Yesterday, Bristol-Myers Squibb Co. (BMY) and AstraZeneca Plc (AZN) announced that their diabetes drug Onglyza (saxagliptin) received the green light from the European Commission to be marketed in the 27 countries of the European Union (EU). Onglyza once daily was co-developed by Bristol-Myers and AstraZeneca.

Onglyza can be used in combination with commonly prescribed oral anti-diabetic medications − metformin, sulfonylureas or thiazolidinediones for improving blood sugar levels in adults when those drugs alone fail to adequately control glycemic levels. The European approval is based on data from late-stage registrational trials which assessed the safety and efficacy of the drug and involved 4,148 type-II diabetes patients, including 3,021 patients treated with Onglyza.

Onglyza is expected to be launched in Europe in the fourth quarter of this year. It will be the first diabetes drug to be launched in Europe under this partnership.

As a reminder, the U.S. Food and Drug Administration (FDA) approved Onglyza for type-II diabetes in July 2009.

Onglyza, a dipeptidyl peptidase 4 (DPP4) inhibitor, will compete directly with Merck & Co’s (MRK) Januvia, which also belongs to the same class of diabetes medicines. Januvia and a related drug called Janumet, which includes metformin, constitute Merck’s fastest-growing product line, with sales coming in at $1.75 billion in 2008. Drugs belonging to this class increase insulin production and lower the production of glucose.

We believe that the drug has blockbuster potential since the number of people suffering from diabetes is on the rise. The U.S. market for diabetes medicines exceeds $5 billion annually. Furthermore, the market has high potential with a huge unmet need. An estimated 246 million people across the globe suffer from diabetes which is a chronic disease in which the body fails to produce or properly utilize insulin. Most of them have type II diabetes which is linked to poor diet and lack of exercise.

Onglyza will compete with players such as Merck, GlaxoSmithKline (GSK), Eli Lilly (LLY), Sanofi-Aventis (SNY) among others. In addition to competition from existing products, competition is likely to increase with several companies seeking approval for their diabetes candidates.

On Friday, Bristol-Myers announced positive late-stage data for its other type II diabetes candidate dapagliflozin which is also co-developed with AstraZeneca.
Read the full analyst report on “BMY”
Read the full analyst report on “AZN”
Read the full analyst report on “MRK”
Read the full analyst report on “SNY”
Read the full analyst report on “LLY”
Read the full analyst report on “GSK”
Zacks Investment Research