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The Next-Generation Therapy to Treat Type 2 Diabetes Has Arrived

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OK, so it's not nearly as dramatic as Captain Kirk beaming up from a planet's surface to The Enterprise, but the approval of Johnson & Johnson's (NYSE: JNJ  ) Invokana is a revolutionary breakthrough for those who suffer with Type 2 diabetes, or T2D.

A new pathway to glycemic balance
On Good Friday no less, the Food and Drug Administration approved J&J's Invokana, ushering in a completely new method by which T2D can be treated. You see, Invokana is an SGLT2 inhibitor and works by a completely different pathway than oral DPP-4 inhibitors, which are the current hot thing in T2D care. DPP-4 inhibitors like Merck's (NYSE: MRK  ) Januvia work by reducing glucagon and blood glucose levels through hormones in the pancreas and liver. However, they've also been linked with potentially serious side effects like pancreatitis, kidney problems, and severe allergic reactions. But that hasn't stopped Januvia from racking up annual sales in excess of $4 billion.

J&J's Invokana -- which was developed by its subsidiary Janssen Pharmaceuticals – is an oral drug that works in the kidneys by blocking the reabsorption of glucose and allowing the body to rid excess glucose through the urine. The end result is a more normalized glycemic balance, with the added benefit of weight loss even though Invokana isn't indicated for weight loss. This is a welcome change since the majority of previous T2D treatments actually induce weight gain in patients.

Improvement seen one step at a time
The approval of Invokana itself wasn't a guarantee even though the clinical trials suggested it would breeze through an FDA approval. Invokana effectively reduced A1C levels, lowered systolic blood pressure, and provided modest weight loss, all at the expense of the placebo, which, in this case, was Merck's Januvia.

However, a gray cloud overhung its PDUFA meeting in the form of a complete response letter for Forxiga, an SGLT2 inhibitor from AstraZeneca  (NYSE: AZN  ) and Bristol-Myers Squibb  (NYSE: BMY  ) that was denied approval in Jan. 2012. Although Forxiga has found success in Europe, where it was approved in November -- and became the first SGLT2-inhibiting drug approved in the world – it was denied a U.S. approval due to concerns about elevated breast and bladder cancer risks from taking the drug.

It's also not hard to understand why the FDA is more stringent when it comes to safety concerns in T2D treatments as GlaxoSmithKline's (NYSE: GSK  ) T2D drug Avandia resulted in one of the largest recalls in U.S. history. All told, GlaxoSmithKline settled in 2012 for $3 billion and it's estimated that Avandia could have resulted in 50,000 to 100,000 deaths due to increased heart attack risks associated with the drug.

Invokana, despite the approval, won't get a free pass. It was shown to cause yeast infection and urinary tract infections (which is expected given the excess sugar being secreted by a patient), but will also need to follow up with five additional longer-term safety trials. Specifically, J&J will be tracking cases of heart problems, cancer, pancreatitis, and liver problems.

A blockbuster in the making
Those concerns aside, Invokana appears to be a vast improvement in T2D patient care, providing fewer and less severe side effects with great efficacy and the added bonus of weight loss. Peak sales estimate for Invokana vary depending on whom you ask, but commonly settle around $1 billion. This figure could prove to be far too low considering that it mopped the floor with Januvia, is priced competitively with existing T2D medications, and faces a big boost when Januvia's patents begin to expire in 2017. Also, as I noted in February, the next-generation of T2D treatment following SGLT2 inhibitors, such as glucokinase activators, are still a long way from gaining approval.

At the moment, I'd say the future of T2D treatments is J&J's market to lose.

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