Novo Nordisk 2Q18 – D/O +4% operationally ($3.6B); Growth from Xultophy (+111% YOY to $60M), Ozempic ($31M in first full quarter on market), Saxenda (+29% to $138M); Pooled diabetes therapy classes; Changes to semaglutide CVOT plan – August 8, 2018

Executive Highlights

  • Novo Nordisk’s reported 2Q18 earnings this morning, announcing that diabetes/obesity portfolio sales fell 1% YOY as reported and rose 4% operationally to $3.6 billion, from $3.7 billion in 2Q17. Sequentially, sales climbed 2% as reported, from $3.7 billion in 1Q18 (reflecting the impact of exchange rates). Overall, ex-US markets buoyed a weaker showing in the US. 

  • The company’s GLP-1 products gave a somewhat mixed performance: Victoza fell 1% YOY and 4% sequentially as reported (+6% YOY operationally) to $898 million, reflecting relative stagnation in growth as the company shifts promotional efforts to Ozempic. The next-gen GLP-1 sales of $31 million climbed 183% sequentially in its first full quarter on the market. Obesity therapy Saxenda posted encouraging 29% YOY growth to $138 million on the strength of a quality OUS performance (+181% YOY operationally). Sales of $60 million for GLP-1/basal insulin combo Xultophy rose 111% YOY and 13% sequentially. Together, Ozempic, Saxenda, and Xultophy drove 59% of the growth in Novo Nordisk’s D/O portfolio. Total sales for all liraglutide and semaglutide products were $1.1 billion, a 10% YOY increase over $1 billion in 2Q17 but a 5% sequential drop from $1.2 billion in 1Q18.

  • Pricing pressure continues to impact Novo Nordisk’s insulin products, particularly in the basal category. Next-gen basal Tresiba sales of $306 million fell 11% as reported and 4% operationally (the product’s first-ever YOY decline), and Levemir sales of $474 million declined 16% as reported and 10% operationally. In rapid-acting insulin, Fiasp sales of $21 million grew 65% sequentially, from a very low base of $14 million, driving a meaningful 14% of the growth in Novo Nordisk D/O (albeit for a low total growth overall) and gaining traction in the US. NovoLog revenue, on the other hand, fell 6% YOY as reported (+1% operationally) to $752 million. Total rapid acting insulin sales were $773 million, a 2% sequential decline from $789 million in 1Q18 and a 1% YOY drop from $782 million (Fiasp sales were not reported in 2Q17).

  • In the pipeline, the focus was undeniably on next-gen GLP-1 semaglutide, both in terms of phase 3 results for oral semaglutide and excellent news on revised CVOT plans. As a reminder, oral semaglutide is slated for 2019 regulatory submission (five of 10 phase 3 trials have read out). Notably, in communication with FDA, Novo Nordisk has also decided to conduct one superiority CVOT with oral semaglutide, cancelling the SOUL CVOT for Ozempic; a bridging study will allow this to support CV superiority for both formulations, and the oral semaglutide SOUL will begin in 2019. Pending compelling PIONEER 6 results, it’s possible no additional CVOT will need to be conducted to support a CV indication. Those results are anticipated by year-end, but CSO Dr. Mads Thomsen characterized this as a the best-case scenario given the trial was designed for non-inferiority, and it doesn’t seem like the company necessarily expects superiority. Additionally, two phase 1 obesity candidates (FGF21 and glucagon analogs) have been discontinued in a planned pruning of the company’s obesity pipeline. 

Novo Nordisk provided its 2Q18 update this morning in a call led by CEO Mr. Lars Jørgensen. See the company’s press release, earnings presentation, and roadshow presentation. We continue to be impressed by the company’s financial transparency in terms of showing net profit by division (diabetes had 38%) and product sales per geographic region.

Below, you’ll find a summary of pooled diabetes therapy markets for 2Q18, followed by financial highlights covering Novo Nordisk’s diabetes and obesity products. Rounding things out, we’ve included three highlights on the company’s pipeline, including a comprehensive summary table on Novo Nordisk’s diabetes, obesity, and NASH pipeline. Diabetes-specific Q&A from the call concludes the report.

Pooled Markets Summary for 2Q18 – Entire Market

Therapy Class

Pooled Sales 2Q18 (billions)

YOY Growth

Sequential Growth

Basal insulin




DPP-4 inhibitors




GLP-1 agonists




Rapid-acting insulin




SGLT-2 inhibitors




Basal insulin/GLP-1 fixed-ratio combinations




Sum of branded diabetes drugs (from therapy classes above)








  • The total diabetes drug market in 2Q18 posted $9.7 billion ($9.9 billion including obesity), marking a 7% YOY increase from $9.1 billion in 2Q17 and a 2% sequential increase from $9.5 billion in 1Q18.

  • GLP-1 Agonists climbed 20% YOY to $1.9 billion in sales from a base of $1.6 billion in 2Q17, also rising 2% sequentially from $1.9 billion in pooled revenue for 1Q18. We were surprised the sequential increase was not higher.

  • SGLT-2 Inhibitors rose to $1.0 billion, increasing 21% YOY from $857 million in 2Q17 and 3% sequentially from $1.0 billion in 1Q18. While GLP-1 increased $321 million year over year, SGLT-2s increased only $180 million year over year – this difference was more striking than in previous quarters when the increases by class were closer. Sequentially, GLP-1 rose $43 million compared to SGLT-2s that rose $26 million, further reinforcing that GLP-1s are growing faster from a higher base.

  • DPP-4 Inhibitors grew 1% YOY and 6% sequentially to $2.5 billion from $2.5 billion in 2Q17 and $2.4 billion in 1Q18.

  • Basal Insulins posted a YOY decline of 5%, achieving $2.5 billion in sales compared to a base of $2.5 billion in 2Q17. Sequentially, sales rose 1% from $2.4 billion in 1Q18.

  • Next-Generation Basals fell a modest 2% YOY to $559 million from $569 million in 2Q17 and grew 5% sequentially from $533 million in 1Q18. We were surprised the sequential increase was not higher and that the YOY change was a decline.

  • Rapid-Acting Insulin increased to $1.7 billion, rising 6% YOY from $1.6 billion in 2Q17 and declining 3% sequentially from $1.7 billion in 1Q18.

  • Basal Insulin/GLP-1 Combinations rose 140% YOY to $80 million, from a base of $34 million in 2Q17. Sequentially, the class rose 19% from $67 million in 1Q18. Given how potent this combination was in randomized controlled trials, we continue to be extremely disappointed in the uptake – a $13 million sequential increase isn’t much, and it follows sequential increases of $13 million, $17 million, and $4 million in the previous three quarters. While YOY growth has been impressive, it continues to come from a very low base.  

  • Obesity pharmacotherapies sold $185 million in 2Q18, up 27% YOY and up 6% sequentially

2Q18 Financial Results for Novo Nordisk’s Major Diabetes and Obesity Products


2Q18 Revenue - USD millions (DKK billions)


Reported (Operational) Growth

Sequential Reported Growth

Basal Insulin

$840 (DKK 5.4)

-8% (-4%)


- Tresiba

$306 (DKK 2.0)

-11% (-4%)


- Levemir

$474 (DKK 3.0)

-16% (-10%)


- Xultophy

$60 (DKK 0.4)

+111% (NR)


Rapid-Acting Insulin

$773 (DKK 4.9)

-4% (+4%)


- NovoLog

$752 (DKK 4.8)

-6% (+1%)


- Fiasp

$21 (DKK 0.1)



Premix Insulin

$405 (DKK 2.6)

-4% (+2%)


- NovoMix

$377 (DKK 2.4)

-8% (-2%)


- Ryzodeg

$28 (DKK 0.2)

+77% (NR)


Human Insulin

$366 (DKK 2.3)

-7% (+0%)



$898 (DKK 5.7)

-1% (+6%)



$31 (DKK 0.2)




$138 (DKK 0.9)

+29% (+40%)


Total Diabetes and Obesity Portfolio

 $3,640 (DKK 23.2)

-2% (+4%)




Table of Contents 

Pooled Market Highlights

1. GLP-1 Agonists Grow 20% YOY and 2% Sequentially to $1.9 Billion; Victoza Leads with 47% Value Share, Followed by Trulicity at 41% – Two-Way Tie at 42% US Volume Share

In another strong quarter for the GLP-1 agonist class, pooled sales grew 20% YOY to $1.9 billion in 2Q18, from a base of $1.6 billion in 2Q17. Sequentially, the market grew 2%, rebounding from a 1% sequential loss to $1.9 billion in 1Q18. This is the second consecutive quarter of essentially flat sequential growth for GLP-1s, following an impressive 19% sequential jump in 4Q17. However, GLP-1s are now growing from a much higher base, knocking on the door to $2 billion quarterly, and we’re encouraged that underlying volume growth remains strong at ~24% annually. Per Novo Nordisk’s slide deck (slide 9), total prescription volume in the GLP-1 segment shows no signs of slowing down. By value, GLP-1s now comprise 13% of the total diabetes care market, up from 12% in 1Q18 and 11% in 2Q17, indicating steady penetration – this may not sound like enormous growth but it is up nearly 20% from mid-2017. This trend is especially strong in the US, where GLP-1 share of the total diabetes care market jumped from 13% in 2Q17 to 16% in 2Q18 – we’re thrilled to see this, as it suggests that more patients are taking one of the most advanced diabetes drugs available today, though we still feel GLP-s are not close to being prescribed often enough given those who could benefit from them and given how much easier they are to dose versus rapid acting insulin. Novo Nordisk’s Victoza (liraglutide) maintained its frontrunner status in 2Q18, claiming 47% of the total GLP-1 market by value with $898 million in sales (+6% YOY). Lilly’s Trulicity (dulaglutide) was not far behind, climbing to 41% value share with $780 million in sales (+62% YOY). It’s worth noting that Trulicity appears to be driving most of the underlying class growth for GLP-1s, and that the gap between liraglutide’s and dulaglutide’s market share has been progressively closing (in 2Q17, these numbers were much farther apart at 56% and 30%, respectively). These two drugs are the clear established giants in the landscape, but we expect disruption from Novo Nordisk’s second-gen GLP-1 agonist Ozempic (semaglutide), which already holds 2% of the market by value with $31 million in its second quarter available. AZ’s once-weekly Bydureon (exenatide) was steady at 8% value share in 2Q18 ($155 million, +6% YOY), while twice-daily Byetta (exenatide) reflected 2% of pooled revenue with $29 million in sales (-33% YOY). Finally, GSK’s Tanzeum (albiglutide) and Sanofi’s Adlyxin (lixisenatide) captured the remaining 1% of the GLP-1 market with $15 million and $7 million in sales, respectively.

