BMO MRK
• Incrementally positive. Omarigliptin's similar efficacy to Januvia was clearly demonstrated in this study, in our view, as the HbA1c reduction curves of both drugs seem nearly identical through week 24. We urge caution in comparing A1c reductions across different trials given patient heterogeneity. Importantly, a higher proportion of patients reached treatment targets (HbA1c <7% or 6.5%) with Omarigliptin versus placebo, and the difference for the 7% goal advocated by the American Diabetes Association (ADA) for Omarigliptin versus Januvia is notable (47% vs. 38%). Overall, we believe Omarigliptin should help protect, or at least mitigate the impact of increased competition for Merck's Januvia franchise as its convenience advantage of once-weekly dosing versus once-daily dosing for the newer SGLT-2s helps offset some of the advantages of the SGLT-2s, particularly their 2-3 Kg weight lowering effect. The reason once-weekly dosing is important in diabetes is that many patients are often taking multiple medications, and lack of compliance could have serious consequences.
• We estimate that Japan accounts for roughly 50% of Januvia's ex-US sales, or approximately $950 million in 2013. Merck plans to file for approval by the end of 2014, suggesting that Omarigliptin could reach the Japanese market by early 2016. We forecast an early 2016 launch in Japan, followed by 2017 launches in other key ex-US markets, and expect that Omarigliptin will essentially allow the combined Januvia franchise to grow by roughly 5-7% operationally (ex-Fx) between 2016 and 2020 (7% in 2016, declining to ~5% by 2019). However, we acknowledge that the type 2 diabetes market is becoming increasingly crowded, with new oral agents including SGLT-2/DPP-IV combos, and there may be some downside risk to our estimates in the event of aggressive pricing/rebating tactics (some of which we've already seen in the DPP-IV market). Overall, we are not changing our Januvia franchise forecasts at this tim
