The abstracts for the upcoming scientific conference of the ADA hit Friday, and top analyst Mark Schoenebaum at ISI flagged a critical issue for Eli Lilly's ($LLY) top drug candidate dulaglutide that could come back to haunt the troubled pharma giant after it reaches the market with its GLP-1 contender.
In Lilly's abstract, says Schoenebaum, dulaglutide was beaten by Novo's ($NVO) blockbuster drug Victoza in one critical area: weight loss. Patients taking Victoza lost an average of 3.61 kg versus 2.9 kg in the dulaglutide arm. And the difference cleared the bar for statistical significance.
Lilly had trumpeted the results of the head-to-head study between its experimental drug and Victoza, saying that dulaglutide had proven to be equally effective, or noninferior, to the Novo drug after measuring changes in HbA1c over 26 weeks. Dulaglutide is given only once weekly while Victoza is a once-daily drug, and Lilly is betting that the easier treatment schedule will give it a big advantage once the drug hits the market.
"Both have easy to use devices," notes Schoenebaum, "but Victoza offers a SS (statistically significant) greater weight reduction. Our initial view is that a 3kg weight loss reduction for Dula is still significant on an absolute basis, and given the 1x weekly regimen, Dula should be able to still grab significant share in the GLP-1 market. The GLP-1 market is currently $3Bn with volume growing 10+% / yr and price also 10+% / yr, so could easily become a $5Bn+ market in the out years. Dula consensus currently is ~$1Bn, which implies a ~20% peak penetration rate. That seems achievable and...still could be low. It's quite possible that even a 33% penetration rate is possible here (implying $1.7Bn in peak sales) given it has on the overall, a competitive profile vs. Victoza. As a benchmark, Victoza currently has about 2/3 share in the GLP-1 space."
Lilly has been promising investors that after a lengthy drought in the clinic, it is finally prepared to deliver some important new product approvals. But some of its late-stage drugs, like empagliflozin, offer little by way of an improvement over existing therapies. Dulaglutide was positioned as a potential new market leader in the GLP-1 field. And any data that undercuts that argument could well come back to haunt Lilly later.
Peak sales projections for dulaglutide are all over the map. Cowen has pegged the potential at $700 million, with Bernstein's Tim Anderson projecting $1.7 billion in 2020.