Shares of Novo Nordisk A/S (ADR) [NYSE:NVO] jumped 5.31% to close at $57.68 a share on Friday, after the company announced its successful headline results from SUSTAIN1, the first phase IIIa trial for semaglutide, a new glucagon-like peptide-1 (GLP-1) analogue administered once-weekly. In the 30-week trial which investigated the efficacy and safety, 388 patients with type 2 diabetes previously on diet and exercise with a baseline HbA1c reading of 8.1% injected with 0.5 mg and 1.0 mg of semaglutide, showed improvements of 1.5% and 1.6% in their HbA1c reading respectively, compared with no change in those on placebo. 

HbA1c, referred to as glycated haemoglobin, develops when haemoglobin, a protein within red blood cells attaches with glucose in the blood, becoming “glycated”. HbA1c is a commonly used measure to identify average blood sugar concentration. Semaglutide is a GLP-1 drug in the same class as Novo's existing once-daily GLP-1 injection Victoza (liraglutide).

In addition, from a mean baseline of 92 kg, patients on the two doses of semaglutide lost 3.8 kg and 4.6 kg in weight, respectively, compared with a weight loss of 1.0 kg for those treated with placebo.

In the first-quarter ended March 2015, Novo Nordisk A/S reported net sales of Danish kroner (DKK) 25.2 billion, up 23.9% year-over-year from DKK 20.34 billion, and by 9% in local currencies. North America accounted for 56% of growth measured in local currencies, followed by International Operations and Region China contributing 20% and 13% respectively. For the quarter, adjusted diluted EPS was DKK 3.79 per share, up 56% year-over-year from DKK 2.45 per share. The median analyst forecast was DKK 3.31 a share on revenue of DKK 25.12 billion. (DKK 6.6515 equals U.S. $1)

Novo Nordisk's diabetes care segment recorded sales of DKK 19.82 billion, up 24% year-over-year and by 9% in local currencies. Modern insulin sales, including NovoRapid, NovoMix and Levemir, were DKK 11.5 billion, up 23% year-over-year and by 8% in local currencies. Levemir sales were DKK 4.07 billion, up 31% year-on-year and by 13% in local currencies. Victoza sales were DKK 3.96 billion, up 36% year-on-year and by 18% in local currencies.

Sales in the biopharmaceuticals segment, including haemophilia drug Hereof NovoSeven, Norditropin and other biopharmaceuticals products, were DKK 5.38 billion, up 23% year-over-year and by 8% in local currencies.

Looking forward in 2015, the company raised sales growth, to between 7% and 9% from the previous forecast of between 6% and 9%, and operating profit growth, to 17% from 10%, both measured in local currencies. Novo Nordisk sees free cash flow of between DKK 32-34 billion, DKK 3 billion higher than previous guidance. 

New launches from Novo Nordisk, such as Saxenda and Xultophy, are also expected to contribute to the top line. Saxenda (liraglutide 3 mg), approved by the FDA for the treatment of obesity, is a once-daily injection of the human 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.

Xultophy is a combination of the basal insulin Tresiba (insulin degludec) and the GLP-1 analogue Victoza (liraglutide). It is indicated for the treatment of adults with type 2 diabetes in combination with oral glucose-lowering drugs.

In late February, Novo Nordisk 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 in May and the company anticipates the initiation of separate Phase IIb clinical trials in patients with both type 1 and type 2 diabetes.

In February 2013, the U.S. Food and Drug Administration (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.

In March 2015, the company said that it had decided to submit the pre-specified interim analysis of DEVOTE as part of a Class II resubmission of the New Drug Applications (NDAs) of Tresiba and Ryzodeg to the FDA. In April, the FDA accepted the resubmission for review. 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.

From our technical viewpoint, Novo’s stock made a major breakout on March 26, 2015 when the company said it resubmitted NDAs of Tresiba and Ryzodeg to the FDA. The price projection in the raising wedge event is about $70, determined by adding the width at the top of the pattern to the point of breakout. Prior to the breakout, two bullish golden crosses emerged as the 50-day SMA crossed above 100-day SMA and 200-day SMA, meaning the run-up could hold for several months, if not years. 

Novo’s stock is traded along with other stocks in the European pharmaceutical sector which is strongly influenced by the Greek debt crisis. The headline risk could be foreign exchange volatility, as it has a significant impact on income statements and balance sheets. The major parts of Novo Nordisk’s sales are in EUR, USD, JPY, and GBP, while the predominant portions of the production, research and development costs are carried in DKK.

It should be noted that not many financial analysts cover NVO in the United States. As of July 10, 2015, a one-year estimated price target on Yahoo Finance is $75 per share.

Disclosure: No position and no recommendation.