  • Novo Nordisk provided details on US volume share, showing that Trulicity and Victoza are neck-and-neck in monthly TRx (share of total GLP-1 prescriptions). As of May 2018, both products accounted for ~42% of GLP-1 prescriptions stateside (slide 9). Technically, Victoza edges Trulicity out by 0.3% though we know Victoza has lost some share to its own drug Ozempic. AZ’s exenatide products claimed another 14% TRx, and when Ozempic’s 2% share is added, Novo Nordisk’s GLP-1 business as a whole reflects 43% TRx. Victoza’s TRx has been steadily falling from ~60% in May 2015, just after Trulicity entered the market, though both products have, of course, seen substantial growth in that timeframe in terms of overall revenue. Lilly reported 37% US volume share for Trulicity as of June 2018. We’re not sure where the discrepancy comes from, but Lilly also asserted that Trulicity was the US volume leader among GLP-1 agonists.

  • Putting within-class comparisons aside, we believe there’s more than enough room for continued growth in multiple GLP-1 agonist franchises. Since SUSTAIN 7 results were published, there’s been substantial buzz in the field about Ozempic’s superiority over Lilly’s Trulicity on A1c reduction and weight loss. But above all, we see Ozempic as an example of an even more potent therapy and as an opportunity for more personalized diabetes care. It’s wonderful that there are now options for once-daily or once-weekly GLP-1 treatment, different types of GLP-1 injection devices, etc. Trulicity, with its IDEO-designed autoinjector, is differentiated on ease of use, and there’s no doubt that thousands of patients are doing well on dulaglutide – but there is learly more competition with a compound that is more potent across the board (Novo Nordisk’s Ozempic). Still, as Dr. Ralph DeFronzo articulated at AACE this year, “all [GLP-1 agonists] are fantastic, and all you need to do is make sure your patient is on one of them.” We’re certainly glad that the conversation is expanding to focus on expanding the entire GLP-1 class since some patients, particularly in the US, simply will never have the choice. We’re glad to hear more thought leaders pushing for earlier use of these advanced agents in diabetes treatment, and guidelines are starting to position GLP-1 agonists as the first injectable therapy – now if we could just see it positioned more frequently as the first therapy, for those that need it! Indeed, some experts are already using them as first-line therapy, period. Reframing mindset around what GLP-1s can be in diabetes treatment – a highly efficacious therapy to be used earlier on to improve long-term outcomes – will be crucial in further promoting uptake of this impressive drug class.

  • Upcoming results from REWIND will be valuable in elucidating whether cardioprotection is a GLP-1 class effect. This CVOT for Trulicity is expected to read out in 4Q18, and it stands to have huge implications, especially since AZ’s EXSCEL trial for Bydureon just barely missed the threshold for CV superiority (but some thought leaders are still calling it “probably positive” and we would certainly agree based on hallway chatter we’ve heard). We’re also excited about the large (69%) primary prevention population, which makes REWIND unique among reported GLP-1 CVOTs – both LEADER and SUSTAIN 6 enrolled >80% patients with baseline CVD. Lilly management has expressed nothing but confidence for study results although presumably nothing is yet known. Trulicity stands to join Victoza (CV indication on its label) and Ozempic (CV benefit demonstrated in SUSTAIN-6 though not yet accepted like LEADER data) as a third GLP-1 agonist with demonstrated cardioprotection – and also a potential first GLP-1 with proven benefit in people without established CV disease.

Pooled GLP-1 Agonist Sales (1Q06-2Q18)

2. Basal Insulin Market Falls 5% YOY, Rises 1% Sequentially to $2.5 Billion; US Pricing Pressure Remains Strong; Continued Lantus Decline

The basal insulin market fell 5% YOY to $2.5 billion from a base of $2.6 billion in 2Q17. Sequentially, pooled sales rose 1%, an easy comparison against a 9% sequential drop in 1Q18 to $2.5 billion. This analysis includes Novo Nordisk’s Tresiba and Levemir, Sanofi’s Toujeo and Lantus, and Lilly/BI’s Basaglar (biosimilar Lantus). We’ve estimated total Basaglar sales by doubling Lilly’s reported product revenue ($202 million in 2Q18), since BI’s share is not publicly disclosed; we can only speculate that the two companies split worldwide Basaglar revenue 50/50 but we don’t yet know, and the company did not include Basaglar in its 2017 annual report. For now, Lantus retains its position as market leader by value with $1 billion reflecting 42% of pooled sales (though this revenue declined 26% YOY in 2Q18). Levemir is still in second place with 19% of the basal insulin market by value ($474 million, -16% YOY), followed by Basaglar with 16% ($404 million, +133% YOY) – boy is this rising fast! Next-generation basals were fourth and fifth in terms of 2Q18 revenue, but these products – Novo Nordisk’s Tresiba and Sanofi’s Toujeo – are also a major bright spot in the insulin market (more below). Tresiba claimed 12% of the market by value ($306 million, -11% YOY) and Toujeo claimed 10% ($253 million, +3% YOY). Generally, pooled revenue from basal insulin continues to fluctuate around $2.5 billion; the market hit an all-time-quarterly-high of $2.9 billion in 4Q14. Around that same time, the two-member basal class (Lantus and Levemir) gained two next-generation products (Tresiba and Toujeo) and its first biosimilar (Basaglar). Since 4Q14, pooled basal insulin sales have never grown more than 2% YOY. Our sense is that, though more people globally are taking basal insulin and though an expanded class is an important win for patients, US pricing pressure has prevented meaningful class growth. Sure, there are five available analog products, but it doesn’t help when payers view insulins as mostly interchangeable, designing exclusive contracts and charging high rebates. It’s our view that if far more people could go on next-generation modern insulins, the reduction in spending on severe hypoglycemia would more than make up for the differences in investment.

  • Novo Nordisk provided US volume share info in its 2Q18 presentation (slide 8). As of July 2018, Lantus maintained a 39% share (TRx) of total basal insulin prescriptions in the US, followed by Levemir at 23% (a travesty given how much better Tresiba is!), Tresiba at 13%, Basaglar at 10%, and Toujeo at 8%. This reflects a significant shift from 2Q17, when Lantus held 50% TRx, Levemir 23% (the same!), Tresiba 8%, Toujeo 9%, and Basaglar 4% – it seems that Levemir in holding steady as next-gen basals (especially Tresiba) take hold and as biosimilar Basaglar benefit from Lantus’ loss of exclusivity. For 2018, the Medicare Part D formulary lists Tresiba, Levemir, and Basaglar on a lower tier (i.e. lower patient copay) vs. Toujeo and Lantus, and this has obviously at least contributed to the volume shift favoring Novo Nordisk and Lilly/BI. Novo Nordisk leaves 6.5% of the market unaccounted for on its slide, which we suspect reflects human/regular insulin; 6% was unaccounted for in 2Q17 (slide 8), indicating this segment isn’t meaningfully changing right now. Interestingly, Basaglar holds 16% of value with only 10% TRx, which begs the question: Are real-world patients seeing the promised 15%-20% discount on Basaglar vs. Lantus? Are Lilly/BI seeing a higher realized price on Basaglar than Novo Nordisk is on Tresiba? A couple caveats here: First, US TRx will not match up exactly with global TRx. Second, we’ve estimated total Basaglar sales by doubling Lilly’s recorded revenue, which may not be accurate. It’s possible we’re overestimating total Basaglar revenue. Pricing pressure has created disparities between US and OUS sales for basal insulin. This trend is most apparent for Sanofi’s two basal insulin offerings. Lantus’ OUS sales have been relatively steady over the past four years and surpassed US sales for the first time ever in 1Q18 (though this was driven by US losses, not OUS gains). In 2Q18, OUS sales were $570 million (-9% YOY) vs. $471 million stateside (-39% YOY). Similarly, OUS revenue from Toujeo has outpaced US revenue, growing 49% YOY in 2Q18 to $153 million as US sales plummeted 30% YOY to $100 million. In our view, the pricing pressure that exists in the US is a function of a broken drug pricing system, in which list prices may be raised to balance the impact of increasing PBM/payer rebates; in many places outside the US, by contrast, insulin can be purchased out-of-pocket for a few dollars. It comes as no surprise to us that insulin manufacturers across the board made comments in support of sweeping changes to US drug pricing rules, including Lilly, Sanofi, and – though not an insulin maker – AZ.

  • Two more biosimilar insulin glargine products are on the horizon: Merck’s Lusduna Nexvue and Mylan/Biocon’s Semglee. Merck’s product has received tentative FDA approval, pending resolution of a patent infringement lawsuit from Sanofi. Mylan/Biocon’s candidate recently received a Complete Response Letter (CRL) from FDA; it has  but has been approved in Europe, and we expect resubmission to FDA in 2019. Sanofi has also filed a patent infringement lawsuit against Mylan/Biocon. As a reminder, Lilly/BI faced a similar lawsuit from Sanofi but eventually reached a settlement (delaying US launch of Basaglar and paying royalties). Merck and Mylan/Biocon can either reach their own settlements with Sanofi or wait out a 30-month stay; alternatively, a court can settle the matter. We have little doubt that both of these products will hit the US market within the next several years, and when they do, diabetes providers/patients will be more familiar with the concept of biosimilar insulin thanks to Basaglar (and on the mealtime insulin front, Sanofi’s just-launched Admelog). In other words, we imagine biosimilar insulin will only play a larger role in the marketplace and in diabetes care moving forward. Drug pricing continues to be a very political issue; we suspect having multiple generics on the market will drive down patient costs more so than one generic. We also see the companies themselves trying to create change on this front, including Lilly through its new insulin helpline, a resource designed to help patients navigate the system as it currently stands.

