Today, it looks like Eli Lilly and Company’s AIR inhaled insulin product has been killed. This follows Pfizer’s Exubera disaster, and Novo Nordisk’s announcement that they were pulling the plug on its AERx iDMS inhaled insulin product.
But what makes this announcement so unusual is that the insulin-maker (in this case, Lilly) wasn’t the first one to announce it, but the partner (in this case, Alkermes). Today, Alkermes put out an unusual, pre-emptive press release saying it expects Lilly to discontinue the program in the next week, ending their 7-year partnership to develop an inhaled insulin. No doubt, Lilly had its own questions considering the moves of its main rivals. In fact, Lilly had told Alkermes that the company was “evaluating its business case” for their AIR insulin product, which was in phase III studies.
But Lilly remained unusually bullish on the product. During the company’s Q4 2007 Earnings release, the company remained very bullish on its diabetes business, which I questioned. Once again, I was right!
Just this week, the FDA suggested that Lilly and Amylin’s Byetta LAR (long-acting release) make some changes to clinical trials that some analysts said might delay approval of a long-acting version Byetta both companies were banking on.
And Lilly’s insulin business remains in dire straights, in spite of a introducing a variety of new pen-injection devices, largely because they have no long-acting insulin in the pipeline, in effect, forcing insurance companies and pharmacy benefits managers to cut deals with rivals for that product. Many have said its simply easier to get everything from either Novo Nordisk or Sanofi Aventis, both of whom offer both long-acting analogs and rapid-acting analogs, rather than working Lilly into their plans.
Morgan Stanley analyst Jami Rubin said on Friday Lilly’s abandonment of AIR Insulin made good business sense.
“We are not (at) all surprised, and have never been strong advocates of the pulmonary insulin agents, following the poor launch and ultimate demise of Pfizer and Nektar’s Exubera and Novo Nordisk’s termination of its AERx program,” Rubin said in a research note.
Rubin said Alkermes, known for its drug-delivery technology, is unlikely to continue development of Air Insulin without Lilly, “given that this represents the third termination of a pulmonary insulin drug.”
But she said the sharp drop in Alkermes shares represented a buying opportunity for investors because Air Insulin had only paltry sales potential.
At this point, MannKind is still betting the bank they can succeed with an inhaled insulin product – and as I’ve noted before, with fewer parties chasing this market, it does increase their chances for success (however limited that may be). But inhaled insulin is not what the market is looking for, what they are looking for is a version which does not require patients to walk on a tightrope to determine the proper dosage.