Another Diabetic Investor Prediction Becomes Fact

Another Diabetic Investor Prediction Becomes Fact

Years ago while Novo Nordisk (NYSE:NVO) was developing Victoza® Diabetic Investor predicted that at some point Novo would reposition Victoza as a treatment for obesity. Back at the time we reasoned that since was Victoza would be the second GLP-1 to come to market and that Bydureon would likely be approved shortly after Victoza, the drug would not gain much traction as a treatment for diabetes and if Novo had any hopes of making the drug commercially viable it would need to be repositioned as a treatment for obesity.

Although things didn’t happen exactly as predicted, Victoza actually outperformed expectations; Novo is now doing exactly what we thought they would do. Recently, the company announced its plan to reformulate Victoza as a weight loss drug and if all goes well it would be ready by 2015. The key words here are “if all goes well”. As everyone knows GLP-1’s are the latest class of diabetes drugs to come under attack by so-called diabetes researchers who are claiming that use of a GLP-1 causes pancreatic cancer. While Diabetic Investor believes their “evidence” is far from compelling the issue is being investigated and like the Avandia controversy that preceded this issue with GLP-1 it’s unlikely a clear answer will emerge from this debate over GLP-1’s.

Even if it’s determined there isn’t enough scientific evidence to state that use of a GLP-1 cause’s pancreatic cancer, this class unfortunately is already tainted in the eyes of many patients and physicians. As we have stated previously this is an issue where reasonable people would agree to disagree, however the anti-GLP-1 zealots are far from reasonable and no matter what the outcome of the debate this will not be the last we hear from them. The only outcome which will satisfy this group is to see GLP-1’s and DPP4’s withdrawn from the market, even if that means millions of patients will suffer from poorly controlled diabetes.

Given this set of circumstances Diabetic Investor wonders why Novo made this decision to reposition Victoza as a treatment for obesity or at minimum why they made this decision public. Diabetic Investor suspects that no matter what the outcome with the GLP-1 debate, the debate will result in even stricter scrutiny by the FDA for any GLP-1 related drug. This is exactly what happened after the Avandia controversy and there is nothing to make Diabetic Investor believe that history will not repeat itself. So as much as Novo would like to see Victoza be repositioned as a treatment for obesity and be on the market by 2015, circumstances indicate this timeline to be somewhat optimistic.

Perhaps this is Novo’s way of diverting investor attention away from the troubles their having getting Tresiba® approved or the fact that their main money maker NovoLog is about to face generic competition. While it’s true that should they be successful the obesity market, excuse the pun, is as huge as the diabetes market. It is also true that like the diabetes market they would face stiff and increasing competition. This decision makes Diabetic Investor believe the company is struggling to come to grips with what to do next. They see the diabetes market changing, not for the better and realize that a drug they had counted on may never make its way onto the market. With a rather lackluster pipeline of new diabetes drugs they likely figured they could make investor believe there is reason for hope.

Finally we don’t necessarily believe the company is making a major mistake here, and as noted earlier the market for obesity drugs is large and getting larger. However, the real question here is one of timing. Why make this public now especially since GLP-1’s have come under attack. Why not proceed with the program, allow the GLP-1 controversy to blow over and then come out with guns blazing.  It’s a mystery to Diabetic Investor and seems to indicate that Novo is running a little scared.