BMY Presents Encouraging Data - Analyst Blog

Recently, Bristol-Myers Squibb Company’s (BMY) pipeline received a boost when its type II diabetes candidate, dapagliflozin, fared well in a late-stage multicenter, active-controlled, randomized, parallel-group, double-blind, study (n=814). The patients enrolled in the study, were more than or equal to 18 years of age and had responded unsatisfactorily to treatment by metformin alone.

Dapagliflozin, a once-daily pill, is being co-developed with AstraZeneca Plc (AZN) for treating patients suffering from type II diabetes, which is characterized by the dysfunction of beta cells in the pancreas. This results in reduced insulin secretion, thereby leading to elevated glucose levels.

Results from the 52 week study, presented at the European Association for the Study of Diabetes (EASD), revealed that a combination of dapagliflozin and metformin was as effective as the combination of glipizide and metformin in reducing blood sugar levels. Moreover, the combination therapy of dapagliflozin and metformin helped the patients lose weight as against the weight gain observed in patients treated with glipizide plus metformin.

Furthermore, treatment with Bristol-Myers’ combination therapy reduced the number of patients reporting one or more hypoglycaemic events. Hypoglycemia refers to a condition where blood sugar becomes dangerously low. The study also revealed that the frequency of adverse events was comparable across the two treatment arms.

Lucrative type II diabetes market

We believe that dapagliflozin, which belongs to a family of drugs known as sodium-glucose cotransporter-2 (SGLT2) inhibitors, represents significant commercial potential, given the highly lucrative market it will be targeting on approval. According to GlobalData, the type II diabetes market was worth $21.9 billion in 2009 across the globe. This represented a compound annual growth rate of 11.2% between 2001 and 2009.

The prevalence of diabetes in the U.S. and major European countries is on the rise. However, the market is highly competitive and has players like Merck’s (MRK) Januvia, Amylin’s (AMLN) Byetta and Sanofi’s (SNY) Lantus. The market is getting further crowded with new entrants such as Novo Nordisk’s (NVO) Victoza. Moreover, there are a large number of candidates targeting this market in various stages of development. We note that apart from dapagliflozin, Johnson & Johnson’s (JNJ) canagliflozin is another SGLT2 inhibitor under development.

Currently, we have a long-term Neutral stance on Bristol-Myers, which is supported by a Zacks# 3 Rank (short-term ‘Hold’ recommendation) for the stock.