May 1 (Bloomberg) -- Novo Nordisk A/S, the world’s largest insulin maker, said it expects to overcome the rejection by U.S. regulators of the new Tresiba medicine within three to five years as the company conducts more tests.
Five years would be the “worst-case scenario,” Chief Financial Officer Jesper Brandgaard told reporters on a conference call today. A cardiovascular outcomes study requested by the Food and Drug Administration will start within a year and interim results the regulator could use to determine approval are expected within two to three years, Brandgaard said.
The FDA’s rejection of Tresiba in the U.S., the world’s biggest drug market, set back Bagsvaerd, Denmark-based Novo’s plan to challenge Sanofi’s top-selling Lantus insulin, which last year garnered 4.96 billion euros ($6.5 billion) in sales. Novo Nordisk had aimed for U.S. approval as early as 2012.
There’s “no quick fix for Tresiba,” Jeffrey Holford and other analysts at Jefferies wrote in a note to clients today. “This points to a potential approval in 2017 at the absolute earliest.”
Novo shares fell 1.7 percent to 976 kroner in Copenhagen trading. The stock has returned 21 percent over the past year including reinvested dividends, giving the insulin maker a market value of 536.8 billion Danish kroner ($95 billion). The Bloomberg Europe Pharmaceutical Index has returned 32 percent in the period.
The Danish company also said it was “one of several” defendants named in five liability lawsuits in relation to another diabetes medicine, Victoza. The single-plaintiff lawsuits are seeking to recover damages for pancreatic cancer experienced by patients who allege they were prescribed Victoza and other similar medicines, Novo said. Three of the cases were filed in California federal court and two in California state court, said Novo, which didn’t identify the other defendants.
The claims “are without substance and merit,” the company said.
Studies have linked Victoza and similar medicines to a higher risk of pancreatitis and pancreatic cancer. The U.S. Food and Drug Administration said in March it was reviewing unpublished findings by a group of academic researchers suggesting pre-cancerous cellular changes may be associated with Type 2 diabetes treatments known as incretin mimetics, including Bristol-Myers Squibb Co.’s Byetta and Victoza. The European Medicines Agency also said it was reviewing the findings.
Costs of the U.S. heart-risks study for Tresiba will probably be about $200 million to $300 million, incurred over a period of four to five years, Brandgaard said. Completion of the required study is expected about four to six years after its beginning, though approval could be based on interim results, he added.
Tresiba, approved in Europe, is already sold in Denmark and the U.K. as well as in Japan. In both the U.K. and Denmark, its reimbursement is “restricted,” while in Japan the product is mostly reimbursed, Novo said.
“The challenge in Europe is getting reimbursement,” Brandgaard said in an interview with Bloomberg Television today.
The Danish company expects to start selling Tresiba in Switzerland soon and then plans to focus on other major countries in northern and central Europe in the months to come, without reimbursement at the start in some countries, he said.
“We expect a slow and steady uptake in Europe given the need to go through significant reimbursement discussions, lingering uncertainty around cardiovascular safety and a fierce marketing effort by Sanofi,” Mark Dainty and other analysts at Citigroup Global Markets wrote in a note to clients yesterday.
Novo also said in the statement today its first-quarter net income climbed 28 percent to 5.98 billion kroner on higher sales of its so-called modern insulins, including Levemir and Victoza. That beat the 5.82 billion kroner average estimate of 20 analysts surveyed by Bloomberg.
Revenue from Victoza, which mimics a hormone called GLP-1 and stimulates natural insulin production, jumped 35 percent to 2.68 billion kroner in the quarter, missing analysts’ estimates of 2.81 billion kroner. Novo saw no impact on Victoza sales in the quarter from the renewed concern on incretin mimetics, Brandgaard told reporters on the conference call.
Novo also raised its 2013 forecast for sales growth excluding currency shifts to 9 percent to 11 percent, though it kept its operating profit target. Full-year revenue was previously expected to climb 8 percent to 11 percent on that basis, with operating profit excluding currency fluctuations gaining about 10 percent.
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