Diabetes market giant Novo Nordisk ($NVO) surprised investors today with second-quarter earnings that came in above expectations, and the news that it plans to report critical clinical trial data on its long-acting insulin treatment, Tresiba, in mid-2015--6 months sooner than expected. That should set the drug up for a 2016 approval by the FDA, which demanded the extra data last year to quell concerns about cardiovascular risks.
Novo's net income jumped nearly 4% from the same period a year ago to 6.99 billion Danish crowns ($1.25 billion), on sales that edged up 1% to 21.6 billion crowns ($3.87 billion). Analysts had expected earnings to come in at 6.88 billion crowns, according to Bloomberg. Sales of the company's GLP-1 drug Victoza jumped 6.3% to 3.06 billion crowns ($549 million), while revenues from modern insulins grew 7.5% to 10.4 billion crowns ($1.86 billion).
Not bad, considering the challenges Novo is facing in the U.S., its largest market. The company is struggling to make up for sales lost to generic competition. And last year, it lost two contracts with Express Scripts ($ESRX), which stopped covering Victoza and the modern insulin product NovoLog (sold as NovoRapid in the U.S.). Express Scripts' decision caused Novo to lose access to more than 40 million patients, and some analysts speculated that as much as 20% of Victoza's U.S. sales would be at risk.
That's one reason analysts are counting on a U.S. approval for Tresiba. Michael Friis Jørgensen of Alm Brand was one of the analysts who was pleasantly surprised by the quicker timetable for the drug. "It looks like there are no problems with the study, so it is a very positive signal," he told Reuters.
In Novo's earnings release, CEO Lars Rebien Sørensen declared he was "satisfied" with second-quarter results in what he called "a challenging first half of 2014." And he did point to one recent victory: In July, a committee of European Medicines Agency advisers recommended approval of Novo's Xultophy--a combination of Tresiba and Victoza--a milestone that Sørensen reminded investors could make Novo the first to bring such a combo product to market.
Novo's challenges have slowed its revenue growth, but not enough to turn off investors. Even before the positive second-quarter earnings announcement, the company's shares had advanced 27% this year, giving it a market cap of $120 billion and pushing its valuation well past that of GlaxoSmithKline ($GSK).
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