize Farxiga

Sales of DPP-4 inhibitor Onglyza (saxagliptin) rebounded in 3Q18, growing 10% YOY to $140 million, from $127 million in 3Q17. This growth was driven by a strong performance (+33% YOY to $40 million, from $33 million) in Emerging Markets. Sequentially, revenue was also up 11% on an easy comparison of 28% and 2% sequential losses to $129 million and $126 million in 1Q18 and 2Q18, respectively. In the context of Onglyza’s recent history, however, this performance represents a fluctuation along a downward trajectory: the franchise has declined YOY with consistency since 4Q14, posting only two quarters of YOY growth since that time (+15% YOY in 1Q16 and +21% YOY in 4Q17. Echoing themselves on previous earnings updates, management explained that Onglyza’s overall downward trajectory is attributable to (i) a general shift away from DPP-4 inhibitors and toward therapies that have proven CV benefits (namely GLP-1s and SGLT-2s); along with (ii) AZ’s specific approach in prioritizing commercial support for Farxiga over Onglyza. Although we certainly agree with AZ’s assessment that the field is shifting toward more potent agents, it bears noting that other agents in the class (and the DPP-4 class overall) have held steadier in terms of revenue. And, there is extensive safety data on the DPP-4 inhibitor class – we expect it to keep growing as a class in the near term. Moreover, we absolutely do still see a place for DPP-4 inhibitors in modern diabetes treatment algorithms, especially in newly-diagnosed and elderly patients who have had diabetes a long time, given the class’ impeccably clean side-effect profile, ease of use, and familiarity among HCPs and patients. That said, we would add one more factor to AZ’s explanation of declining Onglyza sales: a small but significant signal for increased risk of heart failure hospitalizations in the SAVOR-TIMI CVOT. While discussion around this finding continues to this day, we imagine many providers and payers have opted for other agents without similar CVOT findings over Onglyza, and we believe this is a reason why Onglyza has struggled relatively more than other DPP-4s. For more granularity on the class, see above in our pooled market analysis.

  • China’s NMPA (National Medical Products Association) granted approval for Onglyza use in combination with insulin, following the product’s entry onto the Chinese NDRL in 2017. More than anything, this reflects Onglyza’s growing utilization in Emerging Markets, which represent the product’s – and the class’ – biggest growth potential moving forward. Onglyza posted very encouraging sales in Emerging Markets in 2018: +33% YOY to $40 million in 3Q18, which is part of a combined +30% YOY increase t0 $121 million thus far in 2018. This growth, sustained through three quarters in 2018, comes in contrast to a 25% YOY decline in the US and a 15% YOY decline in Europe for 1Q18-3Q18 combined. Whereas more established markets are indeed trending away from DPP-4s in favor of other therapy class, there is still significant potential in Emerging Markets where newer classes have not yet achieved broad penetration. We continue to be bullish on the potential of DPP-4s as a whole in emerging markets, where diabetes prevalence has already become a tremendous issue but where treatment algorithms are oftentimes less “advanced” than other areas of the world.  

Onglyza Sales (4Q12-3Q18)

Pipeline Updates

AZ Diabetes Pipeline Summary and Major Ongoing Clinical Trials

The table below reflects the latest updates, as far as we are aware, on AZ’s diabetes pipeline. Items highlighted in yellow indicate notable changes to the pipeline in 3Q18.





Bydureon BCise (exenatide)

Autoinjector that eliminates need for reconstitution

Launched in the US and approved in EU

FDA-approved in 3Q17 with US launch in 1Q18; EMA-approved in 3Q18

Saxagliptin + dapagliflozin + metformin

Fixed-dose combination for type 2 diabetes

Phase 3

Accepted for EMA review 2Q18; unclear if submitted to FDA within planned 1H18 timeline

Farxiga (dapagliflozin)

Indication for type 1 diabetes

Phase 3

FDA submission still slated for 4Q18 (for 2H19 decision); Under EMA review and filed in Japan ahead of schedule (decisions expected 2H19 per 3Q18 call); Positive 24-week DEPICT 1 results presented at EASD 2017; 52-week DEPICT 1 and 24-week DEPICT 2 results at ADA 2018

