Novo's Tresiba news injects uncertainty in insulin market, particularly for Sanofi

Novo Nordisk says the FDA has accepted its reapplication of its long-acting insulin Tresiba, setting it up for an October decision and a launch yet this year if approved this time around. Execs at Sanofi ($SNY) will certainly be watching the calendar just as closely given that a Tresiba launch will complicate the French drugmaker's efforts to its new long-acting insulin Toujeo established as the clear successor to aging Lantus.

In fact, with Tresiba potentially hitting the market 6 months ahead of earlier projections, Toujeo only recently approved and a biosimilar of Lantus from Eli Lilly ($LLY) and Boehringer Ingelheim on the near horizon, Bernstein analysts are telling clients the long-acting insulin market could get really, really interesting, very, very soon.

"We expect the basal insulin market to get increasingly unstable," the company said in a note to investors when Novo first announced it was resubmitting Tresiba for consideration. They observed that Sanofi's strategy is naturally to maximize its switch of patients from Lantus to Toujeo before competition enters. But now that Tresiba might hit this year, they wonder whether Sanofi might rethink its pricing strategy and start discounting Toujeo to hasten that process.

Novo ($NVO) is clearly at sprint speed with the return of Tresiba, which the FDA rejected in 2013, asking for more data about possible heart health risks. The Denmark-based company last month said it would resubmit the application based on interim data for a study that is not going to be complete until next year. But instead of taking two months for the application to be submitted and the FDA to respond, as some analysts predicted, it has been two weeks. Reuters, citing their own analysts, put the Tresiba sales forecast at $2.2 billion by 2020.

When Tresiba was first submitted, it was seen as primarily targeting Sanofi's Lantus, the best-selling, long-acting insulin in the world and the French drugmaker's top money maker. Sales of Lantus last year topped $7 billion. Tresiba's rejection was a huge benefit for Sanofi. It could continue to reap Lantus' huge sales and it looked like it would give it until 2016, when Novo's DEVOTE study will be complete, to Toujeo approved and firmly established ahead of competition. Sanofi got Toujeo approval in February but the Novo news will significantly shorten the lead time the drugmaker has to get it established.

Further complicating the picture for Sanofi, and for the basal insulin market, is the fact that Lantus' patent in the U.S. has expired and Lilly and Boehringer Ingelheim have gotten tentative approval for their biosimilar, Basaglar. Its launch has been sidelined by patent litigation Sanofi filed but its pending entrance into the market, along with Tresiba's double-time march, has some analysts thinking a pricing war could develop.

Bernstein analyst Tim Anderson was among those. He initially suggested that Lilly could deeply discount Basaglar to Lantus and quickly pick up a 40% share of Lantus market and achieve sales of $1.3 billion by 2020. But that was before Bernstein had a pow-wow recently with three top Lilly execs.

Eli Lilly's Jeremy Morgan

During that discussion, Bernstein reported that Jeremy Morgan, vice president of Lilly diabetes for Australia, Canada and Europe, "positioned Basaglar as LLY's long-acting insulin rather than a biosimilar" and dismissed the idea of price being the key differentiator. Lilly expects not to just grab Lantus market-share but to expand the market by selling to some patients for which Lantus doesn't offer as much protection. The discussion has led Bernstein analysts conclude that Lilly will be offering minimal discounting of the biosimilar to Lantus because Sanofi can just price match and start a price war. They said Sanofi's willingness to cut prices last October in the face of competition from Novo products was proof of that.

And what does Lilly think about think about the potential entry of Tresiba into the market? According to Bernstein's report, the execs said they expect Lantus to "remain a relevant product (and by inference, so would its biosimilar Lantus)."

- here's the Novo release
- more from Reuters

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