This DJ story has some info about PFE's inhaled insulin and its competition:
Europe Stock Focus: Novo Nordisk To Stay Pressured
July 29, 1998 2:32 AM
By Xueling Lin
COPENHAGEN (Dow Jones)--Worries about the
weak yen, tough competition and profit-taking after a
strong run at the start of the year have combined to
batter the stock of Novo Nordisk A/S (NVO) in recent
weeks.
Although analysts say Denmark's biggest pharmaceutical
company is worth holding at current prices, pressure on
the stock isn't likely to ease in the near term.
"It's an excellent company, with sustainable franchises
and extremely well-run," said Vikram Sahu, an analyst
with Credit Suisse First Boston in London. But the stock
needs to adjust after its sharp rise early in the year,
which was a case of the "valuation getting ahead of the
company."
On Tuesday, Novo's stock finished flat at 885 Danish
kroner (DKK). Since the start of the year, Novo's stock
has seesawed, shooOn Tueinanksday,He puts Novo's
earnings per-share growth .
ck verage of 20% a year for the coming three years,
outstrFipined n estimated industry verage of 15%. ay,
Enthusiasm Over Prandin Falters
But in the near-term, the stock still has to factor out the
"misplaced enthusiasm" - as one analyst termed the spurt
earlier this year - about newly touted products: Prandin,
an oral insulin treatment and levormeloxifene, a treatment
for preventing and helping osteoporosis.
Novo's main line of business has traditionally been insulin
for the treatment of diabetes and investors hopes were
raised at the end of last year when the U.S. Food and
Drug Administration approved Novo's Prandin, a tablet
insulin treatment aimed at Type 2 diabetics.
Type 2 diabetes, prevalent among older people and
often accompanied by obesity, afflicts about 120 million
people worldwide. The number of cases is growing
about 5% a year.
Some investors initially saw optimistic parallels between
U.S.-based Warner-Lambert Co.'s (WLA) successful
Rezulin product and Novo's new insulin treatment. But
three months after its launch in the U.S. Prandin hasn't
lived up to hopes.
"Prandin's disappointment stems from the fact that it is
an advanced, premium-priced product in the old
sulphonylurea drug class," said Mark Purcell, analyst
with Deutsche Bank in London.
The longer-term outlook for the drug is positive, though.
One Copenhagen-based analyst said Prandin's slow
start in the U.S. market was due more to marketing
hiccups than price or performance problems. "It will
take about two years for sales to really get going but it
should be fine after that."
Investors also had their eye on levormeloxifene, a new
treatment for osteoporosis, which Novo has called the
most promising compound in its research and
development pipeline.
However, once again, analysts say market enthusiasm
may have been a bit premature. Rival pharmaceutical
company Eli Lilly & Co. (LLY) already has an
osteoporosis treatment, Evista, which is similar to
levormeloxifene.
"Phase II (testing) data suggests that levormeloxifene has
a more profound impact on bone mass density than
Evista," Deutsche Bank's Purcell noted. However, he
questioned why Novo wasn't pursuing any additional
uses outside osteoporosis such as breast cancer
prevention. "Further uses are certainly required if
levormeloxifene is to gain a 'lifestyle' use and potential
blockbuster status."
Weak Yen Worries Takes A Toll
External factors also have played a role in Novo's
share-price decline, with yen weakness taking a toll
because of the company's heavy exposure to the
Japanese market. Last year, Novo earned 17% of its
revenue in Japan.
Novo supplies about 79% of Japan's insulin market and
investors have been dismayed by the yen's lurching
weaker in recent months and worries about political
wavering in carrying out reforms to revive Japan's
flagging economy.
"Currency is clearly something which people are
focusing on," said a stock dealer with a Copenhagen
bank.
Looking ahead, analyst warn the pressure on Novo isn't
going to let up. One of the challenges is coming from
Pfizer Inc. (PFE), which is carrying out trials together
with Inhale Therapeutica Systems (INHL) for inhaled
insulin. So far, testing seems to show the inhaled insulin
gave blood glucose control and dose-to-dose
reproducibility comparable to injected insulin in the
treatment of diabetes.
Novo, which had been looking into inhaled insulin but
had put the idea on ice for a period, revived its efforts
earlier this year when it signed a global agreement with
Aradigm Corp. (ARDM) to jointly develop an inhaled
insulin delivery system.
Novo paid $9 million up front, which included the
purchase of $5 million of Aradigm stock, and in the
future Aradigm could receive up to a total of $50 million
through milestone payments and equity investments.
However, analysts say Novo will still be bringing up the
rear since Aradigm's research is probably a year behind
Pfizer in the inhaled insulin race.
Novo Corporate Snapshot
Denmark-based Novo Nordisk is a leading global
producer of insulin, used for the treatment of diabetes,
and industrial enzymes. Headquarters for Novo Nordisk
is in Copenhagen, Denmark, with manufacturing facilities
in nine countries and major production plants in
Denmark, the U.S. and Japan. Headquarters: Novo
Alle, 2880 Bagsvaerd.
Significant developments:
Novo changed the trading unit of its B class shares to 10
kroner from 20 kroner at the start of 1997.
Novo received a recommendation of approval from a
Food and Drug Administration panel in November 1997
to use its oral medication Prandin in treating type II
diabetes.
Novo sold the marketing rights in the Nordic region for
its anti-depressant drug, Seroxat, to SmithKline
Beecham in April, 1998. Novo reached an out-of-court
settlement with Genentech Inc. in June 1998 over a
human growth hormone and insulin patents dispute.
Mads Oevlisen is chief executive officer.
Latest profit forecast (May 13, 1998): Novo expects to
live up to its objective of an increase in operating income
of at least 15% during 1998. Also, earnings in the
second half of the year are expected to exceed earnings
in the first half. Novo's second quarter result is expected
Aug. 12.
All figures are in Danish kroner.
3-Mos 3-Mos Year Year
ended ended ended ended
31/03/98 31/03/97 12/31/97 12/31/96
Pretax Pft 882 mln 569 mln 3.162 bln 2.521 bln
Op Profit 847 mln 546 mln 3.055 bln 2.386 bln
Sales 4.19 bln 3.66 bln 16.932 bln 14.873 bln
EPS 7.82 4.90 29.48 23.98
Annual Div. n.a. n.a. 5.75 3.75
Currency History (dlr Vs. danish krone)
31/03/98 31/03/97 12/31/97 12/31/96
Copenhagen 7.0415 6.5525 6.8267 5.9435
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