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Takeda Jumps All Over Warning For Diabetes Drug Avandia

Tuesday, 20 Nov 2007 | 1:31 PM ET

It didn't take long for Japan's Takeda Pharmaceuticals, which trades on the Tokyo exchange, to try to capitalize on the new safety warning for GlaxoSmithKline's diabetes drug Avandia. Last week the FDA slapped a so-called "Black Box"--the agency's most severe warning--on the Avandia label advising patients and doctors about the potential heart attack and stroke risk that's been the subject of so much controversy over the past several months.

When we went to the American Diabetes Association annual meeting a few months ago and did a random survey of endocrinologists (specialists who treat diabetes patients) nearly every single one of them said they were putting new patients on Takeda's Actos instead of Avandia and/or switching current, insistent Avandia patients onto Actos.

In her weekly prescription trend report, Deutsche Bank analyst Barbara Ryan calculates that for the week of November 9th new prescriptions for Actos dropped one-tenth of a percent from the week before and new Avandia prescriptions actually went up 1.2%. But comparing the most recent three-week period to the three-week period before the safety controversy erupted last May Ryan says total Avandia scripts have plummeted 59% and Actos scripts are up 8%.

So, with all that in mind, take a look at the "na-na-na-na-na-nah" full-page ad that appeared in the Sunday "Newark Star-Ledger" with the large-type headline, "ACTOS Has Been Shown To Lower Blood Sugar Without Increasing Your Risk Of Having A Heart Attack Or Stroke." According to "The Wall Street Journal", the ad is appearing in about 60 major papers.

Eli Lilly gets a relatively small and dwindling royalty from Takeda on sales of Actos which has a molecular makeup similar to Avandia. But experts and studies thus far have concluded there's no evidence that Actos increases the risk of heart attack or stroke. Both drugs, though, do carry a warning about congestive heart failure.

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Shares of LLY, by the way, are getting hammered this week in the wake of a bearish piece in Barron's regarding the prospects for its late-stage developmental bloodthinner, Prasugrel. The company is set to host an analyst meeting on December 6th when I'll be doing a live interview with Chairman and CEO Sidney Taurel. Obviously, one of the questions I, and I'm certain analysts will have for him, is how he plans to fill the financial void many see being created by potentially lower sales of Prasugrel. Which brings me back to diabetes.

Lilly, Amylin and Alkermes are working on a promising once-a-week shot for diabetes--a reconfigured version of the currently marketed twice-a-day injection called "Byetta". Many analysts believe the longer-acting form has multi-billion-dollar blockbuster potential. So, one has to wonder if Lilly--despite its persistent claims that it's very happy with the existing partnership with AMLN--will pull the trigger and do a deal like the one it did earlier this year with its former Cialis partner, Icos.

Update: Coincidentally, today there was a development in the Capitol Hill investigation into the Avandia safety controversy. The Chairman and Ranking Member of the Senate Finance Committee--which has jurisdiction over such matters--are sending a letter for a former Glaxo research exec who allegedly tried to silence a whistleblowing scientist regarding Avandia. You can check out the press release and letter from Sens. Chuck Grassley and Max Baucus here www.senate.gov/~finance/press.

Questions? Comments? Pharma@cnbc.com

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