Memorandum

Degludec receives marketing authorization in the EU – January 22, 2013

Executive Highlights

  • Novo Nordisk has received marketing authorization in the EU for insulin degludec.

Novo Nordisk announced yesterday (having heard the news earlier in the day from European authorities) that insulin degludec (Tresiba) and insulin degludec/insulin aspart (Ryzodeg) have received EU marketing authorization. This follows a positive opinion from the EMA’s CHMP last October 19, 2012. Notably, the label looks very favorable for Novo Nordisk; this is great news as the EU label will be used as a “reference label” and will likely set precedent for other countries including the US (the label is not yet posted on the EMA website but should be shortly). We were surprised to hear that the label highlights degludec’s duration of action of 42 hours (!); it also states that degludec is associated with less hypoglycemia (overall and nocturnal) compared to other traditional long-acting basal analogs;

The 42-hour duration characterization is a big win from our view, as we think it will grant patients greater flexibility on the timing of their insulin dosing – as background, phase 3 trials demonstrated that patients could take degludec eight to 40 hours after the last injection with no need for dose adjustment. Novo Nordisk will strongly advise patients to take degludec once daily at the same time each day; even so, we believe patients will greatly appreciate the piece of mind of knowing that should they accidentally forget a dose, degludec will continue to work. We imagine that some patients will perhaps experiment with taking fewer injections per month, though we assume that HCPs will strongly advise against such practice, as taking less-frequent injections could require a higher dose per injection and may also result in less efficacy (as a reminder, phase 3 trials showed that degludec taken three times weekly failed to achieve non-inferiority in reducing A1c compared to glargine and led to higher rates of hypoglycemia). Overall, we think patients will quite positively perceive degludec’s flexibility in day-to-day dosing, and that both patients and parents will appreciate degludec’s lower risk of overall and nocturnal hypoglycemia.

Novo Nordisk will launch degludec in regions after the reimbursement is established. Although the launches will start within months, we expect reimbursement in Europe will take some time to be established, especially in regions like Germany and France and Italy, where it can take up to 12 or 15 months to win reimbursement, even third-tier reimbursement. We expect that launch may happen sooner in Switzerland and perhaps Scotland, areas that are not technically part of the EU. As we understand it, the reimbursement process can be quite arduous; Novo Nordisk will have to meet with hundreds of local commissioning groups (212 in the UK alone), speak to their budget holders, and try to get on local formularies, perhaps winning only a "third line option" the first time.

We assume Novo Nordisk will ask for a moderate price premium for degludec, likely 10-15%, but we have no information on this other than our speculation. It will be standard practice in each local authority to establish its own price. It sounds like Denmark and the UK should launch first, likely by the end of March, with other European countries to follow.

