diagnosis sheet with "diabetes" written on it and pills and needles surrounding

At Sanofi’s recent Management Seminar, the road map for its diabetes franchise was laid out. The diabetes franchise for Sanofi is massively important, comprising 20% of the company’s anticipated overall revenue for 2015. The downside for Sanofi is the overall dependence of their diabetes franchise on their insulin glargine products, the blockbuster Lantus, and the recently launched concentrated version Toujeo. The consequence of this dependence has been seen in Sanofi’s declining forecasts for their diabetes franchise, as increased competition within the long-acting insulin analogues is set to hamper sales going forward.

Three key factors have contributed to Sanofi’s dependence on insulin glargine. The first is that Sanofi’s product portfolio for diabetes has long been focused around the insulin market, with no notable presence in the oral market that dominates the earlier lines of therapy. Secondly, Sanofi has met with difficulty in gaining market traction for their non-glargine products, largely due to later-to-market entries versus in-class competitors. Finally, Sanofi’s development pipeline for diabetes is, and has been, relatively barren in recent years.

To overcome these issues, Sanofi has looked to alliances to strengthen and diversify their diabetes offerings. In conjunction with Zealand Pharma, Sanofi has brought the once-daily GLP-1 receptor agonist Lyxumia (lixisenatide) to the European and Japanese markets, and has recently filed an NDA with the FDA for marketing authorization. However, Lyxumia has experienced extremely limited uptake since its launch, due to its later-to-market entry and inferior efficacy, compared with the market-leading Victoza (Novo Nordisk’s liraglutide). Sanofi has also partnered with MannKind on the inhalable insulin Afrezza. Afrezza has struggled massively to penetrate the U.S. market since its launch in February 2015, booking only $2 million in sales for Q3 2015. Physicians surveyed by Decision Resources Group indicate that the REMS requirement for pulmonary function testing is a significant barrier to uptake, something that they are not willing to accommodate given the availability of injectable alternatives.

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Taken from TreatmentTrends: Type 2 Diabetes (US) 2015.

The poor performance of Afrezza has led to speculation that Sanofi are ready to call time on their partnership with MannKind, something they are not required to disclose until January, 2016 (MannKind Q3 earnings call, November 9, 2015).

Thus far, it is reasonable to conclude that Sanofi’s current attempts to alleviate the dependence of their diabetes franchise on insulin glargine through strategic partnerships have not been successful. However, their late-stage diabetes pipeline contains only LixiLan (insulin glargine + lixisenatide) and a biosimilar version of insulin lispro, neither of which are forecast to generate blockbuster status by 2024 (see Decision Resources Group’s Type 2 Diabetes Pharmacor report for more information). Therefore in an attempt to improve the fortunes of their diabetes franchise, it was not altogether surprising that Sanofi has again turned to the partnership route, announcing two new alliances during the recent Management Seminar.

The first of these is an agreement with Hanmi Pharmaceuticals to develop long-acting diabetes agents, chiefly their once-weekly GLP-1 receptor agonist, efpeglenatide (currently in Phase II development), and their once-weekly insulin LAPS insulin 115 (in Phase I development). While Sanofi and Hanmi could potentially pip Novo Nordisk to first-to-market entry of a once-weekly insulin, and the potential this offers for once-weekly combination therapies, the deal to develop efpeglenatide is more curious. Firstly, it suggests that, similar to the agreement with MannKind for Afrezza, Sanofi does not see much further value in its partnership with Zealand Pharma for Lyxumia. But it also suggests that Sanofi has not learned its lesson with Lyxumia, as it is aiming to enter a once-weekly GLP-1 market with three competitors already on the market, as well as Novo Nordisk’s semaglutide in late-stage Phase III development.

The second agreement is with Lexicon Pharmaceuticals for their dual SGLT-1/SGLT-2 inhibitor sotagliflozin, currently in development for type 1 diabetes, but with plans for development in type 2 diabetes. Again, sotagliflozin is at risk of entering a crowded market place, and without the positive CV outcomes demonstrated by BI/Eli Lilly’s Jardiance (empagliflozin) in the EMPA-REG OUTCOME trial that will significantly improve Jardiance’s marketing prospects. Sotagliflozin may also potentially have to compete with similar positive CV outcomes data from Invokana (JnJ’s canagliflozin) and Farxiga (AZ’s dapagliflozin) by the time it reaches the market for type 2 diabetes. However, sotagliflozin’s dual mechanism of action may offer a means of distinguishing itself from its competitors, although it also opens it up to the GI-related side effects associated with SGLT-1 inhibition, in addition to the genitourinary infections associated with SGLT-2 inhibition. More significantly perhaps, sotagliflozin will give Sanofi access to an oral therapy, and potentially broaden their target patient population, due to its anticipated use in earlier lines of therapy than GLP-1 receptor agonists and insulins.

Time will tell whether the potential commercial success of the alliances announced by Sanofi. However, there will be considerable pressure on the management team should they fail, given the negative outlook for their diabetes franchise between now and 2018. As George W Bush so eloquently stated, “Fool me once, shame on — shame on you. Fool me — you can't get fooled again!”

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