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Novo Nordisk Focuses on Pipeline Development Amid Competition

Zacks Equity Research

Novo Nordisk A/S NVO has a strong presence in the Diabetes care market, with a global value market share of 28.3%. The company has one of the broadest diabetes portfolios in the industry. A solid performance from Tresiba, Victoza, Ozempic, Xultophy and Saxenda drove sales in the first half of 2019.

Novo Nordisk’s top line is driven by a strong performance of products such as Victoza (liraglutide). The company continues to be the global market leader in the GLP-1 segment, with a 46.4% value market share. Going forward, we expect Victoza to continue being a significant contributor to the company’s top line.

 We are encouraged by the company’s efforts to develop new treatments for diabetes, which is its core area of expertise.

In September, the FDA approved semaglutide in tablet form, which will be marketed under the brand name Rybelsus. It is approved as an adjunct to diet and exercise to improve glycemic control in adults with type II diabetes mellitus.

Rybelsus is the first approved glucagon-like peptide-1 (GLP-1) receptor agonist in a tablet. The FDA approval was supported by results from 10 PIONEER studies, which included 9,543 adults with type II diabetes. Rybelsus more effectively lowered blood sugar than Januvia and Jardiance. Furthermore, treatment with the drug resulted in up to 4.4 kg reduction in body weight.

Rybelsus is also under review by several regulatory agencies, including the European Medicines Agency, and the Japanese Pharmaceuticals and Medical Devices Agency.

The company’s efforts to diversify its portfolio are encouraging as well.

In February, the FDA approved the company’s biologics license application (BLA) for Esperoct (turoctocog alfa pegol, N8-GP) regarding the treatment of hemophilia A in adult patients and children. The drug is approved for the routine prophylactic to reduce the frequency of bleeding episodes, on-demand treatment and control of bleeding episodes plus perioperative management of bleeding in the given patient population. Per the company, due to third-party intellectual property (IP) agreements, it will not be able to launch the drug before 2020 in the United States.

In July, the European Commission granted marketing authorization to Esperoct for the treatment of adolescents (≥12 years of age) and adults with hemophilia A. The authorization covers all 28 European Union member states.

In March, Novo Nordisk and Gilead Sciences, Inc. GILD announced a collaboration to develop treatments for non-alcoholic steatohepatitis (NASH). The companies will initiate a proof-of-concept study combining Novo Nordisk's semaglutide (GLP-1 analogue) and Gilead's cilofexor (FXR agonist) and firsocostat (ACC inhibitor) for the treatment of NASH.

Novo Nordisk also has other candidates in development like concizumab (NN7415) to treat patients with hemophilia A and  somapacitan (NN8640) for treatment of growth hormone deficiency.

However, it is going through a rough patch with several drugs in its portfolio losing patent protection. The company is also facing pricing pressure for some of its drugs.

Moreover, the diabetes market is already crowded with several drugs. Merck’s MRK Januvia and Janumet (type II diabetes), Eli Lilly’s LLY Trulicity (type II diabetes), and Sanofi’s Toujeo (type I and II diabetes) are already approved for the same.

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