Novo Nordisk [NYSE:NVO] said last Friday that it has successfully completed its Phase II trial for OG217SC, an oral formulation of the long-acting GLP-1 analogue semaglutide, for treatment of people with type 2 diabetes. Type 2 diabetes is a progressive disease in which the pancreas does not make enough insulin or the body cannot use the insulin, known as insulin resistance. Over 340 million people worldwide are affected by type 2 diabetes.

Novo Nordisk’s OG217SC will be competing with ORMD0801, an orally indigestible insulin capsule developed by the small Jerusalem, Israel-based, Oramed Pharmaceuticals Inc. [NASDAQ:ORMP]. Oramed completed its Phase IIa clinical trials earlier this month and the company anticipates the initiation of separate Phase IIb clinical trials in patients with both type 1 and type 2 diabetes.
Recently, the U.S. Food and Drug Administration (FDA) approved Novo Nordisk’s Saxenda (liraglutide 3 mg) for the treatment of obesity. Saxendra is a once-daily injection of the human glucagon-like peptide-1 (GLP-1) incretin hormone that signals the brain when the stomach is full. Saxenda is currently under review by the European Medicines Agency for the same indication.

Saxenda will be competing with obesity drug, Contrave, developed by Orexigen Therapeutics, Inc. [NASDAQ:OREX]. Contrave, approved by the FDA last September, contains a combination of bupropion and naltrexone. Bupropion, which is an antidepressant medicine, helps lessen the appetite while naltrexone blocks certain receptors in the brain to curb cravings.

In the fourth-quarter ended December 2014, Novo Nordisk reported net sales of Danish kroner (DKK) 24.6 billion, up 13.4% year-over-year from DKK 21.7 billion. For the quarter, adjusted diluted EPS was DKK 2.51 per share, up 10.6% year-over-year from DKK 2.27 per share. The median analyst forecast was DKK 2.46 a share. (1 Danish krone equals U.S.$ 0.1517)

For the full year of 2014, net sales increased to DKK 88.8 billion, up 6.2% from DKK 83.6 billion in 2013. Net profit increased by 5.2%, to DKK 26.5 billion from DKK 25.2 billion in 2013. Diluted earnings per share increased by 8%, to DKK 10.07 per share from DKK 9.35 per share in 2013. 

Looking forward in 2015, the company sees sales growth of 6% to 9% and operating profit growth is expected at around 10%, both measured in local currencies. New launches, such as Saxenda and Xultophy, are also expected to contribute to the top line. Xultophy is a combination of the basal insulin Tresiba (insulin degludec) and the GLP-1 analogue Victoza (liraglutide).

In February 2013, the FDA turned down Novo Nordisk’s marketing applications for Tresiba (insulin degludec) and Ryzodeg (insulin degludec/insulin aspart) and required additional proof of the products' safety, via a cardiovascular outcomes trial ahead of registration. The cardiovascular outcomes trial for Tresiba, DEVOTE, was initiated in October 2013.

The company completed patient enrollment (7,644 trial participants with type 2 diabetes who have existing, or high risk of, cardiovascular disease) in the cardiovascular outcomes study (DEVOTE). The required number of major adverse cardiovascular events (MACEs) for conducting a pre-specified interim analysis has now been accumulated.

The company said that it will decide during the first half of 2015 whether to submit the results of this interim analysis to the FDA or to wait for the completion of the DEVOTE study. The full study is expected to be completed in the second half of 2016.

Tresiba and Ryzodeg were approved and launched in the EU, Japan and other markets. Analysts forecast peak sales at DKK 23 billion, or about U.S. $3.5 billion, by 2025 for Tresiba.

Since the beginning of 2014, the NVO stock has been trading in a symmetrical triangle pattern within the range between U.S. $42.11 and U.S. $47.76. From our technical analysis, any breakout of the symmetrical triangle would add about U.S. $16-18 to the price of the stock, meaning the price projection for NVO would be about U.S. $63-65 if NVO broke out of the symmetrical triangle at U.S. $ 47.00. 

It should be noted that there are not many financial analysts that cover NVO in the United States. Consequently, no one will defend the stock if the price should drop in a free fall. As of February 26, 2015, a one-year estimated price target on Yahoo Finance is U.S. $58.52 per share.

Disclosure: No position