On the evening of July 18, Novartis announced its second quarter report for 2023, and its performance exceeded expectations, but a decision in the report was caught by many investors—due to the poor efficacy of the second phase trial, the company gave up the research and development of MBL949.
MBL949 is a GDF15 receptor agonist and one of Novartis’ important weight loss drug pipeline assets. According to data, GDF15 can reduce people’s desire for high-fat diets and achieve weight loss by promoting muscle energy consumption; Johnson & Johnson has achieved some success in this target, while Eli Lilly has voluntarily terminated the development of GDF15 agonists.
The failure of Novartis on weight-loss drugs also makes us have to face up to the risks of developing weight-loss drugs, and the giants cannot avoid “pipeline stop loss”, and this phenomenon is gradually becoming a trend.
The degree of involution of GLP-1R is no less than that of PD-1
Global pharmaceutical companies are deeply attracted by the “drug king potential” shown by Novo Nordisk’s semaglutide and Eli Lilly’s dulaglutide.
According to Insight database statistics, there are currently 289 drugs targeting GLP-1R in the world (including pre-clinical to market-approved), of which 149 are domestic drugs, accounting for 52%.
It is not difficult to see that more than 70% of the drugs under research in China are in the preclinical stage, and the characteristics of follow-up research and development are obvious.
This scene seems to be the reappearance of all tumor drug companies flocking to develop PD-1 after being shocked by the huge market of K drugs and O drugs.
By the end of 2021, among the 154 PD-1 products under research in the world, 85 are developed or jointly developed by Chinese companies, accounting for as much as 55%.
According to Cyberland statistics, on February 23, 2023, domestic PD-1 research and development involved a total of 59 common names, of which 11 have been approved for listing, and 49 are still in the research and development stage; if some ongoing research projects are considered to be in a “stopped” state, then the number of projects will be reduced by at least 50% compared to the end of 2021.
Judging from the data gathered by research and development, it seems that GLP-1R is more popular than PD-1 back then.
Some institutions predict that the global PD-1 market will reach US$64.1 billion in 2029, and the global GLP-1 drugs will exceed US$90 billion in 2030.
Although the currently approved GLP-1R indications include diabetes and weight loss, and weight loss may be the largest indication, due to the powerful mechanism of this target family, GLP-1R drugs may make more breakthroughs in indications in the future.
For example, Novo Nordisk will read out the key data of two cardiovascular and cerebrovascular Phase III clinical trials within the year, and Merck’s GLP-1/glucagon receptor dual agonist will announce data on the treatment of fatty liver at the EASL conference in June 2023, which can reduce liver fat by 72.7%. Lilly Tilpoetide is developing Phase III clinical trials for sleep apnea syndrome (OSA). In addition, metabolic MNC giants are still exploring indications such as chronic kidney disease, Alzheimer’s disease, smoking cessation & alcohol cessation.
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Under the upsurge of research and development and sales, the risks of the GLP-1R track are also heating up. The biggest risks come from: safety and entry barriers.
In June this year, the European Medicines Agency (EMA) issued a safety signal warning letter for GLP-1 drugs. It believes that GLP-1 drugs have a potential risk of causing thyroid cancer, and requires Novo Nordisk, Eli Lilly, AstraZeneca and other pharmaceutical companies to provide supplementary information before July 26.
One wave is not flat, and another wave rises again. In July, according to Reuters, EMA began to investigate the relationship between Novo Nordisk’s semaglutide and Axenda and patient suicide, making weight loss drug developers pay more attention to the safety of GLP-1 drugs.
At the same time, the increase in the efficacy threshold of approved GLP-1 drugs is also a huge challenge for latecomers in the development of GLP-1 drugs. Most of the approved GLP-1 drugs can reduce the average body weight of patients by about 15%, such as Eli Lilly’s telpootide and the GLP-1R/GIPR/GCGR triple-target agonist. The former phase III data showed that the high-dose group lost an average of 22.5% of the patient’s body weight, and the latter’s average weight loss was 24.2% after 48 weeks, constantly refreshing the record of weight loss efficacy.
