Betting on the Saxagliptin Advisory Committee

Tomorrow’s advisory committee review of Bristol-Myers Squibb/AstraZeneca’s oral DPP-4 inhibitor anti-diabetic saxagliptin will be a critical milestone for type 2 diabetes drug development.

Based on our review of the briefing documents for the committee, we think FDA is essentially asking its expert panel whether it is possible for anyone to meet the agency’s new standards for cardiovascular safety of type 2 diabetes therapies without conducting prospective studies to do so.

That question is critically important to other sponsors with drugs pending at the agency, starting with Novo Nordisk whose liraglutide goes before the same committee on Thursday.

As we discuss in greater detail here, we think the signs are good for a positive outcome at the committee.

But who cares about that. We raise a more parochial question today: which of the two sponsors will look smarter when the meeting is over?

Recall that Bristol brought in AZ as a partner soon after the muraglitizar (Pargluva) disaster, where its last effort to market a type 2 diabetes agent crashed and burned—after a successful committee review. (Thank you, Dr. Nissen.) In that case—arguably the worst possible outcome for a drug development company—Bristol could at least look at the silver lining: the $100 million Merck paid for marketing rights to the drug.

In doing the deal with AZ, Bristol was very deliberately hedging its risk in light of what it saw as a worsening regulatory climate for primary care in general and type 2 diabetes in specific. So, was AZ a sucker to pay up (at least $150 million so far), or was Bristol a scaredy-cat to give away half of huge market?

Okay, okay, we get it. Obviously both Bristol and AZ have a huge stake in a positive outcome. Each is slated to share 50% of the market for saxagliptin, so there is no question of one side wanting it more than the other.

But still—given the size of the saxagliptin deal, it is worth asking whether it was worth it and for whom.

Given the concern about FDA’s diabetes guidance and the potential for costly post-marketing studies, you could easily argue that Bristol was right. Even if saxagliptin makes it through FDA soon, it will probably be more expensive to market and less lucrative than AZ may have forecast at the time of the deal.

And there is no guarantee that a positive vote tomorrow means saxagliptan is on the market this year. Most analysts seem to think the exclusive focus on cardiovascular safety at the committee means FDA has no other questions about approvability, but we're not so sure. It may be that FDA wants to focus on the cardiovascular analysis, figuring that if saxagliptin doesn't have enough data to meet the guideline, no one will.

On the other hand, at the time of the deal, saxagliptin looked certain to be at least third in the class (behind Merck’s Januvia and Novartis’ Galvus). Now, however, it has passed Galvus and is ahead of Takeda’s alogliptin . Indeed, it has even leap-frogged drugs that are not head-to-head competitors, like liraglutide. So maybe AZ got the better deal.

We think two things are clear from the above discussion: First, from Bristol’s perspective, the deal almost certainly worked as a hedging strategy. After all, even today, we don’t think you can say with any certainty whether saxagliptin will end up closer to Januvia or Pargluva on the scale of commercial success. (Ask us tomorrow and we might know more…)

Second, on the off chance that Bristol has another type 2 diabetes agent in Phase III, we doubt they'll get $200 million for it if saxagliptin crashes and burns....