Januvia: Defining Primary-Care Success and Risk
Executive Summary
Januvia's fast development and successful launch exemplifies Merck's new biomarker-based R&D operation and its focused "one Merck" strategy. But the drug also provides an ideal case study of why doing everything right in primary care brings with it extraordinary risks: the key elements of Januvia's success -- blazing speed through development and the extraordinary safety profile on which its commercial triumph depends -- also define its most dangerous commercial liabilities.
The anti-diabetic is a template for how Merck intends to recapture industry leadership. But a closer look shows just how difficult that will be.
By Roger Longman
Januvia is the most successful anti-diabetic launch ever—and it could represent the greatest IRR of any new primary-care product.
Its blazing-fast development and record-breaking launch is the first major example of the company’s new biomarker-based R&D operation, on the one hand, and its focused "one Merck" strategy on the other.
The drug’s DPP-4 target has unusual characteristics that helped speed the development program but that aren’t available in many other R&D programs.
Key to its primary-care success is Januvia’s unusually benign side-effect profile. But a key competitor’s speed bumps at FDA highlight the risk Merck runs in depending on safety as the drug’s major differentiator.
Five months into its commercial life, Januvia has been the most successful anti-diabetic drug launch ever. Measured solely by returns, it could become the most successful primary-care drug ever launched--the very definition of what drug companies must do to succeed in primary care.
Not merely because, just four months after its appearance, Januvia (sitagliptin) has already taken about 40% of the new written scrips among anti-diabetics--virtually unheard of in any crowded category. Or that in just a few months the Merck & Co. Inc. first-in-class DPP-4 inhibitor has already reached the market share targeted for its first year.
Instead, key to Merck’s success with Januvia is what could be its extraordinary internal rate of return on its research and commercial investment; an IRR determined by its speed to market, its competitive position, and the molecule’s inherent life-cycle management potential. Just in terms of the useful patent life of the molecule, Merck could end up with an extra four or even more years of additional commercial life than its nearest class-competitor, Novartis AG’s still unapproved vildagliptin (Galvus). And that additional patent life doesn’t count the extra years of exclusivity Merck will get by exploiting Januvia’s unusual adaptability as a component of drug combinations.
And all this potential upside comes despite the fact that Januvia is not an extraordinarily efficacious anti-diabetic. It’s good; it represents an important addition to the current therapeutic armamentarium. But in terms of its ability to lower on its own the key metric for therapeutic success, HBA1c, (a measure of blood glucose), it’s no breakthrough. Instead, Januvia’s popularity among physicians hangs on its benign side-effect profile, an easy-to-prescribe pill that improves the results of most other oral therapies. It requires no real alteration of treatment, no difficulties for patients.
So what’s the problem? Januvia, in fact, is an ideal case study of why doing everything right in primary care brings with it extraordinary risks. The key elements of Januvia’s success—blazing speed through development and the strong safety profile on which its commercial triumph depends—also define its most dangerous commercial liabilities.
The fundamental problem is what the world does not yet know about DPP-4 inhibitors—and whether problems in one member of the class will show up in another. Januvia’s most important DPP-4 competitor, Galvus, has run into a major safety speed bump at the Food and Drug Administration. That problem could redound entirely to Januvia’s benefit: the longer it remains the only drug of its class on the market, the more it can create an insuperable market-share leadership. But Galvus’ fate could also compromise Januvia’s key marketplace advantage, undermining perceptions of Januvia’s safety profile with same-class concerns raised by Galvus’s regulatory challenges. It’s happened before—with Merck’s product playing the part of Galvus: when rofecoxib (Vioxx) was withdrawn, Pfizer Inc.’s celecoxib (Celebrex)—which was never definitively tied to Vioxx’s side effects--got caught in the downdraft and never recovered.
