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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