Pooled Basal Insulin Sales (1Q05-2Q18)

3. Pooled Next-Gen Basal Insulin Sales Fall 2% YOY – First-Ever Quarter of YOY Decline; Volume Share of US Basal Market Hits 21%, Growing from 17% in 2Q17

Next-generation basal insulins Tresiba (insulin degludec) and Toujeo (insulin glargine U300) together sold $559 million in 2Q18, falling 2% YOY from an all-time-high of $569 million in 2Q17. We were very disheartened to see this drop. Sequentially, revenue from these two products rose 5% from $533 million in 1Q18. This marks the first ever negative YOY performance for the next-generation basal insulin class, which has consistently experienced double-digit growth since Toujeo and Tresiba both launched. That said, we have noticed a slowing of growth over the past year: YOY growth was +116% in 1Q17, +92% in 2Q17, +48% in 3Q17, +18% in 4Q17, +27% in 1Q18, and now just a 2% decline in 2Q18. Indeed, we were disappointed by performances from both Tresiba (-11% YOY to $306 million) and Toujeo (+3% YOY to $253 million) in 2Q18, and we were especially disappointed by particularly weak US sales. Toujeo saw a 25% YOY decline in the US to $100 million, offset by dramatic 58% YOY growth OUS to $153 million. Similarly, Tresiba sales in the US fell 16% YOY to $195 million, while OUS sales rose an encouraging 27% YOY to $110 million. Moreover, we note that next-gen basals do continue to gain volume in the US – another sign that pricing pressure (leading to lower realized price for manufacturers) really is to blame for perceived (and actual) weakness. As of July 2018, Tresiba held 13% of total US basal insulin prescriptions and Toujeo held 8% for a total of 21%; in 2Q17, those numbers were 8% and 9%, respectively (17% total). Tresiba has benefitted from better positioning (above Toujeo and Lantus) on Medicare Part D, while poorer positioning in that segment seems to have contributed to Toujeo’s one-point share loss in volume. Both are so incredibly much better than their older brethren and we hope to see many changes here.

  • Tresiba continues to lead this two-member class with 55% of the market by value ($306 million); Toujeo reflected the remaining 45% of pooled sales ($253 million). For comparison, in 2Q17, Tresiba claimed 59% of the market by value and Toujeo claimed 41% so Sanofi’s entry is gaining, big picture. In 1Q18, the split was 54% (Tresiba) vs. 46% (Toujeo). We’ve gathered from thought leaders that while many consider Tresiba a slightly better product (with a flatter PK/PD profile, more flexible dosing, and an on-the-label hypoglycemia benefit), there’s vast agreement that both these drugs are far superior to what came before them (namely, first-gen analogs Lantus and Levemir). We absolutely agree, and would love to see greater volume/sales growth for Toujeo and Tresiba alike. These are better therapies that stand to help so many people with diabetes, and we’re hoping that more attention on hypoglycemia (via Tresiba’s recent label update) will serve as a stimulus for next-gen basals in general. All in all, however, it’s helpful to remember that this class began only in 2014!

Pooled Next-Generation Basal Insulin Sales (1Q14-2Q18)

4. Rapid-Acting Insulin Revenue Climbs 6% YOY to $1.7 Billion on Back of 14% YOY Humalog Growth, Addition of Fiasp Sales

The rapid-acting insulin market climbed 6% YOY but fell 3% sequentially to $1.7 billion in 2Q18, from $1.6 billion in 2Q17 and $1.7 billion in 1Q18. This analysis includes Novo Nordisk’s NovoLog (insulin aspart) and Fiasp (faster-acting insulin aspart), Lilly’s Humalog (insulin lispro), and Sanofi’s Apidra (insulin glulisine). By our calculations, Humalog led the market ever so slightly by value with $770 million (+14% YOY) reflecting 47% of pooled sales. Novo Nordisk captured 47% of pooled revenue altogether, 46% from NovoLog ($752 million, -6% YOY) and 1% from Fiasp ($21 million, +65% sequentially in second quarter on the market). Sanofi’s Apidra grabbed the remaining 6% with $107 million revenue (-1% YOY). It’s a bit trickier to tell what’s happening in terms of volume. Novo Nordisk’s roadshow presentation (slide 47) indicates that NovoLog holds ~40% of US rapid-acting insulin prescriptions; global volume share seems to also stand at ~40% (slide 27). The plateauing of the overall rapid-acting insulin market (see graph below) can be largely attributed to pricing pressure. Manufacturers have not been shy in identifying pricing pressure/high rebating as the primary headwind for mealtime insulin although we believe there are also competitive forces at work. As we understand it, pricing pressure is more intense in the rapid-acting insulin category than in any other diabetes drug class, because payers/PBMs view mealtime insulins as extremely interchangeable, thus designing exclusive contracts and demanding high rebates from manufacturers if they want to maintain formulary positioning.

  • This is the second quarter for which we’ve been able to factor Fiasp sales into our pooled analysis of the rapid-acting insulin market. Without Fiasp (which only became available in the US in February 2018), the class grew 4% YOY and fell 4% sequentially. We expect Fiasp sales to increase meaningfully in 2019, as Novo Nordisk will have had a chance to secure access on major US formularies. Although we have heard mixed opinions from KOLs on the clinical significance of Fiasp’s benefits over NovoLog thus far, we know patients who loved this product enough to import it from outside the US before it was approved. Fiasp is currently priced on par with NovoLog, which should make it easier for Novo Nordisk to secure access though there are various tricky things at play – Kelly and Adam’s own insurance company, Aetna, refuses to cover Fiasp. Although the “official” pricing between Fiasp and NovoLog is supposed to tbe the same, we do not believe this is actually the case that all funders negotiate. Adding to this discussion is the prospect of Lilly’s and Sanofi’s phase 3 ultra-rapid-acting candidates potentially joining the rapid-acting insulin class – and joining Fiasp and MannKind’s Afrezza in the emerging ultra-rapid-acting class. (Note that Afrezza hasn’t been incorporated into this analysis because product sales to-date have been very low and far below 1% of the rapid-acting insulin market. In 2Q18, MannKind recorded $3.8 million in Afrezza revenue. We will include it next time!)

  • Sanofi’s Admelog (biosimilar insulin lispro) is not included in this analysis because official sales were not broken out for 2Q18, the product’s first quarter on market. We very roughly estimated 2Q18 revenue for Admelog to be $18 million; we have asked Sanofi for a more exact number.

Pooled Rapid-Acting Insulin Sales (1Q06-2Q18)

5. Basal/GLP-1 Combinations: Xultophy + Soliqua Post Combined $80 Million, >Doubling YOY and Rising 19% Sequentially, Driven by Soliqua

Combined Xultophy and Soliqua sales of $80 million rose 19% sequentially from $67 million in 1Q18 and more than doubled YOY (+140%) from $34 million in 2Q17 (which was only the second quarter in which revenue was broken out for both fixed-ratio combination products). Since we’ve been able to make the comparison, this class has experienced sequential growth of +75% in 2Q17, +12% in 3Q17, +45% in 4Q17, and +24% in 1Q18. By value, Novo Nordisk captured 75% of the market as Xultophy (insulin degludec/liraglutide) sales more than doubled YOY and climbed 13% sequentially to $60 million in 2Q18. Sanofi captured the remaining 25% of market share by value as Soliqua (insulin glargine/lixisenatide) sales more than tripled YOY and climbed 89% sequentially to $20 million. This represents a meaningful shift in value shares, as Xultophy picked up 83% of the market in 2Q17 and 84% in 1Q18. Historically and in our observation, Sanofi has actually invested quite a bit more than Novo Nordisk in promoting fixed-ratio combination therapy and in securing access for Soliqua, though our sense is that this is starting to change at Novo Nordisk. We know that the US comprises ~80% of Soliqua sales, but the breakdown for Xultophy isn’t clear in Novo Nordisk’s earnings materials. We have heard anecdotally that Xultophy is doing very well in European markets where it has gained access, particularly in France.

  • Despite this continued uptick in sales, we expect that we are still at a very early stage for basal insulin/GLP-1 agonist combination therapies. In our view, 19% sequential growth is underwhelming given that Xultophy and Soliqua are still early in their launch cycle, and given how highly-anticipated the class was for its remarkable efficacy and tolerability (that’s among KOLs however, not necessarily primary care docs on the front line). We are encouraged by a strong 2Q18 for Soliqua, which drove 69% of sequential class growth after two relatively flat quarters in 4Q17 and 1Q18 (both $11 million), but we would have loved to see stronger performance from Xultophy. We do hear good things from some international regions (France is just one example). We wholeheartedly believe that faster uptake of these products is more than justified given their superior glucose-lowering efficacy and milder side-effect profiles (less hypoglycemia and weight gain than basal insulin alone, or even weight loss with Xultophy, plus less GI discomfort than with GLP-1 alone). Overall, we see enormous headroom for both Xultophy and Soliqua, though the same barriers to uptake persist – boy do we hope we can get beyond these!:

    • HCPs are reluctant to prescribe fixed combination therapy, which is rigid in both its components and titration;

    • Many think of insulin as an “escalation” of GLP-1 agonist therapy;

    • US labels require that a patient already be on basal insulin or the specific GLP-1 component beforehand; and

    • Reimbursement is always a hurdle for branded therapies.

