Interesting new drug class – will it be a commercial hit?

There is a new class of diabetes drug being developed called SGLT-2 inhibitors. Scientifically, these drugs work in the kidneys. Normally the kidneys wash blood by filtering plasma (the liquid component of blood) in long tubes called renal tubules. These tubules then actively reabsorb ‘good’ products (such as sugar and electrolytes – things the body needs) while toxins are excreted in the urine. SGLT-2 inhibitors work by blocking the kidneys’ ability to reabsorb sugar. As a result, some sugar gets excreted in the urine.

I first was exposed to this new type of drug back in 2003, when Glaxo was developing a drug in this class. Glaxo’s drug was at an early stage in development and was not a big focus for investors (indeed, development was later halted). At that time, I had a conversation with Dr Tachi Yamada, then head of R&D at GSK (now President of the Health Program at the Gates Foundation). I asked Dr Yamada what R&D project was particularly promising. He pointed to the SGLT-2 inhibitor, saying that, mechanistically, it was like “the Atkins diet in a pill.” That made an impression on me.

As a diabetes medicine, the effect is modest and similar to most other diabetes drugs. As a weight loss pill, the effect is also small (two recent studies called DIA3006 and DIA3009 showed a roughly 4% reduction in body weight). Further, the price tag might leave insurance companies with sticker shock, priced at about $250 per month (patients will have co-pays of about $25-50 per month on average). All drugs have side effects, and this one is no different. In a small number of patients, there is a risk of developing urinary tract infections, since glucose in the urine provides nutrients for bacteria. Notwithstanding all these caveats, weight loss and glucose control are both good things.

Invokana (from Johnson & Johnson), the first drug in this class to get to the market, won FDA approval on March 29, 2013. Several others are in development. The finance community generally has limited expectations for these drugs, anticipating that they will sell several hundred million dollars each, perhaps a bit more (for reference, the threshold for a drug to be considered a blockbuster is annual sales exceeding $1 billion). I tend to be a little more optimistic. Not hugely so, but a bit. Interestingly, the determinant of success probably won’t be the quality of the medical science …. it will be the impact of the marketing campaign.

The degree to which drugs are used while they are under patent protection dictates their long-term use. If SGLT-2 inhibitors are widely adopted, they will remain important in diabetes care when they eventually go generic. Once generic, drugs are almost free to the system (generic drugs cost pennies per pill to make). At that point, the modest medical benefit would be much more cost effective. Of note, drug companies are required to do long-term studies to assess the cardiovascular benefits of new diabetes drugs. Such studies for SGLT-2 inhibitors are ongoing. Once we get the data (in several years), the medical community will have a better ability to assess the right place for these drugs in clinical practice.

If the brief description herein makes it sound like this would be an appealing drug to take once it goes generic, you can mark your calendar for Feb 26, 2029.

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