Monday, February 11, 2013

Seeking Alpha: The FDA Throws Novo Nordisk Off Course

When I wrote on Novo Nordisk's (NVO) earnings and near-term outlook last week (Can Anything Stop Novo Nordisk?), the biggest near-term risk I cited (apart from the valuation) was the possibility that the FDA could reject the company's new drugs Tresiba and Ryzodeg and demand a pre-approval cardiovascular outcomes study (CVOT). This risk has come home to roost, as the FDA did indeed reject the drugs and cited both the lack of a CVOT and a warning letter as the reasons.

As of this writing, Novo Nordisk shares have sold off sharply on this disappointment. While the rejection of Tresiba likely doesn't significantly change Novo Nordisk's long-term earnings potential, it does alter the timing and the resulting fair value today. This setback could certainly represent one of those rare opportunities to acquire shares at a more reasonable price, but investors should note that a lot of unknowns remain and the indicated pre-market price as of this writing doesn't yet make these shares a bargain.

Please read more here:
The FDA Throws Novo Nordisk Off Course

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