  • In one key improvement to labeling, however, Novo Nordisk secured EMA approval to add LEADER and DEVOTE data to the Xultophy label. An equivalent request has been submitted to FDA, but we’re less certain that the US agency will be receptive. We imagine Xultophy sales teams in Europe are excited about the opportunity to describe CV benefit with liraglutide (from LEADER) and hypoglycemia benefit with degludec (from DEVOTE), and we suspect this could meaningfully boost EU prescriptions/sales (although of course they pay far less than the US, which is busy funding/subsidizing global R&D). While we firmly believe that both Xultophy and Soliqua are phenomenal products that should reach many, many more patients, and while there are undeniable clinical differences between these two drugs, both drugs from our view are far better than basal insulin alone. Xultophy is comprised of two medications, Tresiba and Victoza, that are, clinically, superior to the Lantus and Adlyxin that make up Soliqua. Victoza has a CV indication, and DEVOTE demonstrated that Tresiba carries a 40% reduced risk of severe hypoglycemia vs. Lantus. Moreover, and this is the biggest difference, Tresiba is a next-generation basal insulin analog, whereas Lantus is first-gen. No head-to-head trials have been conducted, but most thought leaders have endorsed that Xultophy is likely a better drug simply because of its more potent individual molecules. On the other hand, Soliqua has the advantage of a far lower list price: We just called our local CVS and a five-pen box of Xultophy pens is priced at $1,170, compared to five Soliqua pens for $267 – of course, this only means so much before rebates/insurance and prices vary by pharmacy, but we were truly struck by this difference. Right now, we’re hoping that both Soliqua and Xultophy can drive significant growth for the class rather than compete against one another for market share.

Pooled Sales of Basal Insulin/GLP-1 Agonist Fixed-Ratio Combinations (1Q17-2Q18)

6. Pooled Obesity Analysis: $158 Million Market Grows 9% YOY, Drops 9% Sequentially (Assuming No Contrave Revenue); Saxenda Remains Shining Bright Spot, +27% YOY

The obesity drug market totaled $158 million in 2Q18, rising 9% YOY from $146 million in 2Q17 and falling 9% sequentially from $174 million in 1Q18. This analysis assumes zero revenue from Orexigen’s Contrave, following the company’s March 2018 bankruptcy filing and subsequent acquisition by Nalpropion Pharmaceuticals (this was final as of late June). If we assume Contrave revenue held steady from the last-reported $27 million for 4Q17 (as plotted below), then the class grew 27% YOY and 6% sequentially to $185 million in 2Q18. Details on the logistics of Contrave availability have been scarce, though Pernix Therapeutics – one of the funders of Nalpropion – did reference “returning Contrave to growth” in its update last week, but no new revenue numbers were shared. Assuming no Contrave sales in 2Q18, Novo Nordisk’s Saxenda (liraglutide 3.0 mg) claimed 87% of the obesity drug market by value, with $138 million sales rising 29% YOY. Vivus’ Qsymia (phentermine/topiramate) accounted for 7% of pooled sales ($11 million, +31% YOY), and Arena/Eisai’s Belviq (lorcaserin) captured the remaining 6% ($9 million, +3% YOY). One year ago in 2Q17, Saxenda claimed 72% value share with $105 million in sales, Contrave 16% with $23 million, and Belviq and Qsymia both held 6% with $9 millions in sales each, though it’s difficult to compare these shares to 2Q18 given the impact of Contrave. What is clear is that Saxenda continues to drive the vast lion’s share of growth (and comprise as much pooled revenue) in the obesity market, but we note that unsurprisingly, the product actually claims a minority of prescriptions: When generics are included, Novo Nordisk revealed that Saxenda holds only ~1%-2% of total obesity prescriptions, while other branded obesity medications claim more like 15% of prescriptions (slide 81). The rest goes to generics, reflecting just how poor reimbursement is for branded obesity therapies. That said, Saxenda has achieved quite remarkable success in the face of these commercial challenges, which we think reflects its efficacy as a weight loss product (and we suspect many more patients are using Victoza off-label for weight loss, given its reimbursement is much better).

  • In 2Q18, Eisai reported topline results from the CAMELLIA-TIMI CVOT for Belviq, establishing the product’s CV safety, and we’re excited for Novo Nordisk’s SELECT CVOT for semaglutide in obesity. While CAMELLI-TIMI was positive inasmuch as it (i) demonstrated that Belviq confers no CV risk and (ii) reinforced a positive impact for the therapy/weight loss on CV risk factors (including type 2 diabetes onset), it was not powered for superiority. In contrast, Novo Nordisk plans to begin the SELECT CVOT for semaglutide later this year, and this will be the first obesity CVOT powered for superiority. SELECT stands to demonstrate a benefit on CV outcomes from treatment with semaglutide, but perhaps more importantly, it will also serve as a yardstick for obesity pharmacotherapy, proving once and for all that treating body weight can lead to better health outcomes and longer life. In Dr. Donna Ryan’s words, SELECT could give the obesity field the “legitimacy” it needs, connecting weight loss to improvements in hard outcomes.

  • Check out our obesity competitive landscape for more on this therapeutic area. Here, you’ll find all the candidates that we’re aware of in development toward an obesity indication. Given the extremely low penetration of pharmacotherapies into the population with obesity (only ~2% receive medical treatment), we see less potential for products in this market from small companies and far more from bigger companies -we’re excited to see what’s next and hopeful that more can happen in this arena as CVOTs are developed.

Pooled Obesity Drug Sales (1Q13-2Q18)

Financial Highlights

7. Diabetes/Obesity Portfolio Declines 2% YOY As Reported (+4% Operationally) to $3.6 Billion; Strong International Performance Offsets Weaker US Sales; 38% Net Profit Margin in 2Q18

Novo Nordisk’s overall diabetes/obesity portfolio totaled DKK 23.2 billion ($3.6 billion) in 2Q18, falling 2% YOY as reported (+4% operationally) and rising 2% sequentially compared to DKK 23.7 billion ($3.7 billion) in 2Q17 and DKK 22.7 billion ($3.7 billion) in 1Q18. Altogether, it was a fairly neutral performance from the Danish diabetes giant. The company chose to report financial results predominantly for 1H18 rather than 2Q18 specifically, which made it harder to separate out 2Q18 results – although they did report 2Q results, it’s never a good sign to see quarterly performance obscured. That said, International Operations (i.e. non-North American) were the highlight, and these geographies accounted for 99% of Novo Nordisk’s overall growth in 1H18 (we note of course there was only operational growth and even that was limited). Notably, 42% of that albeit relatively smaller growth came from Region AAMEO (Africa, Asia, Middle East, and Oceania) and 37% from Region Latin America – these tend to be poorer regions where more growth is possible but it seems wrong that these regions that are poor would account for a disproportionate amount of growth vs. the US, for example. North American operations contributed a meager 1% of growth, despite comprising 50% of sales (slide 5). Insulin and GLP-1 are more expensive in the US, of course, than anywhere else globally and we doubt there is much room to grow giving pricing pressure (clearly prices are going one direction only – down). In diabetes specifically, North American sales fell 1% YOY operationally to DKK 11.8 billion ($1.8 billion), while international revenue rose 9% YOY operationally to DKK 11.2 billion ($1.8 billion). By our calculations, portfolio growth in 2Q18 was primarily driven by Xultophy (20%), Saxenda (20%), Ozempic (19%), Fiasp (14%), and Ryzodeg (8%), with a final 20% from the other diabetes care category. Of note, although they represented 80% of Novo Nordisk 2Q18 growth, these products all represent far smaller proportions of Novo Nordisk’s total diabetes/obesity revenue – far less than 10% in all: Xultophy (2%), Saxenda (4%), Ozempic (<1%), Fiasp (<1%), and Ryzodeg (<1%). Across the portfolio, performances were quite mixed, and the impact of currencies makes it even more difficult to get a clear picture of how Novo Nordisk’s products are faring – see the table above for details.

Novo Nordisk’s net profit was very high, at 38% for 2Q18 and 39% for 1H18 (net profit of DKK 21.2 million from sales of DKK 54.3 million); 40% was recorded in 1Q18, according to the company’s press release (page 4). Financial guidance for 2018 was maintained at 3%-5% sales growth in local currencies. Despite its arguably lackluster sales performance in 2Q18, Novo Nordisk remains the leading player in the diabetes industry, as the company holds ~46% of the entire insulin market by volume and ~27% of all diabetes care by value (slide 18).

  • Novo Nordisk now estimates that its effective tax rate for 2018 will be 19%-20%. This is extremely low. The effective tax rate for 1H18 was 19.2%, down almost two percentage points from 21.6% in 1H17, which obviously helped drive profitability. Per its press release, the company attributed this lower tax rate to non-recurring changes in tax provisions related to settlement of international tax cases covering multiple years – obviously, reduced federal corporate tax rates set by the new US administration also had a major impact (page 12).

  • CEO Mr. Lars Jørgensen said during Q&A that Novo Nordisk will likely have to lay off employees in the coming year as a way of mitigating the impact from coverage gap increases (i.e. the Medicare “Donut Hole”). As he described, the company is making a number of changes in different areas that will “lead to less people” a year from now. Details on the significance of these layoffs were vague, and it doesn’t sound as though employees will be let go imminently. Novo Nordisk now has ~43K employees, up from ~41k at this time last year, a fairly major increase. We do struggle with the idea that Novo Nordisk would lay off employees while maintaining a 38% profit margin in diabetes though companies do sometimes take opportunities to lay employees off for performance reasons.

  • During prepared remarks (slide 10), management asserted that market access for diabetes is expected to remain largely the same in 2019. Formulary negotiations with both PBMs and managed care organizations are “ongoing”, and Novo Nordisk does expect average prices to be still lower in 2019 compared to 2018, driven by basal insulin pricing (higher rebates) and coming changes to the Medicare Part D coverage gap (Donut Hole) legislation. Higher rebates will likely affect payers more positively rather than play a role in reducing prices or co-pays for patients, which is quite unfortunate; while we have not heard that effective pricing cuts are likely to translate into improved affordability for patients, that message would be very welcome.

8. Victoza Revenue Falls 1% YOY, 4% Sequentially to $898 Million as US Sales Force Shifts Promotional Efforts to Ozempic; Possible Patent Extension with <18 Indication?

