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Is Merck's Type 2 Diabetes Blockbuster in Trouble?

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By Maxxwell A.R. Chatsko, The Motley Fool

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For the last several years, Merck has been able to ride the success of its leading type 2 diabetes franchise Januvia/Janumet, which generated $5.75 billion in sales last year and represented more than 14% of total pharmaceutical revenue. The successful franchise has taken the top spot from Singulair in the titan’s product lineup and will continue to anchor the company for the foreseeable future. In fact, after Januvia and Janumet, only three products have shots at eclipsing $2 billion in sales in 2013.

This will be a tough year for Merck as Singulair experiences its first full year of generic competition in the United States and loses exclusivity in major European markets. The company is relying heavily on its type 2 diabetes drug franchise to offset as much stagnation as possible. While growth is expected, there is a wave of next generation competition that is about to hit the diabetes market. Couple that with new safety concerns for patients taking DPP-4 inhibitors and GLP-1 agonists and things could get messy. Are Merck and Januvia in trouble?  

A big-picture view
Understanding the big picture is important to understanding how Januvia’s vulnerability affects Merck. The company has taken a lot of heat in recent years for its expensive R&D program, which has swallowed almost $28 billion total and represents 19.6% of total revenue over the last three years alone. That means little without comparing it to competitors’ ratios, but investors and analysts can agree that returns have been lacking for such a massive budget.  

Merck does have bright spots in its product lineup such as Januvia, Gardasil, Zetia, and Isentress. Unfortunately, it also has a series of delays and gaffes in its pipeline. The company had a Food and Drug Administration, or FDA, decision on its next generation anesthesia reversal agent Suggamadex delayed until the second half of 2013. Some analysts expect an eventual U.S. launch to double annual sales to $575 million by 2016, but with several regulatory delays since 2008 some question if it will ever get the nod.  

Internal delays have also hit osteoporosis drug odanacatib, which analysts penciled in for $2 billion in peak annual sales. The series of hiccups forced Merck to can R&D chief Peter Kim for former Amgen chief Roger Perlmutter. It will take time to cut the fat off the company’s R&D program, but hopefully Perlmutter can revitalize and refocus the pipeline.

Hearing footsteps
As you can see, Merck has a lot riding on Januvia’s continued success. The drug has yet to falter in any major way and is generally accepted as one of the safest therapies for patients with type 2 diabetes. That could change with a recently concluded study — the first of its kind — linking the drug and Bristol Meyers Squibb‘s Byetta to a doubling in pancreatitis cases. The FDA has had past concerns with the two drugs, which increase levels of the hormone (GLP-1) responsible for insulin production.

It’s …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Johnson & Johnson Invokana PDUFA Preview

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By Maxx Chatsko, The Motley Fool

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It’s almost here! Johnson & Johnson is eagerly awaiting a decision on its type 2 diabetes drug Invokana (canagliflozin) by the end of the month. The novel small molecule inhibits the SGLT2 protein, which is responsible glucose retention in the kidney, thus allowing diabetes patients to maintain healthy glucose levels. Invokana has blockbuster potential as the first SGLT2 diabetes drug to (potentially) hit the market. Here’s what investors need to know. 

Pass or fail?
It looks like Invokana should have no problem gaining approval. The only thing that could put a lid on investor enthusiasm is the cautious outlook on the new class of drugs by the FDA. Bristol Meyers Squibb and AstraZeneca failed to get their SGLT2 inhibitor Forxiga (dapagliflozin) approved in November of last year, although the drug did gain approval in Europe.

What was the holdup? Forxiga showed a possible link to increased cancer risk. Invokana data has steered clear of a similar link thus far, but that didn’t stop a panel from voting 8-to-7 over long-term cardiovascular safety concerns. Johnson & Johnson is conducting a trial evaluating the long-term effects of Invokana, which is expected to wrap up in 2015. That should appease the FDA panel for the upcoming PDUFA and lead to a thumbs-up for the new drug.

