The FDA’s rejection of Novo Nordisk’s Tresiba and Ryzodeg is in the running for surprise of the year given the positive, if not unanimous, vote of an advisory committee as well as already secured regulatory approvals in Europe and Japan. The news wiped DKr64.5bn ($11.6bn) from the insulin giant’s market capitalisation as executives acknowledged that they would probably be unable to compile the cardiovascular data sought by the regulators until 2015 at the earliest.
Competitor Sanofi was a beneficiary of the FDA action, with shares rising on optimism for its long-acting insulin. Novo will now be working hard to avoid repeating the disappointment of its first basal insulin, Levemir, as its French rival looks to extend the Lantus franchise.
With the fears of a cardiovascular signal, a complete response letter was always thought to be a worst-case scenario for long-acting Tresiba, or insulin degludec, and its fast- and long-acting counterpart Ryzodeg, a combination of degludec and NovoRapid. The hastily called adcom had endorsed Novo’s offer of a post-approval cardiovascular outcomes study, which made it all the more surprising that regulators sent the insulins back for more work (Doubts linger after Novo Nordisk insulins scrape through US adcom, November 9, 2011).
Novo executives remained steadfast in their belief that the cardiovascular scrutiny was unnecessary. “There is no biologically plausible mechanism to suggest or explain that this insulin should have a cardiovascular effect different than any other insulin,” chief science officer Mads Krogsgaard Thomsen said in a call with investors.
With Tresiba’s US sales expected to hit $856m of a total worldwide forecast of $1.87bn in 2018, the scale of this setback is enormous. In the call, Novo executives would not speculate on the timeline of the new pre-marketing safety studies being sought, but Mr Thomsen said the company would be unable to provide added data in 2013, and probably not in 2014.
As it was, a five-year post-marketing trial of 8,000 or so patients had been mooted. Whether regulators will need the sort of assurances that an outcomes trial of this scale would provide will be the burning question for investors in coming weeks and months, and uncertainty surrounding Novo might not ease until it provides some clarity about the design of the new trial.
Using EvaluatePharma’s NPV Analyzer, a two-year delay in Tresiba’s US launch and similar erosion beginning in 2025 trims its net present value from $5.89bn to $5.22bn – an 11% falloff that mirrors Novo’s 13% share price decline to DKr928 today.
The one good piece of news for Novo’s outlook lies in healthy improvements in the sales of Levemir, the disappointing long-acting insulin that has never measured up to Lantus. The uptick could be explained by the fact that the dedicated Tresiba sales force is already on board and helping out the rest of the insulin sales force (EP Vantage Interview – Novo takes stock as US Tresiba decision approaches, December 14, 2012); however, at sales of $1.7bn last year, Levemir remains a weak competitor to Lantus’s $6.4bn.
Extensions and competition
The decision is also a setback to IDegLira, the combination of Tresiba with the glucagon-like peptide 1 agonist Victoza, a combination that itself was looking in better shape last week after development failures from combining Lantus and with Zealand’s Lyxumia (Flexible dosing trips up Zealand, February 7, 2013).
In the investor call today Novo's chief executive, Lars Rebien Sørensen, said the US Tresiba decision would not affect plans to submit IDegLira in Europe and other jurisdictions.
On the other hand, with the competitive threat to Lantus having been sidelined in the world’s biggest drug market, Sanofi looks in a decidedly better state. Shares climbed 3% to €70.84 today as investors saw new life in the French group’s best-selling franchise.
Even though Lantus is likely to face biosimilar competition in coming years, probably from Eli Lilly, it is still a formidable product. Moreover, a new formulation with a longer half-life is in development, which has the potential to match up well against Tresiba’s main competitive advantage – reducing the number of hypoglycaemic episodes.
A wild card, of course, is LY2605541, a novel long-acting insulin based on pegylation technology being developed by Lilly, although this too is surrounded by some cardiovascular worries. ISI Group analyst Mark Schoenebaum notes that it raised triglyceride levels in phase II trials, but adds that it might now be possible for this to be launched first.
There is no doubt that hundreds of millions of dollars of Novo R&D spending are now hanging in the balance. The odds are still very good that Tresiba and Ryzodeg make it to the market, but the big question is whether the Danish group can recoup its investment before the competitive landscape changes.
To contact the writer of this story email Jonathan Gardner in London at JonathanG@EPVantage.com or follow @JonEPVantage on Twitter.