GLP-1 agonist Victoza (liraglutide) sales fell a minor 1% YOY as reported but grew 6% YOY operationally to DKK 5.7 billion ($898 million) from a base of DKK 5.8 billion ($887 million) in 2Q17. Sequentially, Victoza revenue dropped 4% from a base of $989 million, building on a 5% sequential loss in 1Q18, after sales hit an all-time-high of DKK 6.3 billion ($1 billion) in 4Q17. Decelerated growth was not expected for such an established diabetes product except for the Ozempic intro; to be sure, salesforce priorities have shifted toward Ozempic (the company’s once-weekly semaglutide), and there is also ongoing increasing competition in the GLP-1 agonist class, namely from Ozempic and Lilly’s once-weekly Trulicity  (dulaglutide). Victoza’s share of new-to-brand prescription volume has steadily declined from a peak of ~41% in late 2017/early 2018 to its current position of 30%, while Ozempic’s share has climbed to 15% since US launch in February 2018. Nevertheless, Victoza remains the market leader for GLP-1s, commanding 42% of total volume (slide 9) and 47% of total market revenue ($1.9 billion in 2Q18). Although we expect Victoza sales to continue on a shallow downward trajectory as Ozempic secures better reimbursement and builds name recognition, we do believe that Victoza will remain a major force in the GLP-1 market through the next few years at least, aided by continued underlying class growth (pooled GLP-1 sales rose 20% in the US in 2Q18). Moreover, as management again highlighted, Victoza remains (for now) the only GLP-1 agonist with a CV indication; management cited the tailwind from this label update (granted ~one year ago in August 2017) as a buoy for sales while also mentioning that volume gains were offset by rebate adjustments relative to prior periods.

  • By geography, Victoza sales in North America fell 1% YOY as reported (+3% operationally) to DKK 4.1 billion ($648 million) from a base of DKK 4.2 billion ($643 million) in 2Q17. Sales OUS were a bit stronger, flat YOY as reported but +14% operationally to DKK 1.6 billion ($250 million). This performance was led by Europe and China, where YOY growth as reported totaled 11% and 57%, respectively (+12% and +61% operationally) though from a very small base in China. European revenue totaled DKK 962 million ($150 million  - less than 25% of the US market!), while revenue from Chinese markets was DKK 132 million ($21 million – tiny relative to those that could benefit). Sequentially, US Victoza sales dropped 9% against an easy comparison, a 3% sequential loss in 1Q18. OUS Victoza sales grew 8% sequentially in 2Q18, though this was also an easy comparison against a 10% sequential decline in 1Q18.

Victoza Sales (1Q12-2Q18)

  • The phase 3b Ellipse trial (n=135) studying Victoza in children and adolescents age 10-17 with type 2 diabetes wrapped up in 2Q18, and Novo Nordisk intends to submit results for a label expansion and six-month patent extension to both FDA and EMA in 4Q18. Type 2 diabetes in youth is emerging as a particularly concerning public health problem: ~5,000 people in the US <18 years-old are diagnosed with type 2 each year. As was recently illuminated by RISE Peds data, we know very little about the pathophysiology of type 2 in youth (except that the disease progresses much more rapidly than it does in adults), and perhaps even less about how to effectively treat it. Currently, only metformin and insulin are approved for use in a pediatric population – according to RISE Peds, neither was able to preserve beta cell function in children/adolescents with type 2 diabetes or prediabetes. Having a GLP-1 agonist approved for youth would be a game-changer; as a more advanced, potent molecule, perhaps liraglutide could support weight loss, beta cell preservation, and glucose-lowering in the younger type 2 diabetes patient population. In Ellipse, Victoza gave a mean A1c reduction of 0.6% vs. 0.4% with placebo after 26 weeks (baseline A1c 7.8%). This glycemic efficacy was much more impressive after 52 weeks, when Victoza was associated with a mean 1.3% A1c decline (the trial became open-label after week 26). We’re curious to see more on this trial, particularly on the secondary endpoint of change in BMI from baseline. Beta cell function was not measured in Ellipse (at least according to information available on, and we wonder if Novo Nordisk would consider evaluating this metric in a follow-up pediatric study (again, it was disappointing to see that neither metformin nor insulin glargine addressed the underlying pathophysiological defects of type 2 diabetes in RISE Peds). There’s great data from the SCALE program showing that high-dose liraglutide (Saxenda) can significantly reduce diabetes incidence among adults, and we hope down the line to learn of Victoza’s potential in prevention when given to children/adolescents. From a commercial standpoint, this is unlikely to have a big direct long-lasting impact of Victoza sales, but the patent extension could certainly enable Novo Nordisk to maintain exclusivity on liraglutide six months longer, which is worth ~$1.8 billion (based on total 2017 revenue). As we understand it, the company’s Victoza patents are currently set to expire around 2022/2023.

  • Management also mentioned that LIRA-ADD2SGLT2i, a phase 3b trial evaluating Victoza as an add-on to any SGLT-2 inhibitor, was completed in June. Victoza was superior to placebo on A1c-lowering, resulting in a treatment difference of 0.7% after 26 weeks. While full results have yet to be released, this evidence joins Lilly’s AWARD-10 and AZ’s DURATION-8 in supporting the glycemic benefits to GLP-1 + SGLT-2 combination therapy. Notably, no significant weight loss benefit was seen with liraglutide vs. placebo, whereas in AWARD-10 and DURATION-8, there was meaningfully more weight loss with the combination vs. either monotherapy (and weight loss benefit was nearly additive with Bydureon + Farxiga in DURATION-8). We’ll keep our eyes and ears open for commentary on this unexpected finding.  

9. Ozempic Posts $31 million (+183% Sequentially), On Track to Surpass ~$160M Guidance for 2018; Most US Districts Promoting Ozempic Over Victoza; Imminent EU Launch; SOUL CVOT Scratched in Favor of Oral Semaglutide CVOT

GLP-1 agonist Ozempic (semaglutide) posted DKK 195 million ($31 million), nearly tripling sequentially from DKK 69 million ($11 million) in 1Q18. Q2 was Ozempic’s first full quarter on the market, following US launch in early February 2018. Revenue of $31 million reflects 3% of Victoza’s quarterly sales and 2% of the pooled GLP-1 agonist market by value – while those figures might seem small, it’s notable that Ozempic drove 19% of growth (albeit small) in Novo Nordisk’s diabetes/obesity business in 2Q18, while capturing <1% of total portfolio revenue. We consider this a very strong showing for such a young product. Management reaffirmed guidance of at least DKK 1 billion (~$160 million) in Ozempic sales for 2018, while commenting that they expect to land above that. YTD, the product has generated only $42 million in revenue for Novo Nordisk, but if strong sequential growth continues the company is easily on track to meet its $16o million projection. In fact, on its current trajectory, Ozempic sales would sum to far higher sales in 2018, though we expect sequential growth to slow as revenue starts climbing from a higher base.

Today’s call offered robust discussion on Ozempic: By our count, “Ozempic” was uttered 50 times over the course of the hour! Management remained distinctly positive about the product’s commercial prospects. Ozempic has reached a new-to-brand market share of 15% in the US, and formulary access is >60% for commercial and Medicare Part D patients combined, though this doesn’t speak to tiered status (we suspect Ozempic isn’t preferred on most formularies where it has gained access). In explaining promotional strategy for the second-gen GLP-1, highly respected EVP of Commercial Strategy & Corporate Affairs Ms. Camilla Sylvest described how Novo Nordisk is focused on building a base of access before shifting marketing efforts away from Victoza to Ozempic. She noted that access is just now crossing that transition point. Most promotional districts are now in “strike mode.” Ms. Sylvest acknowledged that there has already been an impact on Victoza sales, but the team still expects that putting promotional energy squarely behind Ozempic will translate to a net benefit for Novo Nordisk’s GLP-1 business overall (and, we believe, for the GLP-1 agonist class overall). CEO Mr. Lars Jørgensen offered additional color in mentioning that there are some “pockets” of geography in the US where access is not good, and teams for those areas are still focused on Victoza. He emphasized that Ozempic was not included on Express Scripts’ just-released 2019 exclusion list – though, again, this doesn’t mean Ozempic will be preferred over other GLP-1 products.

  • On a very positive note, after conversation with FDA, Novo Nordisk has cancelled the SOUL CVOT in favor of a second oral semaglutide CVOT beyond PIONEER 6 (to commence in 2019), plus a bridging study between oral and injectable semaglutide (see more on this big news below under Pipeline Highlights). Alternatively, if PIONEER 6 shows superiority despite not being designed for this (a la SUSTAIN 6), FDA will apparently accept the combination of PIONEER 6 and SUSTAIN 6 as evidence of semaglutide’s CV benefit – whether the agent is swallowed or injected subcutaneously. A readout from PIONEER 6 is expected by the end of 2018, at which point Novo Nordisk would likely cancel the new planned oral semaglutide CVOT (pending compelling PIONEER 6 results). FDA’s willingness to accommodate this unique scenario is encouraging, and we’re glad to see such common-sense measures being taken in order to reduce costs, shorten timelines, and eliminate redundancies in diabetes R&D. This move could get CV indications on the labels for Ozempic and oral semaglutide years ahead of the previous schedule, which is a huge win for patients and for Novo Nordisk’s ability to effectively care for people with diabetes. Get more below.

  • Following February EMA approval, Ozempic secured a label update in the EU to reflect its updated device offering, and the GLP-1 will soon be launched in the first European markets. Ozempic will now be available in three pens in Europe: a titration dose 0.25 mg pen and two therapeutics dose pens (0.5 mg and 1 mg). EMA initially approved a single FlexTouch pen with all three of these dosing capabilities, but Novo Nordisk submitted this variation application soon afterward. Our understanding is that Novo Nordisk was actually seeking two pens, one that could dose 0.25 mg and 0.5 mg, and another that could dose 1.0 mg; it’s not clear if the company requested this different setup or if EMA preferred three separate pens. Management has noted in the past that having separate pens approved will enable a flat pricing strategy in Europe. Ozempic is “soon to launch” in European markets, with rollout expected to begin in some countries a few weeks from now. EU launch could offer a significant tailwind for the Ozempic business, especially if Novo Nordisk can secure national reimbursement in some of the larger European countries – we’re eager for more details on this front.

