Novo Nordisk trumpets first phase 3 oral semaglutide results. Does Lilly need to worry yet?

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Novo Nordisk's oral semaglutide hit its primary endpoint in the Pioneer-1 study.
(Novo Nordisk)

Highly anticipated phase 3 results for Novo Nordisk’s oral GLP-1 diabetes therapy, semaglutide, are here, and investors of Novo rival Eli Lilly are taking note. 

Positive study data showing that each of three semaglutide dosage strengths could outdo placebo at improving the blood-sugar measurement HbA1C sent Lilly shares downward Thursday, with investors fearing a serious threat to the Indianapolis drugmaker’s own GLP-1, Trulicity.

Novo cheered the data, with CSO Mads Krogsgaard Thomsen adding that “we look forward to … an expected regulatory submission in 2019."

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But the way Bernstein analyst Tim Anderson, M.D., sees it, that’s not such a bad thing for Lilly. While “at first blush,” semaglutide “appears competitive,” full results—from both this study, Pioneer-1, plus numerous other phase 3 trials in the works—need to be seen before industry watchers can truly determine how competitive semaglutide will be in the marketplace, he wrote in a note to clients.

Plus, “given the high-growth nature of the GLP-1 category, there will be enough room for both companies’ products to grow,” he predicted.

Evercore ISI analyst Umer Raffat isn’t too worried, either. One thing to keep in mind, he told his own clients, is that “Novo is focused on preserving its injectable GLP-1 franchise also.” That franchise includes longtime moneymaker Victoza, recently buoyed by positive heart data, as well as Ozempic, a recently approved, once-weekly injectable formulation of semaglutide.

“It’s not clear if oral sema will be commercially positioned to take share from Trulicity etc,” Raffat wrote.

RELATED: Novo Nordisk's new semaglutide trounces Lilly's scrappy Trulicity in diabetes trial

The way Anderson sees it, Ozempic is the “more tangible” Trulicity threat. That drug got a boost this week with inclusion on Express Scripts’ 2018 formulary.

Still, he understands why investors feel skittish. Consensus estimates peg Trulicity as the eventual leader of Lilly’s portfolio, with Bernstein predicting $4.4 billion in 2025 sales.

“Investors will naturally fear what impact oral semaglutide could have on an important Lilly growth driver,” Anderson wrote.