Glaxo's Tanzeum Approved in the U.S. - Analyst Blog

GlaxoSmithKline's GSK diabetes drug, (EU trade name: Eperzan), gained approval in the U.S. as an adjunct to diet and exercise in adults suffering from type II diabetes.

The U.S. Food and Drug Administration (FDA) approved Tanzeum, a glucagon-like peptide-1 receptor agonist (GLP-1), on the basis of encouraging data from eight phase III trials. Glaxo expects to launch the once-weekly drug in the U.S. in the third quarter of this year.

We remind investors that last month Tanzeum was also approved by the European Medicines Agency. Glaxo expects to launch the drug in the third and fourth quarters of this year in several countries in Europe. Launches are expected to continue thereafter in other European countries.

However, Tanzeum's label will include a boxed warning regarding potential risk of thyroid C-cell tumors, including medullary thyroid carcinoma (MTC). Use of GLP-1 receptor agonists have been found (at clinically relevant exposures) to be associated with thyroid C-cell tumors in rodent studies.

The FDA has requested Glaxo to conduct additional post-marketing studies on Tanzeum evaluating the risk of MTC. The FDA has also asked for a study evaluating the use of the drug in pediatric patients and a cardiovascular outcomes trial.

Meanwhile, Tanzeum has been approved with a Risk Evaluation and Mitigation Strategy with communication plan regarding serious risks associated with Tanzeum.

Our Take

Type II diabetes affects approximately 24 million people in the U.S., thus representing a lucrative market. Tanzeum's once-weekly treatment regimen for type II diabetes provides patients with a more convenient treatment option over the daily dosing regime of GLP-1 products including Novo Nordisk's NVO Victoza among others.

However, we are concerned about the potential MTC related risks associated with Tanzeum. We believe this can limit the drug's sales significantly.

Additionally, we note that AstraZeneca AZN already markets Bydureon, a GLP-1 receptor agonist with once weekly dosing. Apart from that, several big pharma companies have GLP-1 candidates (semaglutide) with once weekly dosing in late-stage development.

Glaxo carries a Zacks Rank #3 (Hold).  A better-ranked stock in the healthcare sector includes AbbVie Inc. ABBV, carrying a Zacks Rank #2 (Buy).