AMLN Amylin Pharmaceuticals, Inc. (MM)

Novo Nordisk (NVO) recently announced that it is planning to initiate a phase III global development program, SUSTAIN, for its type II diabetes candidate, semaglutide. Novo Nordisk expects to begin the first phase III study in this program in the first half of 2013. More than 8,000 patients are expected to be enrolled in the SUSTAIN studies.

Semaglutide is a once-weekly human glucagon-like peptide-1 (GLP-1) analogue. Before moving the candidate into late-stage studies, the company decided to conduct phase I trials comparing semaglutide with a once-weekly formulation of Victoza (liraglutide). This trial was conducted to assess and select the better candidate for phase III.

In the phase I trials, while once-weekly Victoza demonstrated a better safety profile, semaglutide was found to be more promising for once-weekly dosing. As a result, Novo Nordisk has decided to develop semaglutide further and harbors no plans to advance the once-weekly formulation of Victoza.

We note that Victoza is a once-daily human GLP-1 analogue approved for improving blood sugar (glucose) levels in adult type II diabetes patients along with lifestyle management.

We note that the GLP-1 market is getting pretty crowded. Existing products beside Victoza include Amylin’s (AMLN) Bydureon and Byetta. Moreover, several GLP-1 candidates are in late-stage development stage like GlaxoSmithKline’s (GSK) albiglutide and Sanofi’s (SNY) Lyxumia.

Our Recommendation

We have a Neutral recommendation on Novo Nordisk. The stock carries a Zacks #3 Rank (Hold rating) in the short term.

So far, we are impressed by the performance of Victoza, which is doing well both in the US and Europe. Moreover, we believe that the next-generation insulin analogues, Tresiba and Ryzodeg, hold significant potential for long-term growth at Novo Nordisk. Though we are encouraged by data from the Tresiba trials, we prefer to remain on the sidelines until Tresiba and Ryzodeg gain approval.
 

 
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