Novo Nordisk Raises 2012 Forecast as Profit Beats Estimates

Novo Nordisk A/S, the world’s largest insulin maker, raised its full-year sales and profit forecasts after reporting second-quarter earnings that beat analysts’ estimates. The shares rose to a record.

Revenue will jump 9 percent to 12 percent this year in local currencies, compared with a previous forecast for an increase of 8 percent to 11 percent, the Bagsvaerd, Denmark-based company said. Operating-profit growth in local currencies will be about 15 percent, compared with a previous prediction of at least 10 percent.

The daily injection Victoza, Novo Nordisk’s growth engine, is gaining market share in the U.S. even after the approval in January of competitor Amylin Pharmaceuticals Inc.’s Bydureon, a once-weekly version of a similar compound, Chief Financial Officer Jesper Brandgaard said today.

After “an initial tick down” in Victoza’s market share of new prescriptions following Bydureon’s introduction, “it looks like that trend is not stable, and Novo Nordisk is capturing an increasing proportion of new scripts in the U.S.,” Brandgaard said on a conference call with reporters.

Victoza’s Surge

Sales of Victoza, which mimics a hormone called GLP-1 to stimulate natural insulin production, surged 83 percent to 2.29 billion kroner ($380.3 million) in the second quarter, compared with the average analyst estimate of 2.32 billion kroner.

Second-quarter net income climbed 29 percent to 5.35 billion kroner from 4.13 billion kroner a year earlier, exceeding analysts’ predictions for profit of 4.82 billion kroner, the average of 19 estimates compiled by Bloomberg.

Novo Nordisk rose as much as 5.9 percent, the highest since the company went public in 1991, and closed up 1.3 percent to 938 kroner in Copenhagen. The shares have gained 47 percent this year, including reinvested dividends, outstripping a 17 percent gain in the Bloomberg Europe Pharmaceutical Index.

Novo said it’s raising the profit forecast for 2012 because some introduction costs for a new product, Tresiba, have been deferred to next year because of a delay in gaining U.S. approval for the drug. The company is counting on Tresiba to help it wrest market share from Sanofi’s Lantus, the world’s top-selling insulin. That may mean profit will be lower next year, Brandgaard said.

Growth Driver

“If Novo Nordisk goes to a slightly lower level of operating profit in 2013 because we roll out a very significant growth driver for us in the next decade, we have no problems with that,” Brandgaard said in an interview on Bloomberg Television.

The U.S. Food and Drug Administration said last month that it will hold an advisory committee meeting on Tresiba on Nov. 8. The treatment was submitted for approval in Europe and the U.S. in September. Novo hasn’t received any information from the FDA about what the committee’s focus will be, Brandgaard said.

“It’s a bit weird,” said Tim Race, an analyst at Deutsche Bank AG in London. “This is a pretty straightforward filing. You have to wonder what’s behind this, is there any missing data, is there some issue with study design?”

Novo also announced the first results today from a late-stage trial of an experimental product called IDegLira, which combines Tresiba and Victoza. In a study among 1,600 diabetics, the drug helped control patients’ blood sugar better than Victoza on its own and at least as well as Tresiba on its own.

Product Setback

In a separate study of a blood-clotting agent called vatreptacog alfa in people with hemophilia, anti-drug antibodies were observed in “a few” patients and in one there was “a potentially neutralizing effect,” Novo said in today’s statement. The company is evaluating the finding and final results are expected in October, it said.

“That’s not a good signal for this type of molecule,” Race said. “There’s a good chance it gets binned.”

Novo expects an expense of about 1.95 billion kroner this year because of foreign exchange hedging losses, as the dollar and Japanese yen gained against the Danish currency. The losses will be “more than offset” because the value of Novo’s sales outside Denmark will be higher in kroner, the company said.

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