    • Management expects a decision on its EMA variation application for inclusion of SUSTAIN 7 data on Ozempic’s European product label in 3Q18. In SUSTAIN 7, semaglutide showed superiority to Lilly’s Trulicity (dulaglutide) on both A1c-lowering (~0.4% treatment difference) and weight loss (~5-7 lbs treatment difference); these results were highly statistically significant, and held across baseline A1c subgroups. SUSTAIN 7 isn’t yet included in the US label, but Novo Nordisk reps at ENDO 2018 told us that FDA has granted special permission to discuss the study findings nonetheless.

10. In Disappointing Performance, Tresiba Falls 11% YOY to $306 Million; OUS Growth Balances Pricing Pressure Headwinds in US; New DTC Campaign to Promote Hypoglycemia Benefit

Tresiba sales fell 11% YOY (-4% operationally) to DKK 2 billion ($306 million) from a base of DKK 2.2 billion ($338 million) in 2Q17, rising 11% sequentially from DKK 1.8 billion ($290 million) in 1Q18. This is the next-gen basal insulin’s first YOY loss since we’ve been able to make the comparison; while it occurred against a tough comparison (+143% YOY) and from an all-time-high ($388 million), this isn’t the performance we would expect from a ~two-year-old product, let alone an advanced and popular one like Tresiba. Meanwhile, the sequential climb in 2Q18 came against a rather easy comparison, as Tresiba experienced a 7% sequential decline in 1Q18. While this second quarter revenue performance is somewhat disappointing, Tresiba does now hold a ~13% volume share of the US basal insulin market, a three-point gain since the beginning of 2018. The suggestion here is that pricing pressure is muting the translation of volume growth to revenue gains. As of 2Q18, Tresiba’s US volume share is above both Lilly/BI’s biosimilar Basaglar (10%) and Sanofi’s next-gen Toujeo (8%). What drove the three-point increase in Tresiba prescription volume? For one, the product was moved to a lower tier compared to Sanofi’s Lantus and Toujeo within the Medicare Part D formulary for 2018 (this implies better positioning, as patients face lower out-of-pocket cost for prescription drugs on a lower tier). According to Novo Nordisk’s presentation, Tresiba remains at ~80% coverage on commercial and Medicare Part D plans (slide 10). By geography, the lion’s share of Tresiba sales (64%) once again came from the US in 2Q18. US revenue fell 16% YOY in constant currencies to DKK 1.2 billion ($195 million), while OUS revenue of DKK 705 million ($110 million) climbed an impressive 27% YOY in constant currencies. Once more, it’s impossible to ignore the severe effects of US pricing pressure. Tresiba has now been launched in 70 countries, and, as with most insulin products these days, it seems a stronger international performance is fighting headwinds in the US.

Novo Nordisk began promoting Tresiba’s hypoglycemia label update in 2Q18. The US label now includes hypoglycemia data from DEVOTE, which found a 40% risk reduction for severe hypoglycemia with Tresiba vs. standard of care Lantus. To promote visibility of hypoglycemia benefit, Novo Nordisk is in the midst of launching a new DTC campaign for Tresiba, which comes in addition to the broader global relaunch initiated in 1Q18. We’re optimistic that Novo Nordisk can leverage Tresiba’s hypoglycemia benefit into better access and reimbursement. There’s no doubt in our minds that next-gen basal insulins represent a meaningful improvement over first-gen basal insulin analogs.

  • Speaking of first-generation analogs, Levemir sales fell 16% YOY (-10% operationally) to DKK 3 billion ($474 million) from DKK 3.6 billion ($553 million) in 2Q17. Sequentially, sales rose 9% against an easy comparison of 17% sequential decline in 1Q18. Levemir’s US volume share is holding relatively steady at 23%, bringing Novo Nordisk’s total share of the US basal insulin market to 36% by volume.

Tresiba Sales (1Q16-2Q18)

11. Xultophy Revenue Doubles YOY, Climbs 13% Sequentially to $60 Million; LEADER + DEVOTE Data Added to EU Label

Xultophy sales more than doubled YOY, climbing 111% to DKK 382 million ($60 million), from DKK 181 million ($28 million) in 2Q17. Sequentially, revenue from the fixed-ratio basal/GLP-1 combination (insulin degludec/liraglutide) rose 13% from DKK 338 million ($56 million) in 1Q18, when sales increased 26% from 4Q17. With this, Xultophy drove an impressive 20% of growth in Novo Nordisk’s diabetes/obesity portfolio while comprising <2% of total portfolio sales, a testament to both the quality of Xultophy as a diabetes drug and the impact of what we perceive as increasing investment from Novo Nordisk in making the fixed-ratio combination a commercial success. We should note that sequential growth did slow from 1Q18, and 2Q18 was one of the lower quarters for sequential growth in the short history of Xultophy (+76% in 2Q17, -2% in 3Q17, +51% in 4Q17, and +26% in 1Q18) – as a reminder, the product only launched in the US in early May 2017. We still believe Xultophy could generate $250 million in revenue for 2018. In the past, Novo Nordisk has de-prioritized Xultophy to focus on building up the Tresiba and Victoza franchises, a philosophy that was espoused by company reps in exhibit halls (they explained that they have to first get diabetes HCPs familiar with insulin degludec and with liraglutide individually). We see the product’s value becoming more clear to providers and even payers; Xultophy is doing very well in European markets where Novo Nordisk has secured access, leading us to suspect that better reimbursement in the US could aid uptake. With Victoza’s patent expiring in ~five years and increased competition from Ozempic in the GLP-1 class, plus the strong pricing pressure Tresiba faces in the basal insulin market, Novo Nordisk has all the more reason to invest commercially in Xultophy, from where we’re standing. And of course, we’d be remiss not to underscore the tremendous clinical benefits associated with this combination therapy: Xultophy offers superior glycemic efficacy alongside a milder side-effect profile, meaning it results in less hypoglycemia and less weight gain (sometimes weight loss) vs. basal insulin alone or GLP-1 alone. This class of fixed-ratio combos (also including Sanofi’s Soliqua) is a major win for patients, and we desperately want to see more of them accessing these advanced products.

Xultophy Sales (1Q17-2Q18)

  • In June, EMA approved a label update for Xultophy following a positive CHMP opinion in 1Q18: Data from the LEADER and DEVOTE CVOTs will now be included on the EU label. With this update, sales teams for Xultophy in Europe will be able to highlight both the CV benefit associated with the liraglutide component (as seen in LEADER), alongside significant risk reduction for severe hypoglycemia with the degludec component (as seen in DEVOTE). We imagine this could help illuminate Xultophy’s impressive efficacy/safety, emphasizing the “bang for your buck” the product offers. We’re optimistic that greater knowledge and recognition of CV and hypoglycemia benefit can help boost volume and sales for Xultophy in the EU. Moreover, the recent label change draws a greater distinction between Xultophy and Sanofi’s Soliqua (insulin glargine/lixisenatide). Glargine was inferior to degludec on severe hypoglycemia endpoints in DEVOTE, and while lixisenatide is safe from a CV perspective, the molecule has not been shown to be cardioprotective. Indeed, our sense from thought leaders is that most consider Xultophy to be a superior product (the one they’re more likely to prescribe). That said, we would love to see more patients on either Xultophy or Soliqua, given that so many people with type 2 diabetes could benefit from the glucose-lowering efficacy and improved safety/tolerability of fixed-ratio combination treatment (not to mention the greater convenience/lower injection burden). In our view, it’s much more important to promote this class (still relatively new on the market) than it is to compare between Xultophy and Soliqua.

    • A similar request has been submitted to FDA, and we anticipate a decision by the end of 1Q19. While EMA approval of this label update is certainly encouraging, we do think FDA is a bit more conservative when it comes to requests of this sort – though we wouldn’t underestimate Novo Nordisk’s ability to engage in productive conversations with the agency.

  • Novo Nordisk still plans to submit Xultophy to regulatory authorities in Japan in 3Q18, on the heels of positive phase 3a data from DUAL I and DUAL II, which enrolled Japanese patients.

12. Mealtime Insulin: Fiasp Sales Grow 65% Sequentially to $21 Million with Greater Traction (~$9 Million) in US; NovoLog Declines 6% YOY to $752 Million

Sales of next-gen mealtime insulin Fiasp grew 65% sequentially to DKK 137 million ($21 million) from DKK 83 million ($14 million) in 1Q18 (the first time Novo Nordisk broke out Fiasp revenue from the “new-generation insulins” portfolio). According to today’s press release, Fiasp sales totaled DKK 13 million ($2 million) in 2Q17, coming entirely from OUS markets as faster-acting insulin aspart only recently launched in US pharmacies (February 2018). We estimate ~$9 million in US sales for 2Q18; Novo Nordisk did not provide this breakdown by geography. (There was a difference of DKK 56 million between total US sales for rapid-acting insulin and reported US sales for NovoLog, which we take to represent Fiasp revenue). This represents a substantial boost for Fiasp in the US after a sluggish start in 1Q18, when only ~$2.5 million was sold, although the product was only on pharmacy shelves for two out of three months. By our calculations, the US market accounted for 38% of the Fiasp business in 2Q18 compared to 18% in 1Q18, and US sales drove the majority of growth in Fiasp revenue. Also by our calculations, Fiasp contributed a respectable 14% share of growth to Novo Nordisk’s overall diabetes/obesity portfolio, while reflecting <1% of total portfolio revenue. We’re encouraged by this second quarter performance, and also hope and expect to see substantial additional growth in coming quarters. Fiasp is priced at parity to NovoLog in most major markets, including the US, making it an attractive option for patients and payers alike although a number of patients including Kelly and Adam can’t can access despite the same price (which we perceive as better value – i.e. faster onset/offset, more flexible dosing, less uncertainty around meals – for the same price). Back when Fiasp was launched in February, we heard from SVP of Commercial Mr. David Moore that reimbursement would be built up slowly over 12 months. Indeed, Fiasp is at a very similar launch stage as Ozempic (the two became available in the US at virtually the same time); our sense is that Novo Nordisk is slowly accumulating coverage for both before firing full-force on its promotion. All this said, Fiasp was mentioned only once in passing on the call today, and we have to wonder how heavily Novo Nordisk will prioritize it moving forward, especially since some thought leaders have been critical that faster-acting aspart offers marginal advantages over first-gen insulin aspart (NovoLog). Other KOLs have expressed interest in evaluating Fiasp in closed loop systems, arguing that this is where the molecule’s faster PK/PD will really shine.