Market competition: SGLT2 inhibitors
There are big advantages for a first-in-class drug such as Invokana. Pfizer’s ertugliflozin and Eli Lilly’s empagliflozin are the next SGLT2 inhibitors that will be thrust upon the market. Both drugs are in phase 3 trials at the moment, which pegs approval to late 2014 or 2015 and gives Johnson & Johnson a sizable window to get comfy with doctors and patients.

The FDA is also expected to reconsider Forxiga later this year after reviewing additional safety data. Should it gain approval in its second attempt, will doctors be able to overlook previous safety concerns and prescribe it over Invokana? 

Market competition: The field
Being first in class doesn’t automatically make a drug king, but being first to market sure helps. Merck’s Januvia was the first DPP-4 inhibitor approved for type 2 diabetes and is now the most well-established therapy. The franchise recorded $5.75 billion in worldwide sales in 2012. And despite Forxiga’s woes, the alliance between Bristol Meyers and AstraZeneca isn’t exactly out of the race, either. The Byetta franchise, acquired from Amylin Pharmaceuticals last August, brought in $227 million in 2012.

Usually, doctors hesitate to prescribe new drugs as first-line therapies in light of a smaller body of safety data. That would seem to bode well for Januvia and Byetta, except for a recent study that found patients taking either drug were twice as likely to develop pancreatitis, a potentially lethal condition. The study puts a smudge on Januvia’s squeaky-clean safety and side-effect profile and creates an interesting opportunity for Invokana.

Invokana’s blockbuster potential
Will doctors prescribe Invokana over well-established therapies with new safety data in hand? I think it’s …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Pharmaceuticals: Just What the Dow Ordered

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By Jessica Alling, The Motley Fool

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With uncertainty over the fate of the Cypress economy still looming, it’s fascinating that investors in both Europe and the U.S. are flocking back to the markets — suggesting they are confident that the situation will be resolved. The Dow Jones Industrial Average doesn’t mind; it jumped 65 points higher this morning on investors’ return to the Street.

With the Federal Open Market Committee scheduled to make its new policy announcements this afternoon, the market may get a little bit messy before the close of trading, but for now things are looking up. Since investors may be approaching banks with caution before the FOMC info is released later today, one sector has stood out as the early winner: pharmaceuticals.

Pfizer is the big winner this morning, up by 1.04% as of this writing. The pharma giant is being applauded for the recent approval of Uplyso, a plant-cell-expressed treatment for Gaucher disease, with Israeli-based partner Protalix Biotherapeutics. The drug, which was approved for use in Brazil, is the first of its kind for the treatment of Gaucher’s — it’s produced by Protalix’s plant-cell-based protein manufacturing system, which uses genetically engineered carrot cells. The U.S.-based Pfizer is coming under some scrutiny at home, however, as at least one U.S. sentator is questioning the price tag of the company’s oral rheumatoid arthritis medication, Xeljanz. The drug was approved by the FDA in November and is slated to hit the market soon, but its $25,000 annual cost seems a bit extreme to some.

Merck is also up this morning by 1%. Despite last week’s news about more delays for the company’s post-anesthesia drug, investors are happy about some more recent developments. Merck has entered into a collaboration with Bristol-Meyers Squibb for the promotion of Glucophage in China, as well as a deal with Nordic Bioscience to develop sprifermin for osteoarthritis of the knee. BMS and Merck will promote in China the diabetes drug discovered by Merck in order to gain a larger share of the growing diabetes-patient market in that country. For its collaboration with Nordic, Merck will develop and commercialize the new treatment, while Nordic Biosicences will provide clinical development services.

Outside of the Dow, beleaguered Affymax is up 4.76% this morning after shedding more than 60% yesterday. The company continues to struggle following the recall of its only drug, Omontys, a treatment for dialysis patients with anemia. The drug was recalled after it was linked to three fatalities during its use. The company has slashed its workforce by 76% and is weighing a decision to declare bankruptcy since the recall — and the investigation into the adverse reactions to the drug is only getting started.

Can Merck beat the patent cliff?
This titan of the pharmaceutical industry stumbled into 2013 and continues to battle patent expirations and pipeline problems. Is Merck still a solid dividend play, or should investors be looking elsewhere? In a new premium research …read more
Source: FULL ARTICLE at DailyFinance