“It’s not a good day for diabetes patients in the US, it’s not a good day for Novo Nordisk and for Novo Nordisk shareholders,” Novo ceo Lars Soerensen said on a conference call with analysts earlier today. “We will do our utmost to ensure this is solved as expediently as possible... We were both very surprised and very disappointed.” In a statement, he noted approval also hinges on correcting problems in a manufacturing plant (see FDA letter here).
Indeed, only two week ago, Soerensen told analysts that Novo (NVO) was making progress in talks with the FDA and did not have any indication that approval might be delayed (see this). His comments were made following a recommendation last November by an FDA advisory panel that Tresiba should be approved, but that Novo should conduct a cardiovascular outcomes trial in 7,500 patients with type 2 diabetes - after approval.
By issuing a complete response letter, however, the FDA is signaling a desire to avoid the possibility that safety issues could emerge with a primary care drug after facing a firestorm over cardiovascular risks tied to the Avandia diabetes pill. Since that controversy, which emerged after a meta-analysis reported links to heart attacks and strokes, the agency has been more cautious about issuing certain approvals (back stories here).
"By approving (Tresiba) now, it would run the risk of a blow up later when the cardiovascular safety trial completes," Sanford Bernstein analyst Tim Anderson writes in an investor note this morning. "The last thing FDA wants is to approve a new drug that could potentially run into a safety issue years later, especially when the benefits of (Tresiba) over Lantus (a rival insulin sold by Sanofi) are only modest."
At best, he adds, Novo could quickly enroll patients in a trial and the FDA would be willing to accept partial, interim data. But if the agency were to require complete data, approval may not occur until 2017 or later. There is no guarantee, of course, that Tresiba will ever win approval and, he notes, any negative cardiovascular findings could hurt the product in markets where it was already approved, which includes Japan.
The failure to win approval for Tresiba and Ryzodeg, which combines degludec with another formulation of insulin, means that the new insulin product is unlikely to reach the multibillion-dollar sales target that analysts had expected. The US market, of course, is crucial to achieving large revenue goals.
All of this is a big plus for Sanofi (SNY), which is struggling to boost revenue and has been counting on building its Lantus franchise. "This removes a highly visible potential competitor launch for Sanofi in the US for at least a few years while also providing incremental runway for Sanofi's new Lantus formulation," writes Leerink Swann analyst Seamus Fernandez in an investor note. He foresees a three-year delay in Tresiba approval.
Lantus sales are expected to reach some $6.6 billion with nearly two-thirds of that coming from the US, Deutsche Bank analyst Mark Clark tells Reuters. The new formulation is expected to reach the market by the end of next year, not long before biosimilar versions of the existing Lantus product become available, according to Anderson.
As an aside, TheStreet pointed out late last week that trading in Sanofi stock was running exceedingly high on Friday, but no explanation was offered (read here). Perhaps the FDA action is the reason. Novo noted that the FDA letter was received last Friday, although the drugmaker did not disclose the agency decision publicly until yesterday.
thumbs down two pic thx to striatic on flickr