Novo Nordisk (NVO) recently announced approval of its leading glucagon-like peptide-1 (GLP-1) receptor agonist Victoza, in China, for the treatment of adults suffering from type II diabetes. The drug is expected to be launched in China in the second half of 2011.
Victoza, which was introduced in early 2010, is already marketed in the US, EU and Japan. It has been generating strong revenues since launch and is expected to be the key growth driver for Novo Nordisk, going forward. The approval in China will further accelerate sales of the drug as diabetes is a growing disease in that country.
Since Victoza’s launch, the GLP-1 market has expanded, both in terms of volume and value. Victoza’s market share of monthly GLP-1 prescription is more than 40%. It is also taking more than 65% of the new GLP-1 patient market share.
Novo Nordisk received a major boost recently when Amylin Pharmaceuticals (AMLN) released disappointing data on its diabetes pipeline candidate Bydureon (exenatide once-weekly) from a head-to-head study. Bydureon failed to achieve its primary endpoint of non-inferiority in the DURATION-6 study, which compared Bydureon with Victoza. Bydureon is being developed by Amylin in partnership with Eli Lilly and Company (LLY) and Alkermes Inc. (ALKS).
Novo Nordisk sales reps should be able to use the DURATION-6 results to promote Victoza. Victoza already has a significant head start over Bydureon. Victoza sales came in at DKK 2,317 million (approximately $432 million) in 2010.
Given Bydureon’s failure to demonstrate non-inferiority to Victoza, Bydureon will find it challenging to take share from Victoza, once launched.
In December 2010, the Victoza label was updated to include data from the LEAD 6 study, which demonstrated that once daily Victoza led to a significant lowering of HbA1c (a measure of blood glucose) versus twice daily administration of Amylin’s Byetta. The enhanced label is expected to further enhance Victoza sales.
Our Recommendation
We currently have a Neutral recommendation on Novo Nordisk, which is supported by a Zacks #3 Rank (short-term “Hold” recommendation). We are impressed by Victoza’s performance so far. Moreover, we believe that the diabetes pipeline candidates, Degludec and DegludecPlus, also hold key importance for long-term growth at Novo Nordisk. Though we are encouraged by the phase III data from Degludec trials, we prefer to remain on the sidelines until we get more visibility on the approvability of Degludec and DegludecPlus.
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