Fate of Eli Lilly’s potential $2B blockbuster insulin hangs on side effects

An earlier version of this post incorrectly stated that basal insulin peglispro was discovered by scientists at Boehringer Ingelheim GmbH and that Boehringer was still helping to develop the drug. In fact, the drug was discovered by Lilly scientists and is now being developed solely by Lilly. The post has been corrected below. — J.K. Wall

Fifteen years after the mega-blockbuster Lantus upended Eli Lilly and Co.’s dominance in the insulin market, the Indianapolis-based drugmaker finally appears to have an insulin that can beat it.

The question is whether patients’ livers and hearts can handle it.

Lilly announced detailed trial results Saturday for its experimental drug basal insulin peglispro, which is called BIL for short. The drug was discovered by Lilly scientists and, after being co-developed for a few years with Germany-based Boehringer Ingelheim GmbH, is now being brought to market by Lilly on its own.

In three clinical trials involving both Type 1 and Type 2 diabetics, BIL helped more patients than Lantus lower a key blood sugar measure known as hemoglobin A1C to the recommended level of less than 7 percent.

After 26 weeks, the percentage of patients reaching that recommended level was 58 percent, 63 percent and 73 percent, respectively, with BIL. That compared with 43 percent, 53 percent and 52 percent for Lantus.

Patients taking BIL also saw a bit more weight loss and bit less nighttime hypoglycemia than those taking Lantus.

“No other insulin has shown to be more effective,” Enrique Conterno, president of Lilly Diabetes, told investors on Saturday, according to Bloomberg.

Lantus, made by France-based Sanofi, had worldwide sales last year of $7 billion. It was the first once-a-day insulin to help diabetics control their blood sugar levels. Lilly only offers mealtime insulins, such as Humalog.

But BIL has side-effect concerns. It raised a key liver enzyme known as ALT in significantly more patients than Lantus, although whether that difference is meaningful clinically is still unclear. There were no liver injuries reported and the levels went back down after patients stopped taking BIL. Also, liver fat increased in more patients taking BIL than in those taking Lantus.

Also, patients taking BIL had an increase in triglycerides, a key measure of heart health. In one of the studies, patients taking BIL also had increases in LDL cholesterol levels and reductions in HDL cholesterol levels compared to those taking Lantus.

Last, there were significantly more injection site reactions in patients treated with BIL than taking Lantus.

Those side effects led some Wall Street analysts to question whether BIL will even be approved by regulators.

“Even though BIL may be more efficacious than Lantus, we think the FDA will be very conservative with safety in the insulin space given that Lantus is a good basal insulin,” wrote UBS analyst Marc Goodman in a Monday note to investors. “It's not clear the risk/reward profile for BIL is good enough to get approved at this time.”

Goodman estimates no significant sales from BIL in future years.

But Alex Arfaei, frequently one of the most bearish analysts about Lilly, thinks the drug will come to market and become a blockbuster.

“There are some important safety signals that need to be addressed, but overall, BIL seems approvable with a risk mitigation program,” Arfaei of BMO Capital wrote in a June 7 note to investors.

However, he added, the side effects issues are real, and will likely prevent BIL from matching Lantus’ sales (that drug’s U.S. and European patents expired earlier this year and Lilly is working to launch a cheaper biosimilar competitor later this year).

“Overall, BIL has some advantages and disadvantages vs. Lantus, and as diabetes treatment becomes increasingly personalized, BIL will undoubtedly have its own niche,” Arfaei wrote. “We forecast peak sales of $1.9B by 2023.”

Even without BIL, Lilly’s diabetes business is expected to grow strongly in coming years. One analyst, JP Morgan’s Chris Schott, estimates that Lilly’s diabetes revenues will rise by $4 billion—from $4.6 billion last year to $8.6 billion in 2020.