| Glumetza Growing Big for Santarus (NASDAQ: SNTS) and Depomed (NASDAQ: DEPO) | | Print | |
| Written by R. Saito | ||||||||||||||||||||||||
| Sunday, 15 November 2009 10:00 | ||||||||||||||||||||||||
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Glumetza is a long-acting, timed release, once daily version of the drug that now finally can take full advantage of the effects of Metformin to normalize blood sugar in patients with type II diabetes while minimizing the side-effects associated with Metformin. The drug works by reducing the amount of sugar produced in the liver, and the amount of sugar absorbed in the body. It also helps the body respond better to its own insulin, thereby reducing instances of damaging high levels of blood sugar. Think of Glumetza as a once-a-day wonder drug for the approximately 19 million people in the US suffering from adult-onset, or type II diabetes. Since the FDA approved the drug early last year, it has slowly started to penetrate the marketplace. The small company behind the drug is Depomed (NASDAQ: DEPO) of Menlo Park, CA. Late summer last year, Depomed inked a deal with a larger company, Santarus (NASDAQ: SNTS) of San Diego, CA, to market and sell the drug in the US using its well established sales and marketing network. In the deal, Santarus paid Depomed an up-front payment, while Santarus in turn will receive 75-80% of the gross margin from sales of Glumetza. Both companies were winners in this deal, as Depomed received much needed cash in the credit crunch and cash strong Santarus will have huge earnings potential as sales of Glumetza takes off. The market potential for Glumetza is so large that pharmaceutical companies are lining up to get a piece of the pie. Their technology has already been challenged by Bristol Myer Squibb (NYSE: BMY) and Ivax, a subsidiary of Teva Pharmaceuticals (NASDAQ: TEVA), and in recent news, Lupin Pharmaceuticals is again attempting to invalidate their patents. I see little cause for concern as Depomed has already reached other agreements with both Ivax and Bristol Myer Squibb, and this market is big enough for multiple players. In the longer run, it is Santarus who stands to make the most from Glumetza of course. Santarus started marketing the drug in the fourth quarter of 2008, and after a year can now show a very promising growth in the sales of Glumetza with prescriptions currently at around 79,000 patients at the end of the third quarter, turning in a 20% growth over the second quarter of this year. Most patients on the drug will be on it permanently, and since there are 19 million type II diabetes sufferers in the US, the room to grow here makes Glumetza a potential billion dollar blockbuster drug, and sales should continue to see exponential growth as the word gets out to physicians and patients across the country. Although the growth in sales is currently at a rate of doubling every year, it can become even more explosive at any moment as reimbursement for the drug is expected to become widespread. It is not a very expensive drug in the first place at about $4 per day, making the price about $1500 per patient per year depending on the dose, which is customized for each patient with help from their physician. Disclosure: Long SNTS BiomedReports is not paid or compensated to report news and developments about publicly traded companies. Full disclosure can be read at the bottom of / About Us / Section Add this page to your favorite Social Bookmarking websites           
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Comments (7)
JonMaverly
said:
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Early last year, the FDA approved a new drug in the fight against adult-onset, type II diabetes; Glumetza. Glumetza is a new form of Metformin, a generic drug with many problems in uptake and gastric side-effects.
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... I agree with everything you wrote, expect for your essential premise: Glumetza has potential billion-dollar blockbuster. No analyst to date that has tracked Depomed or Santarus has projected more than $150 million. Plus Glucophage XR, is almost identical to it... which is now widely generic. |
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R. Saito
said:
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... BJ Wong, you are absolutely 100% correct, it is the same drug as generic Metformin, Metformin is the active ingredient, my second sentence states this; new form of Metformin. The difference is in the delivery. Metformin is a generic, and Depomed's proprietary time-release is what makes it much more effective while lessening the side effects. JonMaverly, you are also onto something, while Glucophage XR is not generic, it is still a very similar drug. It is Bristol-Myers Squibb's version, for which they pay royalties to Depomed. It has the same active ingredient, and uses a time-release, in this case different from Depomed's Glumetza time-release, but BMS still pays royalties for the timed release part of the patent protection - just like Lupin will when / if they decide to pursue it further. Glumetza, however, uses Depomed's patented time-release technology and does come out on top of all the Metformins, there is plenty of data to support this. It's all in the inactive ingredients, no space to write a thesis on that here, but you both have good points, and as I stated in the article, there's room in this field for multiple players. Glucophage XR is about half the price of Glumetza, and you get what you pay for in terms of efficiency and side effects: It's much better than generic Metformin, but not quite as good as Glumetza. The market for metformin will increase dramatically with these new time-release versions of the drug. For generic metformin, the side-effects are intolerable to most, therefore the market for it has not been big, but this is changing rapidly as you can now have the benefits of metformin without the life-changing side-effects. |
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JonMaverly
said:
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... 1) Glucophage XR and Glumetza have almost identical time-release properties AND active ingredient. Fortamtet has the same active ingredient but a completely different time-release system. 2) Glucophage XR is sold as generic, thats why Depomed sued Ivax/TEVA 3) Actually BMS doesn't pay royalties anymore. It payed a one-time royalty in 2003. The same applies for Ivax/Teva, who paid a one-time royalty. How can Glucophage XR not be generic, like you incorrectly posted, and still be sued by Depomed for selling a generic version of Glucophage XR? 4) Glucophage XR and Glumetza are almost identical in their time-release properties. Depomed made both of them! 5) "Glucophage XR is about half the price of Glumetza, and you get what you pay for in terms of efficiency and side effects: It's much better than generic Metformin, but not quite as good as Glumetza." - what exactly are those differences? Look at the side effects profile for both drugs (Glucophage XR and Gluemtza), look at any head-to-head trials (guess why there are none), then you will come to the same conclusion I have. Your article is awful and full of inaccuracies. Sorry. |
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BJ Wong
said:
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... R., are you saying that Glumetza works differently than generic metformin xr and that there's a difference in efficacy and side effects between the two? If so, please point us to that data. |
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JonMaverly
said:
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... Sorry for the demeaning tone, no offense. I think you have some good stuff here, but I am just pointing out some incorrect statements. |
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BJ Wong
said:
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... "sales of Glumetza with prescriptions currently at around 79,000 patients at the end of the third quarter, turning in a 20% growth over the second quarter of this year" Where is that information from? It's not correct. Santarus said in their quarterly earnings release that it was 9.2%, and that's for revenues, which benefited from a price increase. |
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