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NVO Candidate Gets Positive Opinion


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The US Food and Drug Administration’s (FDA) Endocrinologic and Metabolic Drugs Advisory Committee recently issued a positive opinion on the New Drug Applications (NDA) for Novo Nordisk’s (NVO - Analyst Report) insulin degludec and insulin degludec/insulin aspart. Insulin degludec is a next-generation, once-daily basal insulin, for the treatment of type I and type II diabetes.

The committee was unanimously in favor of a cardiovascular outcomes trial being conducted. The committee voted 8-4 in favor of granting approval to the candidates with a commitment to conduct a post-approval outcomes trial.

Novo Nordisk mentioned in its press release that the FDA has not yet informed when the review process of these candidates will be completed. Although the FDA is not bound to follow the advisory committee’s opinion, the US regulatory body generally does so.

We note that in October this year, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) also recommended the approval of Novo Nordisk’s insulin degludec (Tresiba) and insulin degludec/insulin aspart (Ryzodeg) in the European Union (EU). A final decision on the approval of the candidates is expected from the European Commission by year end.

While the candidates are under review in the EU and the US, they were approved by the Japanese Ministry of Health, Labour and Welfare (MHLW) in September 2012. The Japanese approval marked the first approval for Tresiba. The candidate is also under regulatory review in several countries including Switzerland, Canada, South Africa, India, Australia, Brazil, Mexico and Russia.

Our Recommendation

Even though Novo Nordisk has a robust portfolio of modern insulin analogues, which includes NovoRapid, NovoMix and Levemir, it is heavily reliant on the approval of Tresiba and Ryzodeg for long-term growth. Currently, one of the most commonly prescribed insulins is Sanofi's (SNY - Analyst Report) Lantus (insulin glargine).

We have an Outperform recommendation on Denmark-based Novo Nordisk. The stock carries a Zacks #1 Rank (Strong Buy rating) in the short term. We expect investor focus to remain on the regulatory process of insulin degludec and insulin degludec/insulin aspart.

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