When can a drugmaker beat earnings expectations and project a 10% boost in profits for the year and still end up disappointing investors? When that drugmaker is Novo Nordisk ($NVO), the world's largest insulin maker, focused on a rapidly growing treatment area with investors expecting more, more, more.
The Denmark-based company today handed investors a 28% bump in first-quarter profits as it rode better-than-expected sales of both its insulin products and its diabetes treatment Victoza. Its net income was 5.98 billion kroner ($1.1 billion), Bloomberg reported. Yet in mid-morning trading in the U.S., shares were off 1.25%.
Earlier this year, CEO Lars Sorensen was talking of his plans to build Novo Nordisk into one of the world's biggest drugmakers. But a pall has fallen over the company since February, when the FDA asked for more risk data of its breakthrough long-acting insulin, Tresiba. Investors believe Tresiba has a chance of taking on the Sanofi ($SNY) juggernaut, Lantus. That mega-blockbuster raked in $6.7 billion in sales last year. Tresiba is already approved in Europe, the U.K. and Japan, but nearly half its forecast sales of $2.8 billion a year by 2017 were expected from the U.S., Reuters reported. Novo yesterday said not to expect new trials to approval before 2018.
But if U.S. sales of Tresiba are factored out of the picture, and they have to be, then Novo's earnings are looking strong. Its profits were powered by a 14% jump in sales of Levemir and its other so-called modern insulins, as well as a 35% pop on sales of Victoza, to DKK2.6 billion ($460 million).
Victoza, which stimulates natural insulin, has also run into some issues with the FDA, however. The agency in March included it on a watch list for links to pancreatic cancer. Novo has said it stands behind the safety of Victoza, a drug that competes in the market with Byetta and Bydureon, daily and twice-weekly injected drugs made by Bristol-Myers Squibb ($BMY).