Merck could be in for big Januvia boost, thanks to 'completely balanced' heart data

In one quick announcement Monday, Merck's ($MRK) diabetes drug Januvia became the drug to beat in its class. New study data could boost Januvia's sales by 10% in 2020.

The blockbuster DPP-4 inhibitor hit its overall goal for cardiovascular safety in an anxiously awaited outcomes trial. And patients in the Januvia arm were no more likely to be hospitalized for heart failure than the rest of the trial participants.

Details from the TECOS trial will be presented at the American Diabetes Association meeting in June. But in broad strokes, the results give Januvia an advantage over rivals whose outcomes trials weren't as promising. As Bernstein analyst Tim Anderson wrote in a Monday investor note, "[I]t appears that the upside scenario has played out: Januvia wins and the other products suffer." 

Just two weeks ago, an FDA advisory panel reviewed AstraZeneca's ($AZN) Onglyza and Takeda's Nesina, using data from separate outcomes studies on the two drugs. The upshot: Onglyza should get new red flags on its label, to notify doctors and patients about an increased risk of heart failure, the committee said in a 14-1 vote. The panelists also suggested additional information on a potential increase in "all-cause mortality," a safety signal FDA reviewers noted ahead of the meeting. As for Nesina, its label should get some new info on heart failure risks, the committee recommended. Its up to the FDA to follow either or both of those recommendations, however.

Merck R&D chief Roger Perlmutter

At the time, experts wondered whether the heart-failure problem would extend to the entire DPP-4 class. The Januvia trial should put those fears to rest. It was actually designed to measure heart failure risks--unlike AstraZeneca's SAVOR trial--and Merck said there was "no imbalance" in hospitalizations for heart failure between the Januvia group and the placebo group. When pressed for more during the company's Q1 earnings call, R&D chief Roger Perlmutter called the heart-failure data "completely balanced."

"This would seem to mean that there is not even a trend, which would be a clear positive and could suddenly position Januvia as the best-positioned DPP4," noted Anderson in a dispatch to investors after Tuesday's call, assuming Onglyza and Nesina have their labels revised to warn of the heart failure safety signal, and Januvia's label remains unblemished.

Januvia and its sister med Janumet already dominated the DPP-4 world, with a total of $6 billion in 2014 sales between the two mets. But AstraZeneca--and to a lesser extent, Takeda--were hoping for bigger things from their contenders.

As a latecomer, Nesina has more time on its patent to rake in brand-level sales, but it was Onglyza--with $820 million in 2014 sales--that seemed more of a threat. AstraZeneca has plowed billions into its diabetes franchise--more than $7.5 billion, in fact, including its buyout of Bristol-Myers Squibb's ($BMY) share of their partnership in the field--and it's touting that franchise as a big growth player in the coming years. It's also spending plenty of money on consumer ads, sales reps and other marketing initiatives to make sure that happens. 

So, Merck's study is bad news for those ambitions. But how bad--and how good the news might be for Januvia--remains to be seen. Anderson suggested a 5% to 10% increase in 2020 sales for the Januvia franchise, or about $7 billion to $7.3 billion. Leerink's Seamus Fernandez was somewhat more optimistic, with a projection of $6.4 billion in Januvia franchise sales by 2016, up from a previously estimated $5.76 billion.

- see the release from Merck

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