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How Tresiba and Xultophy Will Drive Novo’s Performance

Jillian Dabney

Novo Nordisk Stock Fell 6% after 4Q15 Earnings Release

(Continued from Prior Part)

New generation performance

New generation insulin sales for Novo (NVO) came in a 1.4 billion kroner for fiscal 2015, up by 118.5%. This figure includes sale of Tresiba, Xultophy, and Ryzodeg.

Novo launched Tresiba in the US in January 2016. The product is currently available in 39 countries. Xultophy, which is a combination of Tresiba and Victoza, is available in Switzerland, Germany, the UK, and Sweden. Novo is expecting the Food and Drug Administration (or FDA) response to Xultophy’s New Drug Application (or NDA) in 3Q16. Ryzodeg is available in Mexico, India, and Japan.

The graph above presents new generation insulin sales for Novo. For the fourth quarter of fiscal 2015, new generation insulin earned 461 million kroner, 23% up from sales of 376 million kroner in the previous quarter.

Performance of Tresiba and Xultophy

In commercial markets, Novo has achieved planned formulary access to Tresiba. With unsuccessful pricing negotiations with German authorities, the company has ceased Tresiba distribution in the country. The reimbursement rate offered for Tresiba is at a similar level to insulin glargine. Tresiba competes with GlaxoSmithKline’s (GSK)  Tanzeum , Sanofi’s (SNY) Toujeo and Lantus, and Eli Lilly’s (LLY) Basalgar.

The graph above highlights the robust growth opportunities available for Novo’s new generation insulin. Novo is conducting SWITCH 2 blinded phase 3b trials on patients with type 2 diabetes. Tresiba has been found to be effective in achieving lower hypoglycemia rates in subjects in comparison with insulin glargine.

It is often risky to directly invest in a pharma or biotech company, as any news release about the success or failure of a drug can result in stock price volatility. Thus, to remain on a comparatively safer side, investors can choose to invest in the PowerShares International Dividend Achievers Portfolio (PID). The fund holds ~0.49% in Novo Nordisk.

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