Novo Nordisk's diabetes combo beats Lantus in Phase III

Novo Nordisk's ($NVO) next big thing in diabetes beat out the world's top-selling insulin in a late-stage trial, stoking blockbuster hopes for the combination treatment. But a previous regulatory setback will keep the cocktail off of U.S. shelves until next year at the earliest.

Dubbed IDegLira, Novo's once-a-day injection pairs Tresiba, an insulin analog that lasts for up to 40 hours, with Victoza, which bolsters the hormone GLP-1 to promote the body's natural production of insulin. In Phase III results presented at the weekend's American Diabetes Association meeting, the combo charted statistically significant reductions in blood sugar, body weight and rates of hypoglycemia compared with Lantus, Sanofi's ($SNY) $7 billion-a-year insulin.

In the 26-week study, 72% of patients taking Novo's combo reached their ADA-approved blood sugar targets, compared to 47% taking Lantus. The cocktail also led to a 57% lower rate of hypoglycemia and came through with a net 7.1-pound change in body weight.

IDegLira is already approved in Europe as Xultophy, but, thanks to Tresiba's costly FDA rejection in 2013, Novo's plans to bring the combo to the U.S. remain on hold. Under FDA regulations, all components of a combination product must be approved individually, meaning Novo can't submit Xultophy until Tresiba gets a green light.

But that may come sooner than expected. The agency turned away Tresiba over safety concerns, demanding long-term cardiovascular outcomes data before it would reconsider and seemingly putting off the insulin's market debut until 2017 at the earliest. However, a group of Novo researchers privy to interim data from the study believe the results are positive enough to warrant approval, and the company's management--without seeing the data--resubmitted the treatment in March, expecting a second FDA decision in the winter.

But the landscape in diabetes has shifted since Novo's initial setback. This year, Sanofi launched Toujeo, a once-a-day insulin it hopes can take the crown from Lantus. Analysts have cautioned that the prospect of multiple new insulins competing for market share could lead to a value-destroying price war, and Novo, by coming in second, will miss out on a first-mover advantage. Both companies caught a break in February when Eli Lilly ($LLY), another major diabetes contender, ran into serious safety issues with its long-acting insulin and indefinitely delayed an FDA filing.

Sanofi's head start makes Xultophy's progress all the more important to Novo. Payers may come to consider Toujeo and Tresiba as interchangeable, and Lilly's recently approved GLP-1 drug Trulicity is cutting into Victoza's market share, but Novo is the first of the pack to win approval for a combination. If it can successfully port Xultophy to the U.S., the Danish drugmaker could elbow its way to the front of a crowded field.

- read the announcement (PDF)