Could This Safe Play Help Eli Lilly & Co. (LLY)?

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At the American Diabetes Association meeting last month, Eli Lilly & Co. (NYSE:LLY) presented promising data for the GLP-1 agonist dulaglutide. GLP-1s are a well-established diabetes drug class dominated by Novo Nordisk A/S (ADR) (NYSE:NVO) and Bristol Myers Squibb Co. (NYSE:BMY).

Eli Lilly & Co. (NYSE:LLY)

GLP-1 agonists are typically used as a second-line combo therapy for type 2 diabetes patients not responding to metformin and insulin. These drugs are generally well-tolerated and carry little risk of hypoglycemia, which makes this class one of the safest diabetes plays.

But how much could this safe play mean for Eli Lilly & Co. (NYSE:LLY)’s overall health?

GLP-1 market

Twice-daily Byetta was the first GLP-1 to market with a Food and Drug Administration approval in 2005. But Victoza quickly took over after its 2010 approval due to a once-weekly dosage.  Victoza has maintained a fairly steady climb ever since. The drug achieved 2012 sales of DKK 9.5 billion (or about $1.6 billion according to current conversion rates), and contributed 39% of the company’s overall sales growth.

Bydureon was brought out last year as a once-weekly version of Byetta. It’s still too early after launch to predict Bydureon’s sales growth, but EvaluatePharma pegged the drug as one of the top five “blockbuster duds” in the past year. Bydureon could see soft sales merely because Victoza got there first and patients don’t want to change treatments.

How does dulaglutide stack up?

Would the once-weekly dulaglutide hold its own in the GLP-1 market — or face a future even less certain than Bydureon’s?

Eli Lilly offered up data from three late-stage trials that showed dulaglutide outperforming Merck’s DPP-4 Januvia, Byetta, and metformin.  Dulaglutide helped patients control blood sugar better than the other drugs and also helped patients lose more weight.

Dulaglutide still has other competitor comparing trials underway. The late-stage trials include Lantus, the company’s own insulin Humalog, and — most importantly — one trial with Victoza. The Victoza trial won’t report until after dulaglutide goes before the FDA for approval later this year. But favorable results could push dulaglutide into a stronger market position.

Other new contenders

Sanofi SA (ADR) (NYSE:SNY)’s Lyxumia received FDA approval in the U.S. and Europe this past February. Lyxumia’s trial results were lackluster and drew criticism for being a Byetta clone. But, as I’ve written previously, Sanofi’s really betting on this drug as a combo therapy for its $7 billion Lantus insulin — a product that loses patent protection in 2015.

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