SNY Sanofi

Eli Lilly and Company (LLY) recently presented positive phase II data on its type II diabetes candidate, dulaglutide. The company said that dulaglutide met its primary endpoint in the study. Dulaglutide is a glucagon-like peptide 1 (GLP-1) analog which is being developed for the once-weekly treatment of type II diabetes.

Results from the phase II, randomized, double-blind, placebo-controlled, 26-week, parallel study showed that dulaglutide achieved non-inferiority after 16 weeks for mean 24-hour systolic blood pressure (SBP). Two doses (0.75 mg and 1.5 mg) of dulaglutide were evaluated in comparison to placebo.

With the primary endpoint of non-inferiority being achieved, superiority testing was conducted. Eli Lilly said that the 1.5 mg dose achieved a statistically significant reduction in mean 24-hour SBP compared to placebo. Results at week 26 were similar.

Meanwhile, the non-inferiority criterion for secondary endpoints like the effect on mean 24-hour diastolic blood pressure (DBP) was met by both dosages at weeks 16 and 26.

As far as the mean 24-hour heart rate was concerned, the 0.75 mg dulaglutide dose met the non-inferiority criterion at both weeks 16 and 26 compared to placebo. However, the 1.5 mg dose failed to achieve the same.

Dulaglutide (both doses) achieved statistically significant reductions in HbA1c levels compared to placebo at weeks 16 and 26.

Gastrointestinal events were the most frequently reported adverse events. This has been observed in other GLP-1 agonists as well. These data were presented at the annual meeting of the American Society of Hypertension (ASH).

Dulaglutide is currently in phase III studies (AWARD). In addition to the phase III AWARD studies, dulaglutide will be evaluated in a cardiovascular outcomes trial (REWIND). Results from the AWARD trials should be out in 2012 and Eli Lilly could be in a position to seek approval in 2013.

While we are encouraged with the phase II data, we note that the GLP-1 market is getting pretty crowded. While approved products include Novo Nordisk’s (NVO) Victoza and Amylin’s (AMLN) Bydureon and Byetta, companies like GlaxoSmithKline (GSK) and Sanofi (SNY) have GLP-1 candidates in late-stage development.

Neutral on Eli Lilly

We currently have a Neutral recommendation on Eli Lilly, which carries a Zacks #3 Rank (short-term Hold rating). The biggest near-term challenge for Eli Lilly will be to replace the revenues that will be lost to generic competition now that Zyprexa has lost exclusivity in the US and EU.

Zyprexa sales are expected to erode significantly in 2012. The generic threat will continue to pose challenges for Eli Lilly with Cymbalta slated to lose patent protection in 2013 and Evista in 2014.

We expect the top-and bottom-line to remain under pressure as the contraction in Zyprexa sales more than offsets growth in Cymbalta, diabetes and new product sales. On the flip side, the Animal Health business, Japan and emerging markets should offer some downside support. We are also pleased to see Eli Lilly pursuing small acquisitions and in-licensing deals to boost its pipeline.

 
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