Speeding Up Development
For Peter Kim, PhD, president, Merck Research Laboratories, and other senior researchers at Merck, Januvia’s speed to market represents a major vindication of the company’s biomarker effort—its strategy to tie the majority of its research programs to biomarkers that can tell scientists quickly whether a product is working, will exhibit side effects, and that will provide information on a host of other development criteria that should cut years off development time lines. Such biomarkers are a foundation of its new experimental medicine department and the rationale behind several of its recent deals, most publicly its alliance with FoxHollow Technologies Inc. [See Deal][See Deal] (See "FoxHollow and Merck Expand Alliance, Aim at Vulnerable Plaque," IN VIVO, October 2006 (Also see "FoxHollow and Merck Expand Alliance, Aim at Vulnerable Plaque" - In Vivo, 1 Oct, 2006.).)
But the speed of the Januvia program also benefited importantly from a series of unusual circumstances. Merck began its DPP-4 discovery program relatively late, in 1999; Novartis had started in 1995, publishing a major paper on the subject in 1998. Like the other companies in the field, the idea was to block DPP-4 from destroying GLP-1, a key player in regulating blood-sugar levels. But inhibiting DPP-4 worried a number of researchers from other companies, afraid that a chemical antagonist would either activate or block other important substrates. But Merck’s lead biologist on the project, Nancy Thornberry, PhD, now VP, worldwide head for diabetes and obesity basic research, was convinced that DPP-4, a protease, was different enough from the other substrates to avoid the problem.
Her opinion convinced the higher-ups in research to fund a program many other companies wouldn’t. But even among the small handful of competitors working on DPP-4 inhibition, Merck was way behind in the research. By 2000, Novartis was already presenting clinical data on a DPP-4 inhibitor (a precursor molecule to Galvus), while Merck had no molecule at all. To jumpstart the program, the company licensed in a compound from a German biotech, Probiodrug AG, along with non-exclusive rights to its IP around the target. [See Deal]
The Probiodrug compound turned out to be toxic, exhibiting, Merck later showed, skin lesions in monkeys—precisely the problem that has recently slowed up Galvus. The Probiodrug experience, Thornberry says, was a highly "useful failure" because it led her to theorize that the compound’s toxicities were at least in part due to the fact that it hit, along with DPP-4, other subtypes of the DPP receptor family, specifically DPP-8/9. Build a DPP-4 inhibitor that avoided DPP-8/9 and, she believed, one could create a highly safe and efficacious new diabetes medicine.
Understanding that toxicity problem "gave us a huge advantage over the competition," Thornberry says. Indeed, it is a far bigger advantage than she knew at the time. It seems, for example, that the FDA has accepted the Thornberry theory—and so apparently suspects that the monkey skin lesions seen with Galvus aren’t, as Novartis argues, a species-specific effect but one linked to inhibiting DPP-8/9.
More immediately, the theory helped Thornberry and her chemistry counterpart, Ann E. Weber, PhD, focus their discovery work. In their efforts, they were helped by the remarkable druggability of DPP-4—another relatively rare advantage to the program. "Chemically," says Thornberry, "DPP-4 is a very tractable target." An extracellular protein, it’s easy to get to and "there are lots of structures that inhibit it," but that don’t bind to DPP-8/9.
The Biomarker Advantage
DPP-4 provided researchers two other huge benefits: it came with its own nearly instant-readout biomarker for chemical efficacy--and the biomarker translated almost perfectly from animals to humans. DPP-4 itself circulates in the blood; lower the amount of DPP-4 and you increase glucose tolerance, in animals and in people. Good animal models aren’t unusual in diabetes, though they are in most other diseases--cancer and neurology are particularly difficult examples. But biomarkers that not only translate well from animals to humans, but quickly, are unusual in any disease.
Take the PPAR agonists (also called thiazolidinediones, or TZDs) pioglitazone (Actos) and rosiglitazone (Avandia). Transcriptional activators, they can take weeks to work. But inhibitors of DPP-4 reduce circulating DPP-4 nearly immediately. So while chemists and biologists working on PPARs might be able to test dozens of compounds in a year, DPP-4 researchers can test dozens every few weeks. That’s why Merck was able to come up so quickly with Januvia--barely months after figuring out why the Probiodrug had failed.
