Novo Nordisk Sees 2014 Sales Gain as Victoza Beats Estimates

Novo Nordisk A/S, the world’s biggest insulin maker, said full-year revenue may increase as much as 11 percent on higher demand for diabetes drug Victoza. The stock rose the most in 14 months.

Revenue will probably climb 8 percent to 11 percent in local currencies this year, while operating profit gains about 10 percent on the same basis, the Bagsvaerd, Denmark-based company said today. Novo had forecast “high” single-digit sales and operating profit growth for this year on Oct. 31.

“Victoza had a strong quarter, which is encouraging for growth going forward,” Alistair Campbell, an analyst at Berenberg Bank in London, wrote in a note to clients today.

Novo needs Victoza, its biggest growth engine, to sustain sales following the rejection of a new insulin called Tresiba in the U.S. last year. The Food and Drug Administration demanded a new study to assess the heart risk of the treatment. Novo originally aimed for Tresiba approval in the world’s biggest drug market as early as 2012. It’s now targeting an introduction in the U.S. by 2016 or 2017.

Novo shares climbed 3.4 percent to 211.3 kroner in Copenhagen at the 5 p.m. close, the most since Nov. 9, 2012.

Net income advanced to 6.05 billion kroner ($1.1 billion) in the fourth quarter, missing the 6.26 billion kroner average estimate of 14 analysts surveyed by Bloomberg because of higher research and development costs. Sales of Victoza fueled the earnings gain, surging 19 percent.

The drug saw “a nice pick-up” in the quarter, Chief Executive Officer Lars Rebien Soerensen said on a conference call with reporters. He reaffirmed an estimate of an additional 150 million kroner per quarter in Victoza sales.

Growth Engine

Revenue from Victoza, which stimulates natural insulin production, reached to 3.23 billion kroner in the quarter, beating the average analyst estimates of 3.09 billion kroner. Sales of Novo’s so-called modern insulins, including Levemir, climbed 7 percent to 10.1 billion kroner. Sales of the hemophilia therapy NovoSeven dropped 7 percent to 2.26 billion kroner, missing analysts’ estimates of 2.36 billion kroner.

Tresiba, approved in the European Union, is already sold in Denmark, the U.K., Switzerland, Sweden, Luxembourg, Mexico, Japan and India. Novo was relying on Tresiba to help it challenge Sanofi’s top-selling Lantus insulin, which in 2012 amassed 4.96 billion euros ($6.73 billion) in sales.

Performance Encouraging

“In markets where we have launched the product, performance has been encouraging,” Soerensen said in a statement today.

Novo has started enrolling patients for the Tresiba study requested by the FDA and expects an interim analysis of the trial to be available within two to three years.

The Danish company said today it appointed Kare Schultz as president and chief operating officer, to work closely with Soerensen on “matters relevant to the company’s senior leadership and the board of directors.”

No decision has been made on the CEO succession, according to Soerensen. Schultz’s appointment “has the benefit that he and I will share responsibilities” and it will give him “opportunities to further develop his leadership,” he told reporters on the call. “My departure isn’t imminent.”

Lost Contract

Novo lost a contract last year to provide insulin and 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.

The company said Oct. 31 it expected to lose 1 percent of its sales this year because of the Express Scripts decision. There has been a “notable” impact on both Novolog and Victoza, but to gauge “how big the impact is, we need a few more weeks if not a couple months,” Soerensen said.

The Danish company said today it will propose a 25 percent increase in dividend to 4.5 kroner a share. It also decided to begin a new 12-month share repurchase program of as much as 15 billion kroner.

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