Monday, October 26, 2009

Effient and Onglyza Start Slow—And That May Not Be A Bad Thing

When Big Pharma execs start pointing to unusual performance metrics when talking about big product launches, investors get very nervous.

What they want to hear (or, better yet, see for themselves) is simple: clear evidence that new prescription trends are tracking well relative to blockbuster launches of the past. After all, as the prescription data company IMS Health points out, it does seem to be an ironclad rule that rapid initial uptake leads to blockbuster franchises—and slow starts almost never do.

So when Lilly and Bristol-Myers Squibb spent their quarterly earnings calls talking about hospital P&T committee schedules, formulary status, brand awareness levels and “intention to prescribe,” you can see why investors are nervous about the prospects for two of the biggest launches in the industry: Lilly’s antiplatelet drug prasugrel (Effient, partnered with Daiichi Sankyo) and Bristol’s diabetes therapy saxagliptin (Onglyza, partnered with AstraZeneca).

Both products were introduced during the quarter, and both posted similar initial sales (about $20 million in the US) during the period. There’s nothing wrong with those launch sales—but the question is: did any of those pills make it out of the distribution channel and into the hands of patients?

That’s where the underwhelming IMS data have raised concerns. Its early days, of course, but neither product is tracking anywhere near the blockbusters already in the market. Effient hopes to approach the performance of Bristol’s Plavix, now the number two drug in the world, while Onglyza matches up against Merck’s Januvia, which is arguably the one launch of the past five years that bears any resemblance to the blockbuster model of the 1990s.

For Lilly, of course, the starting point is recognizing that the IMS data are more or less irrelevant to the launch, since most prescriptions will be written in the hospital in the context of an acute coronary intervention—and then it’s the refills upon discharge that get picked up in traditional channels.

Still, there’s not much to point to as evidence that Effient is doing well. Here’s what Lilly IR exec Nick Lemen said during Lilly’s Oct. 21 earnings call.
“We are diligently executing our launch plan. Obtaining hospital formulary status is critical to the uptake of a hospital-based product like Effient. As we've said in the past, gaining wide-spread hospital formulary status will take roughly six months. To date we're on track to achieve our hospital formulary goals. As we move forward, in addition to working to gain formulary status, we'll be focused on communicating formulary availability to physicians and seeking initiation of appropriate ACS/PCI patients, particularly those under 75 years of age and those over 132 pounds of body weight who have not had a TIA or stroke. Payer access is also meeting our expectations of interim formulary status of Tier 3 unrestricted. We're especially pleased that as of October 1st Effient has Tier 2 unrestricted access with Express Scripts in both commercial managed care and Medicare Part D.”
That didn’t exactly wow ‘em on the call, especially since—as one analyst pointed out—Lilly had previously talked about achieving “rapid” formulary access in hospitals and the six-month time line sounded new.

As for Onglyza, here is what Bristol President Lamberto Andreotti had to say during that company’s Oct. 22 call:
“I think that's a good opportunity for me to say that we are pleased from what we've seen so far. We are executing against our plan….We are very pleased to see that now we are in the marketplace, awareness is going up from nearly zero at the beginning, to a good percentage now. The number of trials, the number of doctors that are using Onglyza is increasing. I saw some data on intent to prescribe, which is also going in the right direction and access is going the right direction.”
That didn’t exactly set the analysts' hearts a pitter-pattering either.

There’s no denying it: both brands are indeed starting slow. The question is whether the rule of thumb that blockbusters start fast needs revision.

That’s where both Lilly and Bristol have a case to make: the world has changed, and the old blockbuster model has to change with it.

For starters, reimbursement matters now, much more than it did in the blockbuster era. So those stats about formulary access are important—not just something to talk about other than IMS numbers.

And then there is the regulatory change. Effient is covered by a formal Risk Evaluation & Mitigation Strategy, set to be in force for two years. We’ve argued since the REMS were enacted that one implication will be to slow down product launches, with blockbusters more likely to follow something like the Prozac model (a slow uptake followed by an explosive breakout) rather than the billion-dollars-in-year-one-or-bust model.

Onglyza doesn’t have a formal REMS, but it is entering a changed marketplace, redefined by the safety concerns raised in the context of GlaxoSmithKline’s Avandia. Bristol’s challenge is, in effect, to reaffirm the idea that innovation in diabetes care can be safe—a task not made any easier by the fact that the company’s marketing materials still aren’t approved by FDA, even though the drug is.

Indeed, for both Effient and Onglyza, we would argue that a slow start is exactly what regulators want to see—in effect, a final trial period where use expands slowly, rather than take the risk of exposing hundreds of thousands of new patients in the first months after approval.

Rather than focus on the different metrics presented by the two companies, investors would be well served to consider another point Bristol’s Andreotti made. “We launched in a different US than the US of many years ago.”

That is undeniably true. Whether Effient and Onglyza will ultimately achieve blockbuster sales is a different question, of course. But a slow start is no longer enough to rule out a blockbuster finish.


Anonymous said...

Intersting topic and worth extensive coverage, BUT you should look closer at the launch of Prozac before describing it this way or using it as a good launch model.

Anonymous said...

The market is completely different compared to when Prozac launched. Much different launch curve for a market shaping first of class therapy vs a second in class.