And once Merck researchers put the compound in humans, its trials went extraordinarily rapidly. The company practically skipped dose-ranging studies, notes John Amatruda, MD, VP clinical research, metabolic disorders. "The fact that we could measure DPP-4 inhibition in plasma, and correlate it so closely to activity, allowed us to go [almost directly] into Phase IIb studies. We cut a year from Phase I and Phase II because we had a marker of activity. And we didn’t need a 12-week study to see if the marker was working. We could do a one-day study."
Merck wasn’t the only beneficiary of this advantage. The biomarker’s characteristics were well known. Novartis was using it to study a wide variety of uses for its compound--as monotherapy and as an add-on metformin, insulin, sulfonylureas, and TZDs.
The One-Merck Advantage
If Merck was going to catch up, says Amatruda, it would have to narrow its immediate ambitions. "We knew," he says, "that if we went for multiple indications, like Novartis seemed to be doing, we’d be slowed down. So we focused…on what we felt would be the most common uses."
In the decision, they were helped by the failure, in November 2003, of their Phase III dual PPAR, MK-767. For that PPAR program, notes Jay Galeota, general manager of Merck’s global diabetes and obesity franchise, Merck had "put together a number of tools to understand the [diabetes] market, to value it, to decide what data would be necessary to develop it effectively—not just to get it approved but to make it commercially successful." When it came to Januvia, they settled on three indications—monotherapy and add-on therapy to metformin and a TZD like Actos or Avandia. "We knew from our previous work [on the dual PPAR] that Januvia would most likely be first used with metformin and then with a TZD, which had become an increasingly popular add-on to metformin. We figured we could do the others later," through supplemental filings, says Galeota.
Speed was increasingly of the essence. In late 2003, Merck lost its two most important Phase III pipeline programs, its substance P antidepressant and its dual PPAR. The next year it pulled Vioxx off the market--killing any near-term approval for its follow-on Cox-2, etoricoxib (Arcoxia). In 2005, it lost the dual PPAR substitute it was co-developing with its inventor, Bristol-Myers Squibb Co. [See Deal]
With an extraordinarily thin pipeline, new CEO Richard Clark formed an intra-disciplinary task force around Januvia, with its head—Jay Galeota--reporting directly to him. "It was an all-hands-on-deck program," says Galeota, one of two such highest-priority programs at the company (the other was for the HPV vaccine Gardasil). A key example, he says, of how Clark’s "one Merck" strategy of focus and prioritization was supposed to help: "we were able to take the best people from each function anywhere in the company to work on the program."
And it worked. Merck began their Phase II in July 2003 and filed the drug’s NDA less than 2½ years later, beating Novartis—which had started its research program four years earlier than Merck—to the FDA by four months. Nearly a year later, Merck had its approval, and Galvus had its first major regulatory delay. A few more months, and Januvia had a total of 11 country approvals. By the end of 2007, Merck expects to have the drug approved in 55 counties, including 27 in Europe. Januvia unquestionably represents the fastest primary-care development and rollout program in the last decade (see Exhibit 1).
The No-Brainer Drug
Meanwhile, physicians seem to love Januvia. As they rolled out results of their trials at medical meetings, Novartis and Merck had built up huge pre-approval interest in the class. Once Januvia had its NDA in hand, Merck capitalized on the pent-up appetite by blanketing doctors’ offices with reps and aggressive sampling. Notes Robert Caprara of market-tracker ImpactRx: Merck hadn’t, unlike a number of other companies, radically cut the number of its sales reps—who have been, in his view, underemployed since the genericization of simvastatin (Zocor). When Januvia launched, they were raring to go.
