GlaxoSmithKline's Eperzan Gets Closer to Launch

Glaxo's (GSK) Eperzan is about to face-off against GLP-1 drugs from Novo (NVO), AstraZeneca (AZN), and Lilly LLY).

Jan 24, 2014 at 11:25AM

GlaxoSmithKline (NYSE:GSK) will likely eat away some of Novo Nordisk's (NYSE:NVO) European market share this year following a positive opinion from regulators that will likely to lead to EU approval of Glaxo's diabetes drug Eperzan. The once-a-week treatment belongs to the same GLP-1 class as Novo's blockbuster once-daily, $2 billion a year drug Victoza and AstraZeneca's (NYSE:AZN) twice-daily Byetta and once-weekly Bydureon.

Competing for diabetes market share
Diabetes is one of the most attractive markets for drug makers due to a growing patient population that stands at more than 370 million people worldwide. In the U.S., it's estimated that nearly 80 million people are pre-diabetic and given more than a quarter of Americans over 65 suffer from the disease, aging baby boomers will likely boost that number over the coming years. That has analysts predicting the diabetes market will grow from $113 billion to $336 billion in the U.S. over the next 20 years.

The sheer size and expected market growth offers plenty of opportunity for Glaxo and other market share leaders, including Novo, which wields a nearly 50% share of insulin sales, and Eli Lilly (NYSE:LLY), which sells the blockbuster insulin treatment Humalog and is investing $700 million to boost global insulin production. The potential for diabetes treatment revenue growth was the main driver behind AstraZeneca's high profile $4 billion buyout of diabetes partner Bristol-Myers in December.

Despite the crowded field of drugmakers jockeying for position, Glaxo hopes Eperzan can win back some of the market it lost when its former blockbuster Avandia was pulled from shelves in Europe and slapped with a highly restrictive label that effectively pushed customers away to Novo Nordisk, AstraZeneca, and Merck, which markets the nearly $4 billion a year Januvia.

Following the positive opinion for Eperzan from the European Medicine's Agency, marketing authorization by the European Commission should come by quarter end, clearing the way for its use as a second line therapy for those unable to take first-line treatment metformin, or as an add-on therapy to help improve glucose control.

However, Eperzan may not prove as big a game-changer as Eli Lilly's late stage GLP-1 drug dulaglutide. Following studies the drug modestly outperformed metformin, Lilly filed for dulaglutide's approval in October. That means the FDA will is set to make its decision on the drug this fall. If it does approve the drug, analyst's thinks dulaglutide's sales could run as high as $1 billion a year. Eperzan success may also lag AstraZeneca's recently approved Farxiga, an SGLT-2 class diabetes drug that industry pros think could reach peak sales of $1.5 billion by 2018.

Fool-worthy final thoughts
Overall, analysts anticipate sales of Eperzan will reach roughly $400 million by 2018. That's hardly a game-changing drug for GlaxoSmithKline given that the company brought $10 billion in revenue just last quarter.

An approval in the EU is likely to come ahead of the FDA's expected decision, which is slated for April 15. However, those approvals probably won't send shockwaves through competitors' boardrooms. Novo has six drugs filed or in late stage trials for the disease, and Sanofi hopes to hit the U.S. market soon with its own GLP-1 drug Lyxumia, which is already on sale in Europe. Sanofi already has a big diabetes winner in its $2.4 billion a year Lantus and the company will likely file for U.S. approval of Lyxumia once it has more phase 3 trial data in hand. Considering all of these competitors are pushing products through pipelines, it should prove an interesting year for investors interested in diabetes treatments.

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Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital.  E.B. Capital's clients may or may not have positions in the companies mentioned. Todd also owns Gundalow Advisor's.  Gundalow's clients do not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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