Eli Lilly and Co.'s $50 million purchase of an oral diabetes drug from Roche Holding AG's Chugai Biopharmaceuticals gives the U.S. company a foothold behind rival Novo Nordisk A/S as they seek to enter a coveted market.

The drug that Lilly licensed, named OWL833, is an oral non-peptidic glucagon-like peptide 1, or GLP-1, receptor agonist. That class of drugs helps control blood glucose levels in patients with type 2 diabetes by stimulating the GLP-1 protein to increase insulin secretion.

Confident in the drug's preclinical performance, Lilly said that it could be the best in its class and is ready for an early clinical trial. The Indianapolis-based drugmaker aims to beat its competitors in both absorption of the active ingredients and reduction of side effects, factors that have hampered oral diabetes drugs in the past.

Scrambling for a GLP-1 pill

Diabetes is a disease with a notoriously difficult treatment regimen, necessitating constant blood glucose monitoring and frequent insulin injections. Pharmaceutical companies have been trying to tame the disease with a pill to tap into a patient population that is searching for easier treatments.

Lilly's current GLP-1 product is its injectable Trulicity, which made $2 billion in 2017. It was the fourth-best seller for the company, behind designer insulin Humalog, erectile dysfunction drug Cialis and cancer treatment Alimta.

Lilly is entering a race with Denmark's Novo, which is much closer to the finish line with an oral version of semaglutide, sold as an injection under the brand name Ozempic. Oral semaglutide demonstrated effectiveness in the first of 10 phase 3 studies in February 2018. It has in the subsequent months met goals in more of those trials, besting Lilly and Boehringer Ingelheim Pharmaceuticals Inc.'s oral diabetes drug Jardiance.

Semaglutide, though, unlike Lilly's OWL833, is a type of protein known as a peptide, and that can come with a host of side effects such as nausea, vomiting and diarrhea. Lilly's product may have fewer adverse effects.

The battle for market approval of the oral GLP-1 hearkens back to earlier injectable competition. That time, Novo's Ozempic, launched in early 2018, was competing from behind with Lilly's Trulicity, which had been around since 2014. Also in the space is GlaxoSmithKline PLC's Tanzeum, Sanofi's Lyxumia, Novo's own Victoza and AstraZeneca PLC's Bydureon.

In such a crowded arena, an oral option with a high enough absorption rate, or bioavailability, could help a new product stand out.

Lilly Senior Vice President Enrique Conterno hinted at the company's interest in the oral GLP-1 space in the fourth-quarter earnings call for 2017.

"We are highly interested in this space and working on pursuing oral GLP-1s," Conterno said. "As we think about progressing to the clinical phase, I think the hurdle that we basically have is one of getting the right bioavailability for our product in order to make sure that we can make this commercially successful on a worldwide basis."

Further, Lilly research and development chief Jan Lundberg balked at Novo's leading pill, saying it was assumed to have only "1% or 2% bioavailability."

Competing across drug lines

But GLP-1 drugs do not just compete with one another. The other oral option is sodium glucose co-transporter 2, or SGLT2, drugs, which block the reabsorption of blood sugar by the kidneys, allowing type 2 diabetes patients to lower blood sugar levels.

Lilly and its partner Boehringer Ingelheim's Jardiance is one of these, along with Johnson & Johnson's Invokana and AstraZeneca's Farxiga.

These treatments offer an effective, though imperfect, oral option for type 2 diabetics, and have demonstrated side effects in the kidneys and bladder.

France's Sanofi and its partner Lexicon Pharmaceuticals Inc. have another oral option, this time in patients with type 1 diabetes. The drug, Zynquista, a dual SGLT1 and SGLT2 inhibitor that also releases GLP-1, would be the first of its kind and is under U.S. Food and Drug Administration review.

The oral insulin problem

Both SGLT2 and GLP-1 drugs are taken along with injected insulin where it is needed, so a pill form of those medicines would not have diabetics completely ditching their syringes.

In that regard, pharmaceutical companies have long sought to make insulin itself available in a pill form, knowing that whoever can solve that problem will have patients ready and willing to make the switch.

Novo gave up its oral insulin pursuit in late 2016, having developed a molecule that could survive the gastrointestinal tract and lower blood glucose just as injectable insulin would. The problem was delivering the molecule at an absorption rate that would account for a reasonable medication regimen. The technology for that did not exist.

Another player in the oral insulin race is Israeli company Oramed Pharmaceuticals Inc.'s pill, which is undergoing a pivotal trial in the U.S. Oramed has a GLP-1 pill in the regulatory pipeline, as well.

Sanofi and its former partner MannKind Corp. made it to market in 2014 with an inhaled insulin, Afrezza, but flagging sales led to the termination of the partnership and declining interest in tapping that market.

Although Afrezza tested well and is effective, patients and physicians opted instead for the more traditional injections. Whether they will react similarly to an oral version remains to be seen.