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Weekly Biotech Report Covering Novo Nordisk A/S (NYSE:NVO)

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The final week of May saw a flurry of activity – and inactivity in one case – from the FDA for 7 different companies. Most of these companies have been covered in previous Market Exclusive Weekly Biotech Reports. Here we will review what happened last week, the market’s reactions and trading strategies from here in light of those reactions.

Novo Nordisk A/S (NYSE:NVO)

On May 24th, an FDA panel unanimously recommended iDegLira for approval, Novo Nordisk’s combination insulin degludec with liraglutide for the management of blood sugar levels in diabetics. Steve Jobs is surely rolling his eyes somewhere in iHeaven for Novo’s blatant rip-off of Apple’s signature marketing techniques. iDegLira until recently was called Xultophy until the marketing team figured that if it started with a lowercase i, it may get more attention. iDegLira was still a shoe-in for approval so there is no surprise here. In a previous report we went into detail about the science and data behind iDegLira.

Both drugs that comprise iDegLira are already approved in the United States. The combination is just a more convenient way of dosing.

As a refresher, liraglutide is a glucose-dependent stimulant for beta cells in the pancreas that produce insulin. It is not insulin itself but stimulates its production and also slows gastric emptying, making patients feel fuller for longer so they generally eat less. Insulin degludec is insulin with an acid chain link on the end that links it with other molecules and dissolves slowly. For some diabetics, liraglutide is enough. For others, both insulin and liraglutide are needed to control blood sugar.

On approval, Novo Nordisk A/S (NYSE:NVO) jumped up a bit but the jump was not sustained. This is essentially what we said would happen in our previous report on the company:

Don’t expect too much reaction from a positive FDA panel review of Xultophy. It is pretty much expected, and there is little reason for the FDA to reject the drug…A positive review could give shares a small bump higher, but after that the market will continue doing what it was doing before.

The company will probably just continue to move along with the rest of the biotech sector. An approval will help with customer retention, but won’t add much to its top line on net if anything. If one of its competitors has a combination drug but Novo did not, it would have been a problem. Fortunately, Novo can now keep up with competition in the insulin space. The stock is a long term buy for a biotech portfolio at this point. Speaking of competition, read our weekly report covering Sanofi’s FDA approval of iGlarLixi here. 

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