AstraZeneca plc (ADR) (AZN), Eli Lilly & Co. (LLY): The Diabetes Pipeline With a Clog

Big pharma placed its bets on a new class of diabetes drugs called SGLT2. Last year, buzz surrounded late-stage projects from Johnson and Johnson (NYSE:JNJ), Eli Lilly & Co. (NYSE:LLY), and the partnership of Bristol Myers Squibb Co. (NYSE:BMY) and AstraZeneca plc (ADR) (NYSE:AZN). But the path to market proved tricky.

Johnson and Johnson (NYSE:JNJ)’s Invokana earlier this year became the first SGLT2 approved in the United States. Bristol Myers Squibb Co. (NYSE:BMY) and AstraZeneca plc (ADR) (NYSE:AZN)’s Forxiga was the first out in Europe but remains stuck in the Food and Drug Administration’s pipes.  Could Eli Lilly & Co. (NYSE:LLY)’s empagliflozin follow Invokana to the U.S. market — or will it become stuck behind Forxiga?

And how much does an SGLT2 win even matter to these companies?

Bumpy road for SGLT2s

SGLT2s were hyped because they’re insulin-independent, which means they can fit into a combo therapy with insulin without risking counteraction. The class also has the potential to become a blockbuster market, with sales of Invokana predicted to reach $1 billion by 2018.

But the FDA has become notoriously skittish when it comes to the safety of diabetes drugs.

Bristol Myers Squibb Co. (NYSE:BMY) and AstraZeneca plc (ADR) (NYSE:AZN)’s SGLT2 received European approval under the name Forxiga, and brought in $3 million in the first quarter. But an FDA approval hangs just out of reach due to concerns of cancer risks. An advisory committee voted 9-6 that the safety and efficacy data wasn’t sufficient to support an approval. Then the FDA issued a complete response letter requesting more data.

Johnson and Johnson (NYSE:JNJ)’s Invokana didn’t show any of Forxiga’s cancer risks. But the drug did need to undergo long-term cardiovascular trials, which should wrap up in 2015. And coming first into the U.S. could provide Johnson with the market advantage.

Which path will Eli Lilly & Co. (NYSE:LLY)’s pipeline contender follow?

Lilly’s contender

Eli Lilly & Co. (NYSE:LLY) provided a glimpse at empagliflozin’s late-stage data during the American Diabetes Association meeting last month. Empagliflozin went up against placebo and showed improvements in reducing blood sugar, blood pressure, and weight. But the drug also showed an increased chance of genital infection due to the glucose that leaves the body through urine.

There’s a good chance the FDA won’t issue a denial or complete response letter based solely on the risk of genital infection. That’s not quite in the same ballpark as Forxiga’s cancer concerns. A cardiovascular safety requirement is more likely, but could be met with data from the late-stage trials.

It’s a fool’s errand these days to guess which way the FDA will rule on a diabetes drug’s safety. But we should have an idea of the agency’s direction soon; Lilly filed its new drug application in March.