Novo Says Momentum Is Still There After U.S. Insulin Setback

Novo Nordisk A/S, the world’s biggest insulin maker, isn’t on a downward trajectory and moved forward on many projects this year following a setback to its most promising product, its chief scientist said.

The stock, which almost tripled between 2009 and 2012, has dropped 13 percent since U.S. regulators rejected the company’s new insulin Tresiba in February. The shares have risen 3.5 percent so far this year, including reinvested dividends, lagging behind a 21 percent increase in the Bloomberg Europe Pharmaceutical Index. Last year, Novo gained 41 percent.

“It’s not as if the momentum has left us, to be quite frank,” Chief Scientific Officer Mads Krogsgaard Thomsen said in an interview, pointing to last month’s increase in 2013 targets. “People see companies as very binary, and either have a very bullish or a very bearish view. They may be looking too black and white.”

The 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 amassed 4.96 billion euros ($6.7 billion) in sales. Novo, which originally aimed for a U.S. approval as early as 2012, now targets an introduction of the medicine there by 2016 or 2017.

More recently, Novo lost a contract to provide insulin and the diabetes drug Victoza to Express Scripts Holding Co., the largest U.S. processor of prescription drug claims, after redirecting its sales force to boost promotion of Victoza in that market.

Market Concern

“There’s a lot of concern about Novo and the company’s prospects in the U.S.,” Philippe Lanone, an analyst at Natixis Securities in Paris, said by phone.

Investors may be overplaying the bad news, said Thomsen, in Barcelona this week to attend the European Association for the Study of Diabetes conference.

“The U.S. managed care system is very complicated,” he said, speaking last week by telephone. “You will constantly have swings and carousels, you win contracts and you lose contracts, and when you lose contracts you do your best to mitigate the situation.”

The Danish drugmaker is continuing talks on pricing and rebate structures with all U.S. pharmacy benefits managers, Thomsen said, declining to be more specific or to say whether Novo may cut its prices to win Express Scripts back.

The company will probably give an update on the potential impact from the Express Scripts decision when it reports third-quarter earnings, Thomsen said. The results are scheduled for Oct. 31.

The shares closed down 0.1 percent at 930.5 kroner in Copenhagen trading today.

2013 Progress

Novo this year introduced Tresiba in some European countries, advanced on projects including liraglutide to treat obesity, the experimental once-weekly GLP-1 treatment semaglutide and IDegLira, a combination of Victoza and Tresiba, Thomsen said during the interview.

It also moved quickly to prepare the Tresiba cardiovascular outcomes study required by the U.S. Food and Drug Administration for approval of the medicine, he said. Novo expects to be able to start the trial before year-end.

In August, the Danish company raised its sales and profit forecasts on higher revenue from Victoza, and now estimates full-year sales growth excluding currency shifts of 11 percent to 13 percent.

“Things have been in many regards better than expected this year,” Thomsen said.

Before it's here, it's on the Bloomberg Terminal.