  • Fiasp’s predecessor NovoLog declined 6% YOY as reported (+1% in constant currencies) from DKK 5.1 billion ($782 million) in 2Q17 to 4.8 billion ($752 million) in 2Q18. Sequentially, NovoLog sales rose 2% from DKK 4.7 million ($776 million) in 1Q18. In its press release, Novo Nordisk cited lower realized price on NovoLog in the US – unsurprising as pricing pressure is working against all insulin manufacturers (and we’ve heard it’s particularly aggressive in the rapid-acting category). These dynamics are reflected in NovoLog sales by geography: North American revenue fell 8% YOY as reported (-4% operationally) to DKK 2.5 billion ($385 million). OUS sales dropped a less severe 3% YOY as reported (+8% operationally) to DKK 2.3 billion ($367 million).

  • Overall, Novo Nordisk’s rapid-acting insulin portfolio (Fiasp + NovoLog) fell 4% YOY as reported (+4% operationally) and grew 2% sequentially to DKK 4.9 billion ($773 million).

NovoLog Sales (1Q12-2Q18)

  • Management emphasized that they do not anticipate significant pressure in the rapid-acting insulin market from Sanofi’s recently-launched Admelog (biosimilar insulin lispro). As they put it, Admelog will likely factor most heavily into the Medicaid segment, a population where Novo Nordisk’s margins are already very low (this echoes commentary from Lilly CEO Mr. Dave Ricks at JPM 2018). Indeed, while Sanofi is still working to build reimbursement for its first-to-market biosimilar mealtime insulin and does not expect significant sales until 2019, the company has referenced early interest from Medicaid; Sanofi management has outlined Medicaid coverage as the priority for 2018, followed by commercial plans in 2019 and Medicare in 2020. Counter to Novo Nordisk’s assertion, we point to Basaglar’s growing share of the basal insulin market. Lilly/BI launched this first-ever biosimilar insulin and have seen steady gains on the strength of preferred status on both commercial and Part D formularies. It remains to be seen if similar dynamics will play out in the rapid-acting segment. Our sense is that pricing pressure around mealtime insulins is especially intense, as payers consider these products even more interchangeable than basal insulins. The rapid-acting insulin market is also considerably smaller than the basal insulin market (~$1.6 billion vs. ~$2.5 billion quarterly), with fewer patients adopting mealtime insulins in the first place (partly due to growing competition from GLP-1s and SGLT-2s, which also address postprandial excursions and are easier drugs to take – offset by more type 2 patients staying older and eventually needing insulin for meals). How will these dynamics impact access and uptake of both Fiasp and Admelog and of course Humalog and Fiasp going forward? Only time will tell, and we’ll be watching extremely closely.

  • Fiasp was approved in Korea in 2Q18, and submission in Japan is slated for 3Q18. The product has been launched in 18 countries to-date.

13. Saxenda Soars +29% YOY Through Tough Commercial Landscape, Posting $138 Million; Highlighted as Portfolio Growth Driver

Saxenda (liraglutide 3.0 mg) surged another 29% YOY and 15% sequentially to DKK 883 million ($138 million) in 2Q18, from DKK 686 million ($105 million) in 2Q17 and DKK 770 million ($127 million) in 1Q18. Management attributed this positive performance to strong international uptake, primarily in the Middle East (where sales more than quadrupled YOY), Latin America (+91%), and Europe (+130%). Overall, OUS growth for Saxenda was stellar in 2Q18: Revenue from the obesity product nearly tripled YOY to DKK 280 million ($44 million). That said, US sales continue to make up the bulk of the Saxenda business (68%, to be exact). The product posted DKK 603 million ($94 million) in the US in Q2, which represents a less impressive 13% YOY increase. Nonetheless, Saxenda is an increasingly important product in Novo Nordisk’s diabetes/obesity portfolio, and its global performance to-date has been remarkable given steep commercial challenges in the obesity market. Saxenda is now available in 30 countries (five more than in 1Q18). During today’s webcast, management named Saxenda a “key innovative product” for driving overall company growth moving forward, alongside Victoza, Ozempic, and Tresiba. In 2Q18, Saxenda drove 20% of growth in Novo Nordisk’s diabetes/obesity business, on part with 18% for 1Q18, which are both marked increases over the 9%-14% of growth the product drove in 2017. Saxenda sales reflected 4% of total diabetes/obesity revenue in 2Q18. Our enthusiasm for this commercially successful obesity drug is tempered only by the fact that Saxenda’s list price is quite high while reimbursement, to our understanding, remains quite low. All obesity pharmacotherapies are prescribed at relatively low volume, and despite leading the market by value, Saxenda is actually the least commonly prescribed. In its 1Q18 presentation (slide 81), Novo Nordisk revealed that Saxenda holds only ~1%-2% of total obesity prescriptions (when generics are included), despite having ~50% market share by value (how much of this is due to cost barriers, versus, for example, injection burden?). Stigma, weight-based bias, poor reimbursement, under-diagnosis, and under-appreciation of obesity as a treatable medical disease remain significant barriers to uptake of obesity pharmacotherapy, and Novo Nordisk has detailed that only 2% of the 650 million people with obesity worldwide are treated with pharmacotherapy.

  • CSO Dr. Mads Thomsen briefly touched on the SELECT CVOT, expressing enthusiasm about the trial’s dual purpose of (i) providing clinically relevant data about semaglutide for obesity and (ii) creating a yardstick in obesity pharmacotherapy for CV outcomes. Indeed, SELECT is the first obesity CVOT powered to demonstrate superiority, with estimated enrollment of ~17,500. Currently, only Arena/Eisai’s Belviq (lorcaserin) has a CVOT in the books, which demonstrated non-inferiority on three-point MACE relative to placebo, as announced just last month. We have high hopes that SELECT could bring more attention to medical management of obesity. Dr. Donna Ryan put it best when at ENDO 2018 she proclaimed, “If in four years, we have evidence that a lifestyle intervention plus semaglutide produces a reduction in CV events and potentially CV mortality, it would be a game-changer for our field. One of the things that has really held obesity care back is that we don’t have this evidence that weight loss produces a reduction in CV events. It’s been shown with bariatric surgery (through SOS and other studies), but we don’t have this for medical weight loss. We need to show improvements in these hard endpoints to really legitimize our field.” Separately, we imagine Saxenda may be benefiting somewhat from positive LEADER results (lower dose liraglutide in a type 2 diabetes population), and Novo Nordisk has filed with FDA to get data from the CVOT added to the Saxenda label. EMA has already approved this update.

Saxenda Sales (1Q16-2Q18)

14. Direct-to-Consumer Ad Campaign Highlights A1c, Weight Loss Benefits of Ozempic

The first DTC campaigns for Ozempic have been launched, and they prominently highlight the A1c and weight loss benefits associated with the therapy. The upbeat TV ad, which went live just last week, lifts the tune from 1970s hit pop song “Magic” by Pilot. In a clever twist, the ad replaces the catchy “oh, oh, oh it’s magic” refrain with “oh, oh, oh Ozempic!” This ad was a big hit with our team – it emphasizes average weight loss of 12 pounds with the 1.0 mg dose, which also gave an A1c <7.0% in 73% of participants. Notably, text on the screen also compares Ozempic to Januvia (SUSTAIN 2). We’re on the lookout for how it appeals to a wider consumer base as it’s rolled out, and we’re thrilled to see Novo Nordisk squarely behind Ozempic promotion.

Pipeline Highlights

15. FDA Says Novo Nordisk Can Conduct One Superiority CVOT for Oral + Injectable Semaglutide; SOUL Replaced by Oral Semaglutide CVOT; No New CVOT Needed If PIONEER 6 Demonstrates Superiority for Oral Semaglutide

In a major shakeup – one that ultimately brings very good news – FDA will allow Novo Nordisk to conduct a single, superiority-powered CVOT for oral semaglutide, then perform a bridging study between oral and injectable semaglutide to support a CV indication for both formulations. CSO Dr. Mads Thomsen explained the implications during prepared remarks, and this regulatory shift was also highlighted in Novo Nordisk’s 2Q18 press release. The post-market SOUL CVOT for Ozempic has been canceled. Importantly, SELECT (evaluating the CV efficacy of injectable semaglutide in people with obesity) will proceed as planned and kick-off later this year. Instead of SOUL, the company will focus first and foremost on demonstrating cardioprotection with oral sema. In what Dr. Thomsen characterized as the alternative “upside” case, PIONEER 6 (expected to complete this September, data anticipated by year-end) could show CV superiority with oral semaglutide vs. placebo. In these circumstances, Dr. Thomsen suggested that FDA will likely accept the amalgamated data from SUSTAIN 6 and PIONEER 6 as evidence supporting a significant CV benefit with both oral and injectable semaglutide – how exciting would that be?! We see either of these two scenarios as a win for Novo Nordisk, as a single CVOT can cost ~$200-300 million. This is also a stride forward for the diabetes field: As we heard at ADA (and as we’ve been hearing at most diabetes conferences in the past few years), it may be time for FDA to revisit its 2008 CVOT guidance, which can delay new therapies from reaching the market and helping patients in-need. As thought leaders debate CV class effects for GLP-1 agonists and SGLT-2 inhibitors, there’s also an ethical challenge in assigning patients to placebo instead of a drug that could prevent major macrovascular complications and even death. Given how new oral GLP-1 is, we haven’t heard much commentary on the potential for cardioprotection with this alternative delivery route, but we sensed on today’s call that Novo Nordisk is confident in both formulations of semaglutide offering CV benefit. For now, the company plans to initiate a new superiority CVOT for oral semaglutide in 2019, pending the PIONEER 6 readout (i.e. we expect Novo Nordisk might cancel this CVOT if PIONEER 6 results are positive and exceptionally compelling). We heard chatter about these regulatory changes at ADA, but this is the first public statement by Novo Nordisk, and we’re impressed by FDA’s open-mindedness. Dr. Thomsen mentioned that the agency is moving toward looking at the clinical relevance of data; even though SUSTAIN 6 was a relatively shorter and smaller CVOT, he shared that FDA has acknowledged that it did find significant cardioprotection. As such, if these findings can be confirmed, be it with oral semaglutide, FDA thinks Ozempic’s CV indication would be adequately supported.

