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Shares of Novo Nordisk A/S
(ADR) [NYSE:NVO] jumped 3.64% to an intraday high of $56.93 a share on Monday before pulling back to close down 0.62% for the day, after the U.S. Food and Drug Administration (FDA) approved two new drugs, Tresiba (insulin
degludec) and Ryzodeg (insulin degludec/insulin aspart) for glycemic control in adults with type 1 and type 2 diabetes. Tresiba is a long-acting basal insulin and is designed to be injected once a day. Ryzodeg is a combination of a long-acting insulin and a fast-acting insulin.
In February 2013, the FDA turned down Novo Nordisk’s marketing applications for Tresiba and Ryzodeg and required additional proof of the products' safety, via a cardiovascular outcomes trial ahead of registration. In March 2015, the company submitted the pre-specified interim analysis of the cardiovascular outcomes trial for Tresiba 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 of the cardiovascular outcomes trial for Tresiba is expected to be completed in the second half of 2016.
Tresiba and Ryzodeg were already approved and launched in the EU, Japan and other markets. Novo Nordisk said that it plans to launch Tresiba in the U.S. during the first quarter of 2016, while there are no plans for a launch date for Ryzodeg yet. Tresiba will compete with the world’s top-selling insulin, Sanofi’s
[NYSE-ADR:SNY] Lantus (insulin glargine). After the lawsuit settlement between Sanofi and Eli Lilly
[NYSE:LLY] on Monday, Lilly will be allowed to launch Basaglar, a biosimilar to
Lantus, in December 2016 in the United States. Basaglar is already approved in Europe. Analysts forecast peak sales for Tresiba at DKK 23 billion, or about U.S. $3.5 billion, by 2025.
New launches from Novo Nordisk include Saxenda and Xultophy. 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.
From our technical viewpoint, Novo’s stock has been moving in an uptrend channel since mid-2010. Bullish golden crosses emerged in the chart pattern as the 50-day SMA crossed above the 100-day SMA and 200-day SMA, meaning the run-up could hold for several months, if not years. In the short-term, the stock is trading in a symmetrical triangle chart pattern with a breakout, or breakdown, that is imminent. The sentiment for the pharmaceutical sector has been negative since Hillary Clinton, U.S. presidential candidate, went on a Twitter frenzy on September 21.
Novo’s stock is traded along with other stocks in the European pharmaceutical sector. The headline risk could be foreign exchange volatility, as it has a significant impact on income statements and balance sheets. Novo Nordisk’s sales are mainly in EUR, USD, JPY, and GBP, while the predominant portions of the production, research and development costs are carried out in DKK.
As of September 29, 2015, a one-year estimated price target for NVO on Yahoo Finance is $71.10 a share.
Disclosure: No position and no recommendation for NVO or any other stocks mentioned. |
