Novo Nordisk A/S fell the most among benchmark stocks in Copenhagen trading after Bank of America Merrill Lynch said the diabetes drug company’s Victoza medicine faces “a real threat” from an Eli Lilly & Co. product.
Novo fell as much as 1.9 percent, the biggest drop in the Nasdaq OMX Copenhagen 20 index. The stock retreated 1.5 percent to 918 kroner at 11:34 a.m. in the Danish capital, with trading volume at 47 percent of the three-month daily average. The stock was also today’s biggest loser in the Stoxx Health Care index of 35 companies.
Sales of Victoza, which mimics a hormone called GLP-1 and stimulates natural insulin production, jumped 35 percent in the first quarter, making the drug one of Bagsvaerd, Denmark-based Novo’s biggest profit contributors. BofA Merrill Lynch cut its recommendation on Novo to neutral from buy, saying data due to be presented at this month’s American Diabetes Association meeting will show that Lilly’s experimental drug dulaglutide has potential to wrest market share from Victoza.
“Overall we believe headline data for dulaglutide suggests a profile that may be better than Victoza,” BofA Merrill Lynch analysts, including Sachin Jain, said in a note. “Our forecasts now assume dulaglutide launch in 2015 and Victoza slowly declining thereafter.”
Sales of Victoza will peak at 12 billion kroner ($2.15 billion), the bank said, lowering a previous estimate of 21 billion kroner.
The U.S. Food and Drug Administration in February declined to approve another of Novo’s diabetes medicines, called Tresiba, saying the company needed to provide more studies to determine cardiovascular risks.
“With investor concerns on the insulin franchise already present following the delay to U.S. launch of Tresiba, we believe the additional competitive pressure to Victoza confirmed in abstracts is likely to cap near-term share price upside from here,” the analysts wrote.