Empagliflozin exposes cracks in Lilly/Boehringer venture

Much as Boehringer Ingelheim has tried to play down its manufacturing violations, after yesterday’s US complete response letter for empagliflozin there can be no doubt: things are serious.

Were Boehringer not a family-owned company that is relatively free to choose what to disclose and what to hide it would be facing a public relations disaster. And with Lilly, its empagliflozin partner, suddenly looking vulnerable, one has to wonder how much more the two companies’ already strained diabetes venture can take.

Lilly’s brief announcement yesterday said the FDA would not approve empagliflozin because of deficiencies at the Boehringer plant. No new clinical data were called for, but the US agency stated that the deficiencies had to be resolved before the SGLT2 inhibitor could be green-lighted.

Fallout

Thus the fallout from Boehringer’s May 2013 warning letter over its Ingelheim am Rhein facility spreads wider. The heavily redacted document had mentioned no products except Spiriva Handihaler, but has since engulfed olodaterol, and perhaps the Spiriva Respimat device too (EP Vantage exclusive – Boehringer battles delay to put Spiriva combo together, September 10, 2013).

Lilly had mentioned in its 2013 year-end SEC filing that Boehringer’s empagliflozin facility was subject to an FDA warning letter, but said it was unsure whether FDA approval would be affected. A Boehringer spokesperson yesterday said the FDA inspection of the Ingelheim am Rhein facility was still ongoing, with a final verdict due within six months of completion.

Lilly analysts had expected empagliflozin to generate sales of $770m by 2018, according to EvaluatePharma consensus data, but it now seems that launch could be delayed by a year.

Empagliflozin would have been the third SGLT2 agonist to come to market after Johnson & Johnson’s Invokana and AstraZeneca’s Farxiga, so on the face of it these two competitors could benefit. However, Bryan Garnier & Co analysts have pointed out that having Lilly’s sales force in the field could have helped grow the entire class.

No obligation

Being private, Boehringer is of course under no obligation to make market announcements. It has issued just one brief statement about the manufacturing warning, saying it took the issue very seriously and would work with the FDA on a comprehensive action plan.

But cracks have already started to form in its risk-sharing diabetes venture with Lilly, with the German group deciding to pull out of joint development of the basal insulin LY2605541. Boehringer’s chairman last year insisted that the alliance was healthy and working well, and one product – the DPP-IV inhibitor Tradjenta – has been launched from the joint effort.

Meanwhile, Lilly stock has had a strong two years, with analysts hailing significant pipeline projects on the one hand, and largely factoring in two large patent expiries into financial models on the other. But the company no longer looks impervious to criticism, and recent weeks have seen several sell-side downgrades.

The diabetes franchise forms a big part of a plan to climb out of its patent expiry trough, and here at least it can point to one relative success – its GLP-1 agonist dulaglutide proving non-inferior to Novo Nordisk’s Victoza (Lilly avoids head-to-head collision with Novo’s market leader, February 25, 2014). Still, first-pass dulaglutide approval is no dead cert.

The third project in the diabetes alliance, the Lantus biosimilar LY2963016, is also awaiting approval. As a biological LY2963016 is not being manufactured at the Ingelheim am Rhein facility, though the US warning was serious enough for the FDA to say it might withhold approval of any new applications listing Boehringer as a manufacturer.

It is just as well that Lilly now has to contend with Sanofi’s lawsuit alleging infringement of Lantus patents, which put an automatic 30-month stay on US approval of LY2963016.

A second complete response letter due to factors it cannot control could have made Lilly lose patience with its partner pretty quickly.

To contact the writer of this story email Jacob Plieth in London at [email protected] or follow @JacobEPVantage on Twitter