  • We are curious how degludec’s lower risk of hypoglycemia will impact its reimbursement; from a health-economics standpoint, payors may view degludec more favorably given the high costs associated with hypoglycemia. For reference, during the Novo Nordisk corporate symposium at CODHy 2012, Dr. Marc Evans (Cardiff University, Cardiff, UK)stated that type 2 patients experience roughly 16 hypoglycemia events per patient year (of which0.4 events are severe) and that type 1 patients experience ~43 events per patient year (of which1.2 events are severe.) The cost benefits appear two-fold: 1) the costs saved from preventing hospitalizations due to hypoglycemia – Dr. Evans noted that in 2009/2010, hypoglycemia was the primary diagnosis for hospitalizations, with diabetes patients staying in the hospital for an average of six days; and 2) the costs saved from preventing complications, as a lower fear of hypoglycemia may result in better glycemic control – Dr. Evans highlighted the GAPP survey which found that 72% of PCPs and 79% of specialists said they would treat their patients more aggressively if there was no concern about hypoglycemia. Dr. Evans highlighted that according to a survey of 1,400 patients from the UK, USA, Germany, and France, the direct economic consequences of non-severe hypoglycemia lead to an additional cost of €1,800 ($2,400) per person per year. As a reminder, degludec’s hypoglycemia advantage was based on a pooling of type 1 and type 2 data in the pre-specified meta-analysis in which Sanofi’s Lantus was the comparator. Though degludec’s reimbursements may improve over the years (as more data is collected), its placement within the reimbursement tiers may change after Lantus’ patent expires in 2015 – of course, this depends heavily on whether biosimilar versions of glargine enter the market and on the quality of data for these new products.
    • From a clinical and patient perspective, the benefits of a lower hypoglycemia risk may be less quantifiable but will play a significant role in patient choice. We’ll be interested in hearing more about how degludec use affects less tangible aspects of insulin therapy such as patient comfort with taking insulin, quality of life, and tendency toward protective eating.
  • The EU label sets a positive precedent for other markets, including the US. As a reminder, the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee voted 8-4 in favor of approving degludec, making a positive FDA decision likely. However, since the FDA raised a number of objections to Novo Nordisk’s hypoglycemia data, a hypoglycemia advantage in the US label seems far from a sure thing. For our full report on the FDA advisory committee meeting, which includes data from the hypoglycemia meta-analysis, please see our November 8, 2012 Closer Look at http://www.closeconcerns.com/knowledgebase/r/c53dd554.
  • The official labeling of degludec’s dosing flexibility and lower risk of hypoglycemia will help it compete with Sanofi’s blockbuster Lantus, which currently has a ~75% share of the basal insulin market and yearly sales of $5.5 billion in 2011 (Novo Nordisk’s Levemir has the remaining ~25% market share, with yearly sales of $1.4 billion in 2011; while the company has not made any official comments, we presume that it will begin to phase out Levemir as it concentrates on degludec). To our knowledge, since patients are generally hesitant to switch from an insulin they feel comfortable with, Lantus and degludec will mainly be competing for new insulin users. Previously, Sanofi management noted three potential drawbacks of degludec compared to Lantus: 1) since its phase 3 studies were “treat-to-target” trials, degludec has not demonstrated superiority to glargine (degludec’s EU label says it is noninferior in reducing A1c);2) Lantus has more safety data; and 3) after speaking with numerous diabetes specialists, Sanofi is unsure whether degludec’s flexible dosing will be a clinical advantage, as it could lead to imprecise dosing. Despite these drawbacks, Sanofi management has stated that they may increase their marketing efforts in response to a degludec launch.
  • Both Lilly and Sanofi have basal insulins in late-stage development. During its 2013 financial guidance, Lilly management reiterated that Lilly will not publically disclose phase 3 data for its insulin glargine candidate but will submit it to regulatory authorities in 2013. Managementalso started that in 2013, Lilly would only receive internal readouts of phase 3 data for its novel basal analog (LY2605541; PEGylated lispro), suggesting that data will be publically disclosed in 2014 or later. As a reminder, in January Boehringer Ingelheim and Lilly announced that BI decided to terminate the LY2605541 collaboration due to "independent strategic portfolio considerations." However, Lilly stated that it plans to continue with LY2605541’s development program in 2013 and 2014, placing a regulatory submission as early as 2014. Sanofi recently expanded the phase 3 EDITION program for its novel insulin glargine candidate and expects to file the candidate in 2014, with a launch in 2015 if approved (this would coincide with Lantus’ patent expiry in 2015).
  • We imagine that similar to GLP-1 agonists, the entry of newer and better basal insulins will hopefully expand the insulin market and help physicians overcome the clinical inertia that sometimes delays insulin therapy when it is needed. For reference, according to IMS moving annual total data from August 2012, the value of the global insulin market totals roughly $18 billion and long-acting insulins have a 38% share (amounting to roughly $6.8 billion). For Europe specifically, the insulin market totaled ~$4.2 billion as of August 2012, with basal insulins holding a 36% share (~$1.5 billion). In the US, the market value of insulin therapies totaled ~$11 billion as of August 2012, with basal insulins holding a 48% share (~$5.3 billion).
  • Novo Nordisk will announce its 4Q and 2012 results on January 31, and we look forward to learning more regulatory news on IDegLira (degludec/Victoza), which should be filing in the second half of this year (likely 3Q13); of course, a US IDegLira submission will require degludec approval in the US (see details below); we also hope to learn more about Novo Nordisk’s other programs such as liraglutide for obesity (phase 3), liraglutide for type 1, the once- weekly GLP-1 agonist semaglutide (phase 3 initiation planned for 1H13), the three oral GLP-1 agonists in phase 1, the two oral insulins in phase 1, and Novo Nordisk’s ultra fast acting insulin (phase 3 expected to begin in late 2013 – see our report at http://www.closeconcerns.com/knowledgebase/r/0cac6e75).

-- by Kelly Close and Nina Ran