And they had a hugely compelling set of messages. First, says Jay Galeota, the reps talk about Januvia’s "efficacy, and then its broad utility, whether high or low A1c, whether young or old. It’s hard to find a situation where Januvia doesn’t add value." But what doctors really hear, noted Daniel Einhorn, MD, of the Scripps-Whittier Institute for Diabetes at the University of California, San Diego, in an investor conference call put together by Credit Suisse, is that Januvia "is probably the first truly simple-minded therapy in diabetes. There is zero training required….It's a once-a-day pill, [taken] any time, with or without food, with or without any other medication. The side-effect profile is identical to placebo. It doesn't cause low blood glucose or weight gain. There's no extra monitoring needed. So it's truly as close to a no-brainer in a diabetes treatment as there could ever be." In contrast, the case for Januvia’s branded competition was growing more complicated: data from GlaxoSmithKline PLC’s ADOPT trial showed that Avandia, while it had some benefits over older drugs, could also increase the chance of certain bone fractures in women.
Januvia’s safety messaging was, to put it mildly, well received. A few weeks after launch, Januvia was capturing a 40% share of attention among the anti-diabetics; even when GSK counterattacked with significant additional promotion for Avandia, Januvia’s share dipped down only to about 30%. Meanwhile, its market share was climbing. By its second month, doctors were prescribing it, usually as part of a multi-drug regimen, 25% of the time when they wrote a new anti-diabetic prescription. By its fourth month, they were prescribing it almost 40% of the time.
To put all this into perspective, notes Caprara of ImpactRx: the most successful launch he had ever seen previously was Forest Laboratories Inc.’s launch of its antidepressant escitalopram (Lexapro). Januvia has been virtually doubling Lexapro’s share of new written prescriptions (see Exhibit 2).
Januvia’s been helped by the fact that it has had the DPP-4 market to itself. But that also means that Januvia is building up what looks to be an unbeatable lead over competitors. The more time doctors have to grow comfortable with Januvia, the less inclined to switch they will be, particularly to what analysts see—at least from their preliminary understanding of the potential competition—as a relatively undifferentiated field. "Best-in-class may not be all that meaningful in this category," says Robert Caprara of ImpactRx. "What’s really important is first-in-class." Januvia’s market performance, he says, will probably look like GSK’s migraine drug sumatriptan (Imitrex), in which the first-to-market drug maintained its huge lead over all other subsequent competitors in the class, including Merck’s own rizatriptan (Maxalt).
And for at least the next year, Januvia is likely to be an only-in-class drug. A month after approving Januvia, the FDA delayed Galvus’ approval by three months—it wanted questions answered about skin toxicities in monkey tests. Then, in February, right around the drug’s PDUFA action date, the FDA asked for still more testing. With the Galvus delays, Januvia’s commercial prospects seemed only to grow brighter, as analysts moved DPP-4 sales they’d allocated to Novartis over to Merck. Prudential Equity analyst Tim Anderson, for example, boosted his revenue estimates about 20%, to $723 million in 2007 and $2.7 billion by 2010.
Meanwhile, the Januvia franchise will only continue to grow as Merck combines the molecule with other drugs. Given its lack of side effects, it’s the ideal combination component and thus an ideal candidate for an extended life-cycle management strategy. Its first combination, with metformin, should appear in just a few months: Janumet is scheduled for FDA action at the end of March. Following Janumet will be undoubtedly other combinations—with sulfonylureas and TZDs, for example.
The Argument for Caution
Merck could even use combinations to compensate for Januvia’s limitations compared with its injectable competitor, Amylin Pharmaceuticals Inc.’s exenatide (Byetta). Januvia appears to have no effect on weight—an advantage over some other orals, which can cause weight gain. But Byetta actually causes weight loss, a big plus because many diabetics are overweight. Theoretically, Merck could combine Januvia with a weight loss agent—like its own development-stage CB-1 antagonist—and create a powerful answer to one of Byetta’s most important differentiators.
