Lilly diabetes risk-sharing starts to unwind as Boehringer pulls back

It is a good news/bad news time for Eli Lilly’s diabetes pipeline. The good news is that another oral antidiabetic drug from its partnership with Boehringer Ingelheim has generated positive data and looks set for regulatory submission this year; the bad news is that the private German group has pulled out of the development of Lilly’s novel basal insulin LY2605541.

Boehringer’s decision, which it said was driven by strategic concerns, changes the economics of the tie-up in that it shifts all the remaining costs of developing the least-valuable product onto Lilly. The Indiana company says it remains committed to the project, with more clinical trials kicking off this year and next; however, if similar products are any indication, the phase III programme might have to more than double in size.

Parting ways

Beyond announcing that it had happened, little on Boehringer’s decision to drop out of the novel basal insulin’s development was disclosed. The two companies continue to work on a Lantus biosimilar dubbed LY2963016, the earliest-stage of the three remaining projects from the four-product partnership signed two years ago (Lilly-Boehringer diabetes deal seeks safety in numbers, January 12, 2011).

“Independent strategic portfolio considerations” was the reason cited for withdrawal on ‘5541, a pegylated recombinant insulin. Among the issues that Boehringer executives were confronting in its development, wrote ISI Group analyst Mark Schoenebaum, were up to $350m in milestones that could have been paid out to the US partner and the continuing R&D costs of phase III development.

Another issue is the likelihood that the two Lilly-Boehringer long-acting insulins will become the fourth and fifth products onto the market, assuming Novo Nordisk’s Tresiba gets approval on schedule this year (Key regulatory decisions for big pharma in the first half of 2013, December 20, 2012). With generic versions of the leader, Lantus – including ‘3016 – possibly due in 2015, there is the potential for a great deal of price pressure in the space, providing a barrier to growth for a novel product.

Phase II data for ‘5541 were presented at the American Diabetes Association scientific session and published last year. The project proved similar to Lantus on lowering diabetics’ blood sugar levels, and although patients taking ‘5541 lost weight compared with weight gain seen in Lantus patients, they also had significantly higher liver enzyme levels.

With little to differentiate it from established products, it is no surprise analysts are forecasting it as the least valuable product emerging from the 2011 Boehringer-Lilly partnership – just $294m to Boehringer, due in part to the expectation that sales will peak in 2019, according to EvaluatePharma’s estimates (see table).

This is without considering the costs of the programme. So far five clinical trials of ‘5541 have begun, enrolling 4,830 patients. If the phase III programme for Tresiba is any guide, as many as 10,000 more might need to be recruited. 

NPV of products under Lilly-Boehringer diabetes deal ($m)
Tradjenta Lilly 1,178
Boehringer 1,762
empagliflozin Lilly 546
Boehringer 610
LY2963016 Lilly 2,230
Boehringer 1,142
LY2605541 Lilly 432
Boehringer 294

Still promising

On the other hand, Boehringer’s contribution to the partnership continues to look promising. When the two companies signed on the dotted line, Tradjenta had already been submitted to regulators and was on the verge of approval; now empagliflozin has reported positive data from four trials indicating that the once-daily pill significantly reduced blood-sugar levels when compared to placebo.  

Only topline results were released, with detailed disclosure expected at medical meetings this year. Consistent with other drugs in empagliflozin’s class – the sodium glucose co-transporter-2 (SGLT-2) inhibitors, which encourage urinary excretion of glucose – genital infections were more frequent in patients taking the active product.

Strategically, the trouble with these two products is that they will not be first to market. Tradjenta was five years behind Januvia, the first dipeptidyl peptidase IV (DPP-IV) inhibitor that when combined with its metformin combination pill Janumet is forecast to sell nearly $9.5bn in 2018. Favourable FDA review for Johnson & Johnson’s canagliflozin will make that pill the first SGLT-2 to reach the US market, while Bristol-Myers Squibb and AstraZeneca’s Forxiga is on the market in Europe (Event – J&J hopes canagliflozin flourishes where Forxiga failed, January 4, 2013).

The strategic rationale for the Lilly-Boehringer pact was of course a bid to get these late-arriving products better established on the formulary tiers of big payers by offering products across the range of therapeutic options. This goal remains alive with the good news yesterday from empagliflozin, even if that SGLT-2 class has raised cardiovascular safety concerns in addition to the genitourinary ones.

But without Boehringer there to offset some of '5541's costs, the strategic rationale behind forging on becomes a little harder to justify. It will be some time before investors can see pivotal data and judge whether it was a wise bet – Boehringer’s decision should give them reason to question Lilly’s wisdom.

All data sourced to EvaluatePharma.

To contact the writer of this story email Jonathan Gardner in London at [email protected] or follow @JonEPVantage on Twitter

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