FDA rejects Novo Nordisk insulin remedy

Novo Nordisk lost DKr80bn from its stock market value after the Danish drugs company failed to win US regulatory approval for a new long-lasting insulin.

Shares in the group – the biggest in the Nordic region by market capitalisation – dropped by 13 per cent on the news that the US Food and Drug Administration had asked for more tests into potential health risks in Tresiba, touted by Novo as one of the longest-lasting insulins in the world.

The move could delay approval of the drug by several years and dented investors’ expectations for the company’s future earnings even as it reaffirmed its financial targets for this year.

Novo has seen its share price more than triple in the past five years as it has exploited its position as the world’s largest seller of insulin.

The share price rise has catapulted Novo ahead of Statoil as the Nordic region’s most valuable company.

Tresiba and a related product Ryzodeg have been hailed by the company as being ultra long-lasting, a key benefit for diabetes sufferers who have hitherto had to inject themselves frequently.

The failure to win approval means that Novo’s leading position in insulin is increasingly under pressure from France’s Sanofi and Eli Lilly of the US.

Sanofi has the best-selling long-lasting insulin on the market, Lantus, but Novo claims that Tresiba works for longer and allows sufferers to inject it under a less strict timetable.

The rejection by the FDA was unexpected after an advisory panel to the US regulator approved the drug – also known as degludec – in November.

Regulators in Europe and Japan have also approved Tresiba, but the US is the world’s biggest market for drugs.

Novo said it would be unable to provide fresh data to the FDA this year on the heart risk.

Lars Rebien Sørensen, chief executive, said: “It is quite clearly not good news for US diabetics who do not have the opportunity to take Tresiba and Ryzodeg. Clearly it is also not good news for Novo Nordisk, and it is not good news for Novo’s shareholders.”

Novo has recorded 40 consecutive quarters of double-digit sales growth, becoming an investor darling because of its ability to beat profit expectations as well as increase its returns to shareholders.

It has benefited from a huge rise in obesity-related diabetes around the world, with the number of people with the disease expected to rise by 50 per cent in the next 20 years.

But analysts said its reputation had taken a knock with the FDA rejection. Forecasts for when Tresiba might come to the market in the US range from 2015 to 2018.

The shares closed down 13.2 per cent at DKr928.50.