J&J licenses late-stage Type 2 diabetes drug from Diamyd; gets preclincal drugs from Metabolex

J&J cuts 2 deals for diabetes treatment

TRENTON, N.J. — Johnson & Johnson is grabbing for a share of the huge, fast-growing market for diabetes drugs, announcing a pair of partnerships Tuesday that could produce novel medicines for the disease.

They would complement a very successful line of blood sugar testing and control equipment.

The agreements, with companies in Sweden and California, to develop new drugs for Type 1 and Type 2 diabetes come just days before J&J is to release results of mid-stage human tests of another promising drug, called canagliflozin, likely to be its first diabetes medicine.

The experimental Type 1 drug could be groundbreaking, as it aims to slow, or even halt, progression of diabetes, rather than just control blood sugar. And the health care giant soon will begin testing an experimental artificial pancreas, which would regulate insulin and blood sugar levels together, under a joint project with the Juvenile Diabetes Research Foundation.

The projects show Johnson & Johnson is aiming to provide comprehensive care for diabetics at all stages of the disease, a potentially deadly disorder in which the body either doesn’t make enough of the hormone insulin or doesn’t use it properly to control blood sugar levels. Diabetes already affects about 25 million Americans and tens of millions of people in other countries, and those numbers are expected to keep rising.

Analyst Steve Brozak of WBB Securities said J&J deliberately announced the two very different deals the same day to make clear that they plan to “grow their presence to make sure they are in a leadership position.”

“This is more than a toehold,” Brozak said. “They’re going to be advancing their franchise and their position by investing resources in this area.”

The diabetes market expands along with waistlines. That’s because most Type 2 diabetes, which comprises about 85 percent of cases, is associated with obesity and lack of exercise.

Sales of medicines and insulin for diabetics are the fourth-biggest category of prescription drugs, with global sales topping $30 billion last year, according to prescription data firm IMS Health.

Meanwhile, hospitalizations and other care for expensive complications of poorly controlled blood sugar — from kidney and heart disease to blindness and amputations — threaten to bankrupt government health programs.

“There’s a need for therapies” that work differently from existing medicines, said Ernie Knewitz, a spokesman for Johnson & Johnson Pharmaceutical Research and Development. “We’re demonstrating our commitment to building a pharmaceutical franchise in diabetes.”

J&J, based in New Brunswick, N.J., has never sold a drug for diabetes but has marketed glucose testing strips for a quarter-century. Now one of every three strips sold in the U.S. is from its OneTouch Ultra brand, which includes meters that analyze the glucose level in a drop of blood.

In 2006, J&J bought insulin pump maker Animas. It now sells the devices, which deliver a controlled amount of insulin under the skin all day, under the OneTouch Ping brand.

Last year, Johnson & Johnson made $2.4 billion on sales of the testing strips, blood glucose meters and insulin pumps. Revenue from the pumps jumped 30 percent last year, but the recession lowered sales for the testing strips and meters by 3 percent as unemployed and uninsured workers cut costs.

About eight years ago, J&J quietly entered diabetes treatments with a research partnership with Japan’s Mitsubishi Tanabe Pharma Corp. Their initial search for new ways to attack diabetes led to canagliflozin, a pill in a new class of drugs believed to lower blood sugar levels by increasing the amount of sugar excreted in the urine.

Results from mid-stage tests, to be released at the American Diabetes Association conference Saturday, are encouraging enough that J&J started a 10,000-patient late-stage study last December. The company already plans to ask U.S. regulators in 2012 to approve the pill.

On Tuesday, J&J’s Ortho McNeil Janssen Pharmaceuticals said it will pay $45 million upfront to Sweden’s Diamyd Medical AB, and share the costs of current research and development, for rights in most countries to a drug already in two late-stage clinical tests against Type 1 diabetes.

This type, once called juvenile-onset diabetes, is caused by the immune system attacking the beta cells in the pancreas that produce insulin. The drug is meant to delay or prevent destruction of those cells, to slow or block progression of diabetes.

Data from the first study is due in the first half of 2011, and J&J will then decide whether to complete the second study, now under way in the U.S. Diamyd would get additional payments and then sales royalties if testing goes well and the drug gets approved.

Also Tuesday, the Janssen unit licensed exclusive worldwide rights to several potential Type 2 diabetes drugs, not yet in human testing, from privately held Metabolex Inc. of Hayward, Calif.

Metabolex will receive an undisclosed upfront payment and could later receive development, regulatory and commercial milestones up to $330 million, plus royalties on worldwide sales of any products eventually marketed.

“We have a host of earlier-stage programs” also in testing, Knewitz added.