With Scrutiny of Insulin Drugmakers, Is Novo Nordisk a Buy for 2020 Investors?
The last three months have been good ones for investors in the pharmaceutical and biotech markets and with a new year upon us, some analysts are already picking potential winners in the market for 2020. One of those companies could be Denmark-based Novo Nordisk.
Over the last 12 months, shares of the Danish drugmaker have steadily increased by 24% to today’s price of $57.68, as of 10:04 a.m. Novo Nordisk is one of the biggest manufacturers of diabetes drugs and insulin in the world. While insulin manufacturers, including Eli Lilly and Sanofi, are under fire by lawmakers in the United States due to the high prices, one analyst has pegged the company as a buy in 2020, especially with the approval of Rybelsus, an oral-semaglutide. In September, the U.S. Food and Drug Administration approved Rybelsus, a once-daily glucagon-like peptide-1 (GLP-1) receptor agonist, approved for type 2 diabetes. Writing in The Motley Fool, analyst Prosper Junior Bakiny said “the addressable market” for Rybelsus “makes its prospects mouth-watering.”
The FDA is continuing to review Rybelsus for another indication to reduce the risk of major adverse cardiovascular events (MACE) such as heart attack, stroke, or cardiovascular death in adults with type 2 diabetes and established cardiovascular disease. Novo Nordisk said it anticipates a decision on that indication in the first quarter of 2020.
“Thus, sales of Novo Nordisk's GLP-1 drugs will likely continue leading its revenue on an upward trajectory, and the company's shares could continue climbing in 2020,” Bakiny said after rating the company a “buy” for 2020.
Not only did the FDA approve Rybelsus, in October, the regulatory agency also expanded the label for Novo Nordisk’s Fiasp (insulin aspart injection) to include use in insulin infusion pumps for the improvement of glycemic control in adults with type 1 or type 2 diabetes. Fiasp, a rapid-acting insulin, was first approved by the FDA in 2017 for use by intravenous infusion under supervision by a healthcare professional or by subcutaneous multiple daily injections in adults with diabetes.
In addition to the approval of Rybelsus and the expanded label for Fiasp. Novo Nordisk has spent the past several months forging collaborations with various companies as it looks to expand its pipeline in new directions. In October, the company entered into an R&D deal with bluebird bio to develop next-generation genome editing therapies for genetic diseases, including hemophilia. The initial focus of the three-year deal will be on correcting FVIII-clotting factor deficiency. Then, in November, Novo Nordisk partnered with Dicerna Pharmaceuticals to discover and develop therapies for liver-related cardio-metabolic diseases. The two companies will leverage Dicerna’s GalXC RNAi technology platform to explore more than 30 liver cell targets. The indications for the R&D pact are broad, including chronic liver disease, non-alcoholic steatohepatitis, type 2 diabetes, obesity, and rare diseases.