Biotech Values

[Biowatch]

Novartis, Merck face off over new diabetes drugs
Fri Jun 9, 2006 7:26 AM ET

By Ben Hirschler, European Pharmaceuticals Correspondent

LONDON, June 9 (Reuters) - Novartis AG <NOVN.VX> and Merck & Co Inc <MRK.N> will go head-to-head at a major medical meeting starting on Friday in a bid to convince physicians each has the most promising of a new class of diabetes drugs.

Novartis's Galvus and Merck's Januvia stand to enter the lucrative -- but highly competitive -- market of oral treatments for Type 2 diabetes. Both have been touted by analysts as potential $1 billion-a-year plus sellers.

They represent the first of a class of drugs called DPP-IV inhibitors, which work by enhancing the body's own ability to lower blood sugar levels.

Results of pivotal Phase III studies on both products will be unveiled at the June 9-13 annual meeting of the American Diabetes Association in Washington.

Novartis has already presented headline efficacy data on Galvus, so the focus will be primarily on its safety and tolerability profile, according to UBS analysts.

Januvia, however, is more of an unknown, since little data has so far been released.

"There is plenty of market out there to go for. The incidence of Type 2 diabetes is going up, so sales of $2 billion a year for Galvus look quite reasonable," said Martin Hall of stockbroking and asset management firm Eden.

"There are a few more question-marks over the Merck product," he added.

"WORKHORSE" DRUG CLASS

Analysts at Bernstein Research believe DDP-IV drugs are likely to become the new "workhorse class" in the oral anti-diabetes market, since they are not associated with weight gain, a major side effect of many diabetes drugs.

Assuming Galvus and Januvia emerge with similar profiles, each could have potential sales of more than $1.5 billion by 2011, according to Bernstein.

But clear superiority for one over the other -- or a regulatory setback -- would tip the balance dramatically.

The two drugs have already been filed for approval with the U.S. Food and Drug Administration and, if given a green light, could be launched next year in a neck-and-neck race.

Both Novartis and Merck need a winner.

Galvus is one of two big blockbuster hopes for the Swiss drug group, which wants to show it can still get megabrands to market after a relatively lean period for major new drug launches.

Its other big hope is anti-hypertension drug Rasilez.

Merck, meanwhile, faces loss of patent protection this month on cholesterol fighter Zocor and needs to rebuild its fortunes after thousands of lawsuits over recalled arthritis drug Vioxx. It achieved one milestone in that process this week when cervical cancer vaccine Gardasil won U.S. approval.

Diabetes, which is linked with obesity, affects about 195 million people worldwide and the number of sufferers could top 330 million by 2025, according to the International Diabetes Federation.

That has made the disease a hot area for drug research and Bernstein believes diabetes drugs -- both non-insulin and insulin -- could generate $24-28 billion in worldwide sales by 2011.

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060609:MTFH09405_2...