Under the double pressure, not only Novartis mentioned at the beginning, but also major MNCs began to “retire bravely”.
At the end of June, due to elevated transaminases in some patients in the mid-term clinical study of Lotiglipron, Pfizer announced that it would stop developing Lotiglipron, an oral small molecule GLP-1RA agonist.
Since the beginning of this year, AstraZeneca has abandoned the clinical development of two GLP-1 drugs, including the oral GLP-1R agonist AZD0186 and the GLP-1/GCGR dual-target agonist Cotadutide. The two were abandoned for similar reasons. The former did not meet the expected clinical goals, and the latter AstraZeneca believes that it does not have a competitive advantage compared with several drugs that have been marketed.
There are two gatekeepers, Lilly and Novo Nordisk, latecomers, even giants, must carefully consider the competitiveness of their own products, otherwise the future commercialization prospects will be tested, and we can foresee that there will inevitably be more suspensions in the development of weight loss drugs in the future.
Domestic, conceivable involution situation
Domestic pharmaceutical companies are still actively entering the GLP-1 track regardless of their own safety, which has nothing to do with the domestic situation.
At present, GLP-1 drugs for weight loss in China include liraglutide and semaglutide (the NDA for weight loss indications has just been accepted), etc. Liraglutide must be injected once a day, and compliance is limited; semaglutide has not been approved for weight loss indications in China, and Novo Nordisk’s production capacity is limited, so it has been in short supply for a long time; dulaglutide is not approved for weight loss indications in Europe and the United States & the disadvantage of the convenience of the syringe (can only be injected in large doses at one time), the popularity is lower than that of Lira and Si Meglutide.
Obviously, there is a window of time before semaglutide can be adequately supplied to the Asia-Pacific region.
Domestic pharmaceutical companies have no more than three strategies. Some companies choose to make semaglutide biosimilars in order to quickly apply for listing after the patent becomes invalid in 2026; the other part chooses to self-develop and do fast follow on dual-target/oral GLP-1RA; the rest choose to import from overseas and quickly advance clinically in China.
Another core point is the cost of trial and error, and the “economic accounts” of pharmaceutical companies can be calculated.
According to Evaluate’s prediction, the R&D cost of a GLP-1 overseas in 2020 is expected to be US$868 million.
In China, since the target combination has been verified overseas, the failure rate of drug development and the cost of research and development have been greatly reduced. For example, Huadong Medicine’s liraglutide has a total cost of 321 million yuan for the two indications of diabetes and obesity.
The cost of Hengrui Medicine’s two dual-targeted drugs is also lower than overseas. The receptor agonist HRS9531 targeting GIP/GLP-1 (clinical phase II) and the GCGR antibody/GLP-1 fusion protein SHR-1816 (clinical phase I) have invested about 62.25 million yuan and 43.59 million yuan in research and development, respectively.
Taking Hengrui Medicine as an example, even if the clinical costs of the above two drugs are magnified by 10 times, the overall R&D costs will be on the order of 1 billion. Based on a roughly 20% net profit rate in the industry, if the two drugs have a combined annual sales of 1 billion yuan, then the cost will be paid back in about 5 years, and the sales of 2 billion will be paid back in 2.5 years.
Considering the feasibility of the domestic market, different sellers have given different scale forecasts for the GLP-1R market by 2030, roughly in the scale range of 30-50 billion. Assuming that Pharam such as Hengrui and Cinda conservatively account for 5-10% of the market share, the minimum sales scale will be around 1.5 billion.
However, at present, a large number of domestic preclinical pipeline targets and drug designs have not yet been clarified, but if a large number of them are simply followed by tricks, then there is a high probability that they will repeat the mistakes of PD-1, and the winner must be the first leading pharmaceutical company.
Domestic pharmaceutical companies really need to take a good look at their own GLP-1 pipelines, and it may be ugly to wait until the halfway cut.