Not everyone is ecstatic over Januvia’s success. The product is expensive: Januvia costs the average managed care plan about $4.85 a day, smack in the middle of the range defined by the TZDs Avandia ($4.47) and Actos ($4.99), according to data from the Academy of Managed Care Pharmacy. Many patients and their physicians still must jump through insurance hoops to get payment for the drugs approved. Even so, notes Frederic R. Curtiss, PhD, editor-in-chief of the Journal of Managed Care Pharmacy, managed care organizations will almost all make the drug widely available to patients, if not immediately, then soon. "Managed care has not been a barrier so far," says Jay Galeota. "Everyone wants to manage diabetes," adds Curtiss, "and the drug companies are heavily promoting the message that the drugs should be virtually free. Any formulary restriction is running against that current."
But the fact is, he says, Januvia isn’t that efficacious. That’s part of the problem diabetologist David M. Nathan cites in a widely read New England Journal of Medicine editorial: the drug is only moderately effective--but no one really knows its side effects. Meanwhile, there are plenty of older drugs with greater efficacy in lowering HBA1c levels with well-studied side-effect profiles. The DPP-4 inhibitors, he says, raise plenty of side-effect questions, most importantly about alteration of substrates beyond forms of DPP with "the potential for unexpected consequences." But those questions haven’t, in his opinion, been studied particularly hard: only one major peer-reviewed study had been published before its approval.
"Why the rush to approval?" asks Steven Nissen, MD, chairman of the Department of Cardiovascular Medicine at the Cleveland Clinic Foundation and president of the American College of Cardiology. Nissen is a frequent critic of the FDA and certainly no friend of Merck. He’s attacked Merck’s approval filing for Arcoxia as dangerous. More dramatically, after the Bristol/Merck dual PPAR muraglitizar had gotten a unanimous "yes" from an FDA advisory committee and a relatively straightforward approvable letter from the FDA, Nissen and cardiologist Eric Topol rushed an analysis of the drug into print in the Journal of the American Medical Association. Muraglitizar, they claimed, was a health disaster waiting to happen. The FDA killed the drug. (See "Shadow FDA? Researchers Are Taking Approval Matters into Their Own Hands," The RPM Report, December 2005 (Also see "Shadow FDA? Researchers Are Taking Approval Matters into their Own Hands" - Pink Sheet, 1 Dec, 2005.).)
And now, says Nissen, he’s worried about the same management problem with the DPP-4s: did the FDA move too quickly? "The Galvus experience," he says, "doesn’t inspire confidence."
What the FDA is worried about with Galvus isn’t exactly clear—not even to Novartis. Indeed, the obscurity of its concerns is one of Nissen’s biggest worries: as there’s a drug in the same class now on the market, he asks, why isn’t the FDA "being more transparent"?
The uncertainties around Galvus only create more arguments about the advisability of using the drugs broadly—with Nathan’s editorial being the most obvious evidence. "We have very little data on this drug," says Nissen. "Januvia may turn out to be a great drug, but it needs more study. These drugs affect huge populations. There’s a lot of risk here." Moreover, Januvia was approved after testing on fewer patients (2316) than Galvus (2800)—in part because of Merck’s streamlined development program.
The Safety Side Effect
One prevalent theory about Galvus is that its monkey-skin problem might be linked with problems seen at toxic doses of the drug, and perhaps, Novartis’ global head of development James Shannon, MD, told an investor conference call, to a DPP-4 inhibitor’s potential effects on other substrates, for example, such as substance P (a problem at very high doses for all DPP-4s, he said). That would be a class problem for DPP-4s, he implied. Merck scientists, for their part, believe that Galvus’ problems are probably related to the compound’s effects on DPP-8/9.
The argument is a reflection of the same argument Merck and Pfizer engaged in when Vioxx was withdrawn: Merck saw the problem as a class effect; Pfizer as a problem specifically related to Vioxx, not to its own Cox-2, Celebrex. And investors remember that argument—one that Pfizer lost both in the marketplace, as Celebrex sales plummeted after the Vioxx withdrawal, and at the FDA, which eventually slapped a black-box warning and prescribing restrictions on the product.
