Novartis vs. Merck over diabetes
Novartis' Galvus and Merck's Januvia will do battle in the multi-billion dollar market.
By Aaron Smith, CNNMoney.com staff writer

WASHINGTON (CNNMoney.com) - Merck and Novartis both released studies on experimental diabetes drugs Tuesday, signaling an imminent market face-off between potential blockbusters.

Merck's Januvia and Novartis' Galvus have both been filed with the Food and Drug Administration and they're both members of the same drug class, DPP-4 inhibitors. If approved, they would be taken orally once a day to lower blood-sugar levels in people with type 2 diabetes, the most common type of the disease.

Shares of Merck (up $0.63 to $34.00, Research) rose nearly 2 percent in midday trading in New York, while Novartis (down $0.61 to $52.48, Research) shares dipped about 1 percent.

The studies funded by these two drug makers and released at the American Diabetes Association conference did not compare Januvia and Galvus head-to-head. Instead, they were compared to generic drugs and placebo. Because of this, spokesmen for Merck and Novartis dispelled any comparison between the two.

Nonetheless, there are many similarities between them. There are also differences that could be emphasized in marketing the drugs, assuming that the FDA approves them.

Les Funtleyder, analyst for Miller Tabak, said Merck and Novartis will probably try to make one product look better than the other by marketing their different strengths.

"It's Coke versus Pepsi, but they'll try to differentiate on some clinical points," said Funtleyder. "It's going to be a marketing war."

The most notable differences appear to be the findings on lowering the risk of hypoglycemia, or low blood-sugar, and increasing beta cell function, which creates insulin in the body. Merck produced stronger data about hypoglycemia risk and Novartis produced stronger data about beta cells. Conceivably, the drugs could act the same way or radically different, but this won't be known unless further studies are done.

Hypoglycemia risk lowered

The Merck-funded study showed that Januvia, when compared to the generic drug glipizide, lowered the risk of hypoglycemia, or low blood-sugar, by sixfold. In the head-to-head study, 32 percent of the patients using glipizide suffered at least one episode of hypoglycemia, while less than 5 percent of Januvia patients experienced hypoglycemic episodes, according to independent researcher Dr. Edward Horton of the Harvard-affiliated Joslin Diabetes Center.

Januvia was slightly better than glipizide in helping diabetics reach the medically acceptable target level for blood sugar.

Dr. Ameet Nathwani of Novartis said Galvus appeared to lower the risk of hypoglycemia, but it would have to be studied further for solid data.

Dr. Alan Garber, an independent researcher from the Baylor College of Medicine in Houston who helped conduct the Galvus studies, said that Galvus, when taken with the generic treatment metformin, resulted in a nearly fivefold increase in the function of beta cells, which make insulin. This is an important detail, because it could help early-stage diabetics postpone the need to begin taking insulin.

Januvia also significantly increased beta cell function, according to Merck, but the company did not have more specific data.

"Merck could use hypoglycemia fears to market their product," said Funtleyder, noting that doctors could be swayed by fears of malpractice and patients could be influenced be fears of having dangerously low blood sugar.

Funtleyder said that Novartis' beta cell data could also be used as a powerful marketing tool.

"That's important, because if they can help people preserve beta cells, they can keep them off insulin longer," said Funteyler. "The longer you can keep people off insulin, the better, because insulin comes with its own host of issues."

Weight loss

Both experimental drugs also helped diabetics lose weight, or avoid gaining weight. This is important in the treatment of diabetics, who often gain weight from the use of insulin. Obesity is one of the factors that leads to the onset of type 2 diabetes, and diabetics are constantly being told by their doctors to lose weight, thus the industry term "diabesity."

The prime use for these experimental drugs would be to lower blood sugar, and both of them appeared to work best in the least-healthy diabetics with the highest levels of blood sugar. Both Januvia and Galvus did a better job of lowering blood-sugar levels when added to the Takeda drug Actos, which is FDA-approved and on the market. Getting blood-sugar levels down to 7 percent is considered the Holy Grail of diabetes treatment.

In studies on diabetics with mildly elevated blood-sugar, Januvia by itself reduced levels by 0.6 percent to slightly more than 1 percent. In diabetics with higher blood-sugar, Januvia reduced levels by 1.2 percent to 1.5 percent. Galvus by itself or with metformin reduced blood-sugar by 1.1 percent overall.

In other studies that added Actos, Galvus reduced blood-sugar levels of 1.9 percent overall. Diabetics with excessively high levels of blood-sugar experienced an average reduction of 2.8 percent, and diabetics at least 65 years old had, on average, blood-sugar reductions of 2.3 percent. In Januvia-Actos studies on diabetics with moderately high blood-sugar, the levels were brought down by as much 0.7 percent.

Prior to the release of Tuesday's studies, analysts' sales projections for Galvus were higher than Januvia. But both are expected to be blockbusters, with annual sales exceeding $1 billion.

The market for diabetes drugs exceeds $12 billion and there are more than 20 million diabetics in the U.S. Both figures are expected to grow, along with the swelling ranks of baby boomers and declining health.

Merck filed its Januvia application to the FDA in February, ahead of Novartis' Galvus filing in March, so it's expected to enter the market first, assuming regulatory approval. Merck expects the FDA to make its decision on Januvia by mid-October.

Novo Nordisk shows promising results

Novo Nordisk, a Danish drugmaker and the world's biggest producer of insulin, announced findings from a study of its experimental drug liraglutide, which appears to help beta cells make insulin in the body, and which also showed significant weight loss. This company-funded study focused on four groups of diabetics, with 40 people in each group, according to independent researcher Dr. Sten Madsbad of the University of Copenhagen in Denmark.

In the two groups taking the highest doses of liraglutide, half the patients got their blood-sugar levels below 7 percent, said Madsbad. In one group taking a lower dose, 38 percent got their levels below that medically accepted target. In the one group on placebo, 25 percent of the patients were pulled from the study prematurely because their blood-sugar levels went so high that they suffered hyperglycemia, while 5 percent achieved the medically acceptable target.

In addition, patients on the highest doses of liraglutide lost an average of 6.6 pounds over 14 weeks, according to the company. If this indication continues to show up in late-stage studies, it could give Novo Nordisk a competitive edge, assuming that the drug is eventually approved by the FDA.

The liraglutide study was Phase 2, meaning it was less advanced than the Januvia and Galvus studies, which were Phase 3, the latest stage that a drug must go through before regulatory approval. Liraglutide is currently being studied in Phase 3 as a once-a-day injectable drug. As a GLP-1 analog, it is in a different class from Januvia and Galvus.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.