Novo Nordisk (NVO - Free Report) recently faced a setback when the US Food and Drug Administration (FDA) declined to approve its diabetes candidates, Tresiba (insulin degludec) and Ryzodeg (insulin degludec/insulin aspart), on the basis of the submitted data.
The FDA issued a complete response letter (CRL) asking Novo Nordisk to conduct a dedicated cardiovascular outcomes study and provide additional cardiovascular data.
Moreover, the FDA said that it will not grant approval to these candidates until the company resolves the issues mentioned in a warning letter given by the FDA in Dec 2012. The warning letter specified violations of current good manufacturing practice (CGMP) regulations for finished pharmaceuticals at the company’s Novo Alle, Bagsvaerd Denmark facility.
Meanwhile, we note that both Tresiba and Ryzodeg are approved in Japan, the EU and Mexico. In the EU, Novo Nordisk is planning to launch Tresiba first and Ryzodeg a year later. Tresiba and Ryzodeg will be available in Novo Nordisk’s latest prefilled insulin pen named FlexTouch in Europe. Tresiba will initially be launched in the UK and Denmark in the first half of 2013 and in other European markets throughout 2013 and 2014.
We are discouraged by the CRL issued by the FDA. Considering Novo Nordisk’s statement that it will not be in a position to provide the required data in 2013, we expect a significant delay in the US approval of Tresiba and Ryzodeg. The US approval of Tresiba and Ryzodeg would have strengthened Novo Nordisk’s diabetes franchise. We expect shares to react negatively to the news.
Novo Nordisk currently carries a Zacks Rank #1 (Strong Buy). Other large-cap pharma companies like Sanofi (SNY - Free Report) , Bayer AG (BAYRY - Free Report) and Eli Lilly and Company (LLY - Free Report) also look well-positioned. All three companies are Zacks Rank #2 (Buy) stocks.