How Far Will Avandia Fall?

A week and a day after the nation’s leading medical journal announced that Avandia poses a much higher heart attack risk than either its maker, GlaxoSmithKline, or FDA had previously reported, the media dustup has come nowhere near peaking. Meantime, analysts are already revising-downward-the damage to GSK’s blockbuster anti-diabetes drug in the face of what appears to be a rush to switch on the part of doctors and patients.

Citing an abrupt drop in Avandia prescriptions last week, Deutsche Bank experts announced, “This reaction is far worse than we had anticipated and suggests that there could be as much as 22 percent downside risk to Glaxo’s near-term earnings…[and] a still further downside to GSK’s share price.”

Using data from market research firm ImpactRx, Deutsche Bank said that Avandia’s share of new oral-diabetes scripts dropped to near zero from 10 percent in the two days following the May 21 New England Journal of Medicine report, while Actos, Takeda Pharmaceutical’s PPAR-class rival, saw its share jump from 10 percent to 22 percent. Moreover, the analysts said that there were three times as many switches as usual. (In a Wednesday update, ImpactRx's CEO, Richard Altus, issued a strongly worded objection to Deutsche Bank's interpretation, calling its conclusions “premature.”.)

Shares of GSK stock plummeted to a two-year low following the news, but the British drug giant yielded no ground, downplaying the data just as it has the entire episode. “Two days of data is not enough to reach sensible conclusions on the trend for Avandia new prescriptions,'' Glaxo said in an e-mailed statement.

Avandia is the firm’s second-biggest seller (after anti-asthma Advair), and its $3.2 billion sales in 2006 were projected to top $4 billion this year. But that was before Dr. Steve Nissen of the Cleveland Clinic got his hands on the 42 Avandia studies that GSK, in a nod to transparency, had posted on its Web site. Nissen’s meta-analysis found that diabetics who took Avandia had a 43 percent increased risk of heart attack than those on other drugs. Although Avandia was approved in 1999 and has been used by some 7 million patients, the NEJM viewed these findings as urgent enough to warrant release several weeks before publication. FDA issued an immediate alert, and the press pounced.

While it is way too early to predict the extent of the harm to the franchise, few analysts agree with Glaxo head JP Garnier’s rosy picture for his rosiglitazone. “We expect that once the complete data set on Avandia becomes available, our product will be vindicated,” Garnier said in a shareholder meeting last week.

But Morgan Stanley’s Andrew Baum sees little hope of Avandia recovering its pre-Nissen punch, putting its 2010 sales at $2.4 billion, half of previous estimates.

And if Actos looks like the winner for the moment, most analysts also agree that Merck’s Januvia will be the big benefactor of Avandia’s spoiling. “Switching to Actos is probably a stopgap measure,” said Miller Tabak’s Les Funtleyder. “When the dust settles, the whole class of PPARs may well be implicated-if not by the data, then by the press. Januvia and other DDP-4 inhibitors will emerge as the safer alternative.”

And when the dust settles, will Avandia be Vioxx 2? Despite the outcry in Congress and plans for hearings at which JP Garnier and FDA officials will testify, Funtleyder says fuhgedaboutit. “Vioxx was a mass-market painkiller that caused heart attacks, while Avandia is for diabetics, many of whom are already seriously ill. The risk/reward profiles are completely different.”

Tell that to Cleveland Clinic’s Nissen, whose drug-safety crusade toppled Vioxx.