AMLN Amylin Pharmaceuticals, Inc. (MM)

Recently, Novo Nordisk (NVO) presented data from late stage trials, which showed that its ultra-long acting insulin Degludec lowered blood glucose levels with significantly reduced risk of hypoglycemia (low blood sugar) versus Sanofi Aventis’(SNY) Lantus in patients with type II diabetes.

Novo Nordisk presented data from two, late stage, 52-week clinical trials, one in patients with type I and the other in victims of type II diabetes. These data were presented at the American Diabetes Association.

Degludec particularly reduced nocturnal hypoglycemia (night-time episodes of excessively low blood sugar) versus Lantus in patients with type I or type II diabetes. Nocturnal hypoglycemia is highly feared by diabetics, and hence a reduced threat of it represents a real commercial edge for Degludec. Apart from the two studies, Novo Nordisk also presented data from a 26-week study, which revealed that Degludec can be given at different times of the day in patients with type II diabetes.

Degludec is Novo Nordisk’s most important pipeline product in addition to DegludecPlus. Degludec (also known as NN 1250) and DegludecPlus (also known as NN 5401) are next-generation insulin analogues. Degludec is an ultra long-acting basal insulin and DegludecPlus is a fixed ratio combination of Degludec and NovoRapid.

Novo has conducted a large late stage, clinical program with Degludec and DegludecPlus consisting of 17 separate trials. The program included 12 trials under the BEGIN program (Degludec) and 5 under the BOOST program (DegludecPlus). All the 17 trials have now been completed and data from the trials, which studied more than 10,000 type 1 and type II diabetes patients, confirmed the safety, efficacy and convenience of both the pipeline candidates. The company expects to file applications for marketing authorization of the candidates in both US and EU in the second half of 2011.

Our Recommendation

We currently have a Neutral recommendation on Novo Nordisk. The stock carries a Zacks #3 Rank (short-term “Hold” recommendation). Novo Nordisk holds an impressive market share of the global insulin market by volume. We are impressed by Novo Nordisk’s biggest drug Victoza’s performance thus far. Victoza is doing well both in the US and Europe. Moreover, we believe that the diabetes pipeline candidates, Degludec and DegludecPlus, also hold significant importance for long-term growth at Novo Nordisk. We are encouraged by the positive data from Degludec trials that will ensure the approval of the candidates.

However, the impending competition from Bydureon, which has been co-developed by Amylin Pharmaceuticals (AMLN), Eli Lilly and Company (LLY) and Alkermes Inc. (ALKS), concerns us. We prefer to remain on the sidelines until we get better visibility on the performance of Bydureon on launch and its subsequent impact on Victoza sales.

 
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