Novo Slumps As Leader Looks More Like A Follower

| About: Novo Nordisk (NVO)
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Novo Nordisk’s (NYSE:NVO) cardiovascular outcomes trial of Victoza was not the unambiguous win the Danish group hoped it would be, but it should help protect its dominant position in its drug class.

Full results from the Leader trial presented at the American Diabetes Association meeting revealed that Victoza’s benefit was largely down to prevention of cardiovascular death, while no effect could be shown on non-fatal strokes or heart attacks. This of course will help Novo argue for a labeling change and for coverage from skeptical payers; however, the 4% share price tumble today demonstrates that expectations were higher.

Indeed, success in a three-part composite cardiovascular endpoint based on a single measure was exactly Novo’s criticism of a similar outcomes trial for Jardiance (Leader could give Novo pushback power in payer wars, March 4, 2016).

Novo expected success on all three, but that did not materialize, and Victoza’s benefit looks surprisingly similar – a 13% reduction in cardiovascular death and complications versus 14% for Eli Lilly (NYSE:LLY) and Boehringer Ingelheim's Jardiance (EASD – Lilly blooms with full Jardiance outcomes data, September 18, 2015).

Not a clean win

Novo’s rationale for that belief was the difference in the drugs’ mechanisms of action. Jardiance, an SGLT2 inhibitor, reduces glucose in the bloodstream by increasing its excretion in the urine, and thus has a diuretic effect – this could reduce sudden death in heart failure patients, according to Novo.

However, Leader shows that Victoza’s mechanism – a reduction in blood sugar through increased insulin secretion by activation of glucagon-like peptide-1 (GLP-1) – has no greater effect on non-fatal heart attacks or strokes. Enrolees were permitted to take insulin or oral anti-diabetic drugs like Jardiance, and were randomised to take either Victoza or placebo.

More ominously, for the purposes of adding the Leader data to the US FDA label and marketing on that basis, North American patients in the trial showed no benefit, with the hazard ratio on the composite endpoint a non-significant 1.01. Novo executives chalked this up to a tendency for US patients to be less adherent in clinical trials than those in other parts of the world – a statistically significant benefit was seen in US subjects who did use once-daily Victoza as directed.

Likewise, Novo executives were keen to focus on other positive findings, suggesting that they believe the breadth of data should be persuasive to regulators and payers. For example, while the non-fatal myocardial infarction (MI) endpoint was a miss, a combined fatal and non-fatal MI measurement showed significance, with a risk reduction of 14%.

And on an “expanded” composite endpoint that includes other cardiovascular outcomes such as coronary revascularization, hospitalization for unstable angina or hospitalization for heart failure, Victoza showed a significant benefit, reducing by 12% the risk of any of the six adverse events. Given that averting hospitalizations and invasive procedures has an effect on health expenditures, these will be closely evaluated by payers.

Earning favor

This is a group Novo has battled more fiercely than regulators in recent years. Victoza is still barred under the national formulary of Express Scripts, the biggest pharmacy-benefit manager in the US, along with the insulin products Novolin and Novolog; longer-acting insulins Levemir and Tresiba have won their way onto the list, although the latter, a newer agent, has higher cost-sharing requirements for patients.

So far, Victoza is the only GLP-1 agonist to show a cardiovascular benefit, so it has that on its side. This differentiation might not last for long, since AstraZeneca’s (NYSE:AZN) Bydureon and Lilly’s Trulicity are due to report long-term outcomes data next year – payers will be interested especially in the Rewind trial of Trulicity, a once-weekly agent that has won favor with Express Scripts and has taken market share from Victoza.

Persuading regulators to add the cardiovascular benefit to the Victoza label could be the easy part. Novo will be coming to Express Scripts and other payers with a mixed dataset and a benefit that fell short of expectations, providing ammunition for pushback against the Victoza asking price.

When it comes to payers, the stage might be set for an outcomes-based payment scheme similar to that covering the new heart failure drug Entresto. Should US diabetics be persuaded to take their Victoza as directed, and as a result suffer fewer heart attacks and strokes, maybe Express Scripts would be willing to pay a higher price.