Farxiga (dapagliflozin)

Cardiovascular outcomes data

Phase 3

Topline results from DECLARE CVOT announced September 2018; To be presented at AHA 2018

Farxiga (dapagliflozin)

Outcomes data in patients with chronic heart failure with reduced and preserved ejection fraction

Phase 3

Dapa-HF initiated in HFrEF February 2017, expected to complete December 2019 (2020 readout); DELIVER in HFpEF added 3Q18, expected to complete June 2021; PRESERVED-HF evaluating heart failure biomarker (not outcomes) expected to complete March 2019

Farxiga (dapagliflozin)

Outcomes data in patients with CKD

Phase 3

Dapa-CKD initiated in February 2017, expected to complete November 2020 (2020 readout); DERIVE data under review at FDA and EMA (results presented at ENDO 2018 showing effective A1c reduction in people with type 2 diabetes/CKD stage 3A [eGFR down to 45 ml/min/1.73m2])

Brilinta (ticagrelor)

P2Y12 receptor agonist antiplatelet agent

Phase 3

THEMIS outcomes study in patients with type 2 diabetes and coronary artery disease expected to complete December 2018; Data expected 1H19 for 2H19 regulatory submission


2-OG inhibitor for anemia in chronic kidney disease or end-stage renal disease

Phase 3

FDA filing planned for 1H19, pushed back from 2H18; Approved in China


GLP-1/glucagon dual agonist

Phase 2

Phase 2a data presented at EASD 2018; Phase 2b data expected 1H19 from dose-ranging study (n=834) in people with type 2 diabetes and overweight/obesity, expected to fully complete March 2020


Uric acid reabsorption inhibitor (URAT-1) for CKD in type 2 diabetes

Phase 2

Phase 2 trial completed August 2018


Undisclosed (apparently an oral GLP-1 agonist, though not officially in AZ materials)

Phase 1

Added to pipeline in 1Q18; Phase 1 study expected to complete March 2019, pushed back from October 2018

Q: Do you have any comments on your phase 2 GLP-1/Glucagon agonist? Will we see any data soon and what are your thoughts on the product’s outlook given some of the positive GLP-1/GIP data from Lilly?

Dr. Sean Bohen (CMO): MEDI-0382 is currently phase 2b and we are looking at the data. We’ll plan to present it when we have it, and our decision on where to go from there will be dependent on our review of that data. The Lilly molecule is slightly different in that it is a GLP-1/GIP agonist, so we’ll have to look at the data to understand whether the mechanisms might be similar or different in terms of the effects they produce.

Q: How soon to you anticipate DECLARE data to impact sales?

Dr. Bohen: We’ll present the DECLARE data on Saturday at AHA, and I think you’ll get a chance to see what we think is an extremely meaningful effect, both in terms of the reduction in hospitalization for heart failure or CV death, which is the primary endpoint that was met, but also the opportunity for that finding to apply to a much broader patient population – not only those with type 2 diabetes with a previous CV event (7,000 of the patients in DECLARE), but also those without a previous event (10,000 of those enrolled). We will file that data as soon as we can get it together.

Mr. Marc Dunoyer (CFO): Obviously, we can’t promote the data with the product until the label has changed, and the rules on this vary around the world. I think Sean said it well – there are two important things coming out of DECLARE. The impact on heart failure, a really important complication associated with diabetes, and the much broader population. I think it’s very exciting news to physicians. You could look to past models to get an indication of what could happen.

Mr. Pascal Soriot (CEO): …Going back to Farxiga, I think people sometimes may underestimate the potential of heart failure. I think we all have to understand that heart failure is as costly as cancer in terms of healthcare cost. It’s a major problem in diabetes, and if we can establish that SGLT-2 agents reduce the incidence of heart failure and also have a potentially positive effect on the kidney, then the potential for the SGLT-2 class is enormous. Of course it is a competitive class, but we believe we have a good chance to succeed and that there’s a lot of opportunities to grow.


--by Ann Carracher, Martin Kurian, Peter Rentzepis, and Kelly Close