Glaxo's Avandia To Prove Its Mettle At Medical Meeting

GlaxoSmithKline PLC (GSK) will report results Friday from a much-anticipated study on its blockbuster diabetes treatment Avandia, which is likely to show that the drug could be a preventative as well as a treatment for the disease.

The data, to be reported at a medical conference in Copenhagen, Denmark, could help GlaxoSmithKline boost flagging sales of its second best-selling drug, which posted sales of GBP1.3 billion in 2005. The extension of Avandia's existing use would also help the U.K. drugmaker fend off competition from newer drugs, such as Galvus, by Novartis AG (NVS) and Januvia, by Merck & Co. Inc. (MRK). Other Extensions

If the study is successful, Deutsche Bank said that it could increase its GlaxoSmithKline sales forecast for 2010 by more than GBP400 million and its earnings per share forecast in the same year by more than 4%.

However, some analysts have questioned whether the study could, in fact, change clinical practice and boost Avandia's sales, which contributed 6% to the company's total revenue in 2005.

The GlaxoSmithKline study evaluated whether Avandia can reduce the risk of type 2 diabetes and its complications. Type 2 diabetes is a disease characterized by high blood sugar levels resulting from a lack of the hormone insulin in the body. Unlike type 1, or juvenile diabetes, type 2 is preventable through weight-control and diet.

In the U.S. alone, there are around 20 million people with type 2 diabetes and an additional 41 million who have slightly elevated sugar levels, which are often precursors to full-fledged type 2 diabetes, according to the American Diabetes Association.

Earlier studies have shown that if this condition, called prediabetes, is addressed early enough, it's possible to delay or prevent the onset of type 2 diabetes.

The Avandia study followed just more than 5,000 patients diagnosed with prediabetes for three-to-five years, and is expected to show a 22% reduction in the risk of developing diabetes.

Potentially, Avandia's use as a preventative is an enormous opportunity but some analysts are skeptical whether even a positive trial could boost Avandia's prospects.

JP Morgan noted that even though Avandia generates most of its revenue in the U.S., the American Diabetes Association doesn't say that preventative therapies are cost-effective in low-risk patients, when compared with simple lifestyle changes such as diet and exercise.

GlaxoSmithKline may also face hurdles in accessing this potential patient pool, since two-thirds of patients with prediabetes are undiagnosed, making the market opportunity much smaller than it appears, say analysts at CSFB.

No drugs are currently approved specifically for use in patients who have prediabetes though other treatments, such as Actos, a diabetes pill sold by Japanese drugmaker Takeda Pharmaceutical Co. Ltd (4502.TO), have shown positive effects in clinical studies on diabetes prevention.

Another clinical study, due to be showcased in early December at a conference in South Africa, could be a far better hope for Avandia's future, according to Goldman Sachs.

The second study aims to show that using Avandia in patients recently diagnosed with diabetes is superior to using older antidiabetics, metformin and sulphonylureas.

Only GlaxoSmithKlines' asthma inhaler Advair sells more than Avandia, but the antidiabetic drug's growth has stalled, in part, due to manufacturing problems at a plant in Puerto Rico last year, which disrupted supplies for several months.