That’s why investors are worried about Galvus’ effect on Januvia. Asks Catherine Arnold, an analyst at Credit Suisse: will the FDA take the opportunity of the Janumet (sitagliptin/metformin) approval decision to ask Merck for more data? The FDA group responsible for these drugs, the Division of Metabolism and Endocrinology Products, has been under perhaps more political pressure than any other, in part thanks to the muraglitizar episode. It would hardly be unthinkable for them to slow down the Januvia juggernaut, notes David Kliff, publisher of the widely read Diabetic Investor.
If that were to happen, Merck reps would then have a hard time explaining why doctors shouldn’t be concerned about using Januvia merely as an add-on to metformin, one of the most common prescription situations. If FDA balks at Janumet, should doctors continue to co-prescribe the drugs?
There is no evidence at all that the FDA will slow up Janumet’s approval. Nor has the agency made a peep about adding restrictions to Januvia’s label, something investors think is likely to happen with Galvus (investors speculate that FDA could accept a class argument for the Galvus restriction and include it in Januvia’s label). As of the end of February, Januvia scripts continue to be written at a torrid pace.
But the fact that investor concern has risen reflects the damned-if-you-do, damned-if-you-don’t problem of innovative primary-care drug development and commercialization. The very factors behind Januvia’s medical and commercial success outline its risks. Fast development for first-in-class product? Less patient data. Safety as the fundamental growth driver? Emerging side effects—even from competitive in-class products—can quickly dampen customer enthusiasm. That’s one reason that Merck’s stock dropped on the news of Galvus’ delay.
The messages of the Januvia story are complex—but understanding them is fundamental for an industry struggling to recover a primary-care business model. The drug’s development and launch have been an unparalleled success—a triumph for the strategies of the company’s new management. If Merck can duplicate the program with other products, it will have solved a productivity and efficiency problem no other drug company has seemed able to address. At the same time Merck, and all its competitors, are swimming against a tide of rising safety concerns when it comes to primary care. Merck’s drug is all about safety—at least as important as what it will do for patients is what it won’t do to them. The problem is that competitors, academic clinicians, and, increasingly, the FDA insist that companies prove safety--and, as everyone knows, proving a negative is a logical impossibility.
Januvia vs. Acomplia: Simplicity Sells
Januvia’s success as a first-in-class drug for metabolic disease contrasts sharply with a first-in-class product of equal importance to its owner, Sanofi-Aventis’ cannabinoid receptor-1 antagonist, rimonabant (Acomplia). (See "The Acomplia Paradox: Primary Care Drug, Targeted Population," December 2006 (Also see "The Acomplia Paradox: Primary Care Drug, Targeted Population" - In Vivo, 1 Dec, 2006.) and "Positioning Acomplia: Has the Drug Arrived Before the Disease?" November 2005, both in IN VIVO.)
Prescribing Januvia is easy for primary-care doctors: it fits smoothly into their well-established prescribing regimens, with a clear label and—most importantly—with a whistle-clean side-effect profile.
Prescribing Acomplia--so far only launched in the EU, Argentina and Mexico--is anything but simple. Rather than selling into an existing market, Sanofi-Aventis hopes to create a new one. Designed as a drug to address a range of cardiometabolic risk factors--metabolic syndrome--it ended up with an obesity label.
But Sanofi can’t just market Acomplia as a fat drug. It’s not for fat Americans, as new CEO Gérard le Fur told investors during the company’s recent full-year results meeting. In the first place, it doesn’t shine in terms of efficacy relative to other drugs that treat individual component risk factors because its widespread effects are most pronounced in patients with a relatively specific combination of health issues.
And because Acomplia has side effects—depression is the best known—regulators are likely concerned about mis-prescribing (one reason it’s not yet approved in the US), whereas marketers are concerned that obese patients will be disappointed in their weight loss. So Sanofi has engaged in "responsible promotion"—complex, targeted promotion that looks far more specialist than appears commercially viable for a primary-care product.
Primary-care hurdles for novel drugs, in short, seem higher all around. But a few lessons are clear: better to create a first-in-class drug for a disease with a well-established treatment path, and in a choice between greater efficacy and greater safety, choose safety--both for regulators and for marketers. In other words: simplicity sells.