The new diabetes drug Tresiba is supposed to be Novo Nordisk's ($NVO) next big growth engine. In fact, it was supposed to be revving up sales even now. But in February, the FDA threw a wrench in the works by refusing to approve Tresiba and its sister drug Ryzodeg without more safety data.
Big news for investors who'd been fed Tresiba-fueled growth projections. But Novo waited two days to reveal that info to the public--and Danish authorities aren't happy about that. Securities regulators have called in law enforcement to investigate, the Financial Times reports.
Here's what the Danish Financial Supervisory Authority found: Novo received the bad news from the FDA on the evening of Friday, Feb. 8, but waited till Sunday, Feb. 10, to disclose it. On Feb. 11, the first trading day after the news broke, Novo's European shares plummeted by 13%.
Novo figured that was fast enough then and maintains so now. "Novo Nordisk is of the opinion that the company announcement was issued in a timely manner, but acknowledges the decision of the Danish Financial Supervisory Authority and will cooperate with the relevant authorities in their investigation," the company said in a statement.
In any case, Novo says, it should have been allowed time to digest the FDA's refusal before sharing it publicly. The drugmaker was caught a bit flat-footed by the agency's decision; it had already recruited new sales reps to help with the U.S. launch. Tresiba was widely expected to win approval, and though the FDA had previously said it would weigh new diabetes drugs with a more critical eye on cardiovascular safety, the agency hadn't yet put that promise into practice by requiring additional studies. Plus, an FDA advisory panel had backed the drug for approval.
According to Reuters, Novo's U.S. operation was notified by the FDA at about 5 p.m. Danish time, just as the market in Copenhagen was closing. It was "some hours" later when the news was handed up to headquarters. Between 9 p.m. and 10 p.m. in Copenhagen that night, Novo had a conference call to discuss the decision. At that point, the local markets were long closed, but over-the-counter trades were still possible--and the U.S. market, where Novo's American depository receipts are traded, was still open, Reuters says.
Since the news broke, Novo has been working with the FDA to design a new clinical trial that can answer the agency's questions about Tresiba's effects on the heart. When the company announced third-quarter results, executives said the agency had cleared the trial to begin, and the company had started recruiting patients.
Regulators in Europe and Japan have approved Tresiba. But the rollout in the EU will be slow because Tresiba will need reimbursement approval from individual countries. The U.S. is the market Novo needs to really build Tresiba sales--and with the trial now underway, the drugmaker is one step closer. But best case, a U.S. nod is several years away.
Worse, Novo's fast-growing Victoza has slowed a bit, and it lost out on a U.S. pharmacy contract for 2014, which could cut significantly into next year's sales. The company is hoping that a new weight-loss use can help jump-start Victoza--and help make up for Tresiba's delay--but the FDA has to give its blessing first.
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