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Extending the Diabetes Dominance

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Merck (NYSE: MRK  ) looks set to continue its dominance in diabetes.

On Wednesday, the company presented solid phase 2b data on MK-3102, a DPP-4 inhibitor, which is the same class of drugs as its multibillion-dollar blockbuster Januvia.

The big difference between Januvia and MK-3102? The experimental drug only has to be taken once a week, while Jaunvia is taken daily.

At the highest dose, MK-3102 reduced the baseline HbA1c levels, a measure of long-term blood sugar levels, by a placebo-adjusted 0.71 percentage points. The patients started out with an HbA1c level of about 8%, and the standard goal is to get the measurement below 7%, so that's not bad for the drug all by itself. Merck will likely test it in combination with other diabetes drugs, like metformin, in the phase 3 trials.

Merck is only planning on taking the highest dose into the phase 3 trials, but there was a nice dose response from 0.25 mg, decreasing HbA1c levels by a placebo-adjusted 0.28 percentage points, up to the 25 mg dose that produced the aforementioned 0.71 percentage point decrease. The three doses in between the high and the low dose produced intermediate responses. A dose response is nice because it gives investors confidence that the drug is responsible for the change.

MK-3102 will probably cannibalize some of Januvia's sales, but Merck should be willing to live with that. MK-3102 presumably has a longer patent life than Januvia, and the once-weekly formulation should help it capture patients away from other oral diabetes medications like Takeda's Actos and Bristol-Myers Squibb (NYSE: BMY  ) and AstraZeneca's (NYSE: AZN  ) Onglyza. The easy dosing might even lead doctors to prescribe the drug earlier in the progression of diabetes.

The only once-weekly diabetes drug on the market is Bydureon, which Bristol and AstraZeneca got in the purchase of Amylin. I don't think MK-3102 will be that much of a threat to Bydureon because their main target audience will be different. Because it has to be injected, Bydureon is stuck as an add-on once oral medications fail to keep blood sugar in check. Amylin was trying to position it earlier, given the easier dosing schedule than a drug like Novo Nordisk's (NYSE: NVO  ) Victoza that has to be injected daily, but I don't see much difference in competing against once-daily versus once-weekly oral medications. If Bydureon's new owners want to pick up that fight, they'll have to argue for increased efficacy and weight loss over DPP-4 inhibitors, no matter how often they're dosed.

Don't expect powerhouse Merck to go down without a fight.

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Fool contributor Brian Orelli has no positions in the stocks mentioned above. The Motley Fool owns shares of AstraZeneca. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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