Novo Reports

Novo Reports

While Novo Nordisk (NYSE:NVO) may not be
the unstoppable diabetes juggernaut it once was the company remains a
formidable force in diabetes. With today’s third quarter earnings release Novo continues
to hold their global leadership position in the insulin market. While Lilly
(NYSE:LLY) has stabilized their insulin franchise preventing further share erosion,
Novo today showed just how dominate the company has become with their full line
of insulin products.

As strong as their insulin franchise is the
future for Novo rests on the shoulders of Victoza® and how well the company can
do penetrating the growing market for new therapies targeted at patients with
type 2 diabetes. As expected during this morning’s Q&A session there were
several questions on when Victoza would be approved by the FDA and what impact
the drug would have on the company’s bottom line. The company as they did
during the last earnings call reiterated their position that they should have decision
from the FDA sometime during the fourth quarter and that Victoza sales would
not have a material impact on 2010 performance mainly due to costs associated
with launching Victoza once it receives approval.

As Diabetic Investor has previously reported
when Amylin (NASDAQ:AMLN) released their earnings, sources tell Diabetic
Investor that the FDA has basically approved Victoza and that remaining hurdle
comes down to label language. Once this label language is worked out Diabetic
Investor expects Victoza to receive full FDA approval.

While Byetta and Byetta LAR will be Victoza’s
primary competition this morning Roche released updated results for their
long-acting GLP-1 taspoglutide. According to a press release issued by Roche
taspoglutide meet its primary end-point of change in HbA1c in their Phase III
T-emerge 2 clinical trial. Although the company did not specifically state just
how effective taspoglutide was at lowering A1c, this news reinforces Diabetic
Investor’s view that GLP-1 compounds have the potential to change the paradigm
for treating type 2 diabetes.

Looking ahead we’re beginning to see the
emergence of how Novo plans to market Victoza here in the US. Realizing that
Byetta LAR will likely come to market within months of Victoza, the company appears
to be positioning Victoza not just as a treatment for type 2 diabetes but as
diabetes/obesity drug. The company understands that it may be impossible to offset
the fact that Byetta LAR is administered once-weekly while Victoza is administered
once daily. By positioning Victoza as an obesity drug the company at least has
a chance to gain a position in the market.

Diabetic Investor remains firm in our
belief that it will difficult for any company to compete with Byetta LAR.
Victoza is a very solid drug but when it comes to the type 2 market, less
frequent dosing trumps more frequent dosing. Novo learned this when Lantus hit
the market and became the world’s number one selling insulin. Although the
company has done a fine job of marketing their 24 hour insulin Levemir®, Lantus
remains the dominate player in this insulin category. Not wanting to repeat the
mistake made with Levemir, Novo will do whatever they can to keep Victoza
afloat while they continue to develop a longer acting version.

The reality of the situation is Novo sees
what Diabetic Investor sees, in that strength in their insulin franchise will
only take the company so far and that to remain a player in the diabetes drug
market penetrating the type 2 market is where growth will come from. And all
facts point to GLP-1 therapy being the key to this market.