16. Phase 3 PIONEER Program for Oral Semaglutide On Track for 2019 NDA; Five More Studies, Including PIONEER 6 CVOT, to Read Out in 2018

With topline results released for half of the 10 trials in the phase 3 PIONEER program for oral semaglutide, Novo Nordisk is well on its way to filing the first-ever oral GLP-1 agonist for regulatory approval in 2019. See the image below for a summary of 14 mg dose results from PIONEER 1, PIONEER 2, PIONEER 3, PIONEER 4, and PIONEER 7, which Dr. Thomsen characterized as “positive across the board.” Dr. Thomsen highlighted PIONEER 3 in particular, dedicating an entire slide to results showing superiority on A1c-lowering and weight loss vs. sitagliptin (Merck’s DPP-4 inhibitor Januvia); we note that these PIONEER data were announced most recently (near the end of June). Based on what management shared during Novo Nordisk’s Capital Markets Day last year, the company intends to position oral semaglutide against other oral agents, including DPP-4s and SGLT-2s. This way, HCPs would consider prescribing oral sema earlier in the course of diabetes development, and it wouldn’t “compete” directly with injectable GLP-1 agonists – after all, Novo Nordisk still has Victoza and Ozempic in its portfolio (though we surely see it competing with Ozempic!). PIONEER 2 also established superiority of oral semaglutide vs. empagliflozin (Lilly/BI’s SGLT-2 inhibitor Jardiance), though the weight loss benefit was only statistically greater at 52 weeks (not at 26 weeks). Dr. Thomsen detailed that across the five completed trials, the 14 mg dose of oral semaglutide has given mean A1c reductions of 1.1%-1.5% and weight loss of ~6.4 to ~11 lbs. An A1c <7% has been achieved by an astounding 52%-80% of participants on the 14 mg dose. Dr. Thomsen continued by noting that 28%-49% of participants receiving 14 mg oral semaglutide achieved clinically-meaningful weight loss of ≥5%, and he emphasized that tolerability is on par with existing GLP-1 agonists (i.e. nausea is a side-effect of oral semaglutide, but it isn’t more frequent or more morbid than researchers have seen with most injectable GLP-1s). It seems increasingly likely that Novo Nordisk will pursue approval for a 14 mg dose of oral semaglutide – Dr. Thomsen was very focused on this dose during today’s call, and we’ve heard that the company previously conducted modeling studies to determine this optimal dose. It’s less clear whether  Novo Nordisk will also seek approval for lower therapeutic doses, and if so, which? FDA submission is slated for 2019, and we’ll keep our ears open for more details on the coming NDA.

PIONEER Phase 3 Program for Oral Semaglutide


Estimated Enrollment






Results presented at ADA 2018; Completed December 2017; Topline results announced February 2018



Lilly/BI’s Jardiance (empagliflozin)

Topline Data; Completed March 2018



Merck’s Januvia (sitagliptin)

Topline Data; Completed March 2018



Novo Nordisk’s Victoza (liraglutide)

Topline Data; Completed March 2018



Moderate renal impairment

Topline release expected 3Q18; Completed May 2018




Topline release expected 4Q18; Expected to complete September 2018



Flexible dose escalation

Topline Data; Expected to complete March 2019 (including trial extension)



Insulin add-on

Topline release expected 4Q18; Expected to complete August 2018



Placebo and liraglutide in Japan

Topline release expected 4Q18; Expected to complete August 2018



Lilly’s Trulicity (dulaglutide) as an add-on to oral agents in Japan

Topline release expected 3Q18; Completed July 2018

17. Obesity Pipeline: Two Phase 1 Candidates (FGF21 and Glucagon Analogs) Discontinued; Phase 3 STEP Program for Semaglutide in Obesity Initiated

Novo Nordisk discontinued two of its phase 1 obesity candidates: (i) the FGF21 analog (NN9499); and (ii) glucagon analog G530L (NN9030). Dr. Thomsen reaffirmed the company’s commitment to both GLP-1/glucagon dual agonist NN9277 and GLP-1/GIP/glucagon tri-agonist NN9423. He also clarified that the FGF21 analog will be evaluated in other disease areas, despite its termination for obesity. These discontinuations aren’t surprising given that management has been clear that they’ll “pick and choose” which of an initial six obesity candidates would advance through development. In 1Q18, long-acting amylin analog NN9838 became the first of Novo Nordisk’s early-stage obesity pipeline to advance into phase 2 (trial slated for a 1H19 start). A PYY analog remains in phase 1 development, both as monotherapy and in combination with semaglutide. Our sense is that Novo Nordisk is very excited about the amylin analog: a large phase 1 trial (n=96) in people with overweight/obesity wrapped up in January 2018 and the company made a prompt decision to move the candidate into phase 2; to our knowledge, however, data from the phase 1 study have yet to be announced despite a planned 2Q18 release. Additionally, we expect Novo Nordisk will advance at least one of its dual or tri-agonists into phase 2: Dr. Thomsen has previously highlighted the potential these hold for superior weight loss efficacy, and there’s no doubt we need pharmacotherapies that offer greater weight reductions. Recently, Lilly became the first company to advance a dual agonist into phase 3, on the heels of undisclosed but apparently very positive phase 2 data for its GLP-1/GIP dual agonist (to be presented at EASD 2018). On the safety front, Dr. Thomsen has stressed the importance of balancing ratios of agonism. Sanofi’s GLP-1/glucagon dual agonist showed GI toxicity in phase 2 due to a higher-than-expected GLP-1 effect in humans compared to what was seen in non-human primates. We imagine Novo Nordisk has taken some valuable learning from this observation and is proceeding with caution; we’ll keep a close eye on both candidates.

  • We were also glad to see the four-trial phase 3a STEP program for semaglutide 2.4 mg in obesity is underway, as planned, with all four trials currently recruiting. The SELECT CVOT (n=17,500) is posted to but is not yet recruiting (expected to start in 2018 and complete in September 2023). The STEP program includes (i) STEP 1 (n=1,950) investigating weight loss in patients with obesity, (ii) STEP 2 (n=1,200) in patients with type 2 diabetes not taking insulin, (iii) STEP 3 (n=600) examining semaglutide plus intensive lifestyle modification to maximize weight loss, and (iv) STEP 4 (n=1,060) investigating semaglutide for weight loss maintenance. All are expected to complete between March and May 2020, with readouts expected later that year.

Novo Nordisk Diabetes/Obesity Pipeline Summary

The table below reflects the latest updates, as far as we are aware, on Novo Nordisk’s diabetes/obesity pipeline products. Items highlighted in yellow indicate notable changes to the pipeline in 2Q18.



Class/Mechanism of Action



Oral semaglutide

Type 2 diabetes

Once-daily oral GLP-1 agonist

Phase 3

PIONEER 1 presented at ADA 2018; Topline data from PIONEER 2, PIONEER 3, PIONEER 4, PIONEER 7; Remaining five phase 3 studies to report in 2018; Phase 2 data presented at EASD 2016 and published in JAMA

Injectable semaglutide

Obesity, NASH

GLP-1 agonist

Phase 3

Phase 3a STEP program (four trials) initiated 2Q18; SELECT CVOT in obesity to launch 2018; Positive phase 2 data in obesity in 2Q17; Phase 2 NASH trial ongoing (expected to complete July 2020)


Type 1 diabetes (newly-diagnosed)

Anti-IL 21/GLP-1 agonist (liraglutide) combination for beta cell preservation

Phase 2

Phase 2 trial expected to complete March 2019; FDA Orphan Drug Designation in January 2017

LAI287 (NN1436)

Type 1 and type 2 diabetes

Once-weekly injectable basal insulin

Phase 2

Phase 2 trial slated to start by end of 2018, following positive phase 1 results

HypoPen 1513 (NN9513)

Type 1 and type 2 diabetes

Next-generation glucagon

Phase 1

Added to pipeline in 1Q18; Phase 1 study completed May 2018

AM833 (NN9838)


Long-acting amylin analog

Phase 1

Phase 2 trial slated to start in early 2019; Phase 1 readout (from study completed in January 2018) expected 2Q18 (not yet provided); Previous phase 1 trial completed March 2016

PYY1562 (NN9747)


PYY; Under development as monotherapy and in combination with semaglutide

Phase 1

Phase 1 trial completed February 2017; Advanced into phase 1 in 3Q15

G530L (NN9030)


Glucagon analog

Phase 1

Discontinued in 2Q18; Phase 1 trial of standalone agent completed July 2017; Phase 1 trial of co-administration with liraglutide completed September 2017; Previous phase 1 trial completed July 2016

FGF21 Obesity (NN9499)


FGF21 analog

Phase 1


Discontinued for obesity in 2Q18 but will remain under investigation in other disease areas; New phase 1 trial posted in 1Q18, expected to complete April 2019 (status unclear); Previous phase 1 trial completed October 2017

GG-co-agonist (NN9277)


GLP-1/glucagon dual agonist

Phase 1

New phase 1 study posted to in 4Q17, expected to complete December 2018; Previous phase 1 trial completed September 2017

Tri-agonist 1706 (NN9423)


GLP-1/GIP/glucagon tri-agonist

Phase 1

Phase 1 trial completed August 2017; Management has alluded to second phase 1 study starting up on 1Q18 call (not yet found on; Added to pipeline in 1Q17

Questions and Answers

On Insulin & Pricing Pressure

Q: You are reporting that you expect negative basal insulin pricing in 2019, but yet you have increased the list price of Tresiba and Levemir twice this year and even once after the blueprint from the Trump administration. I think we have to go back to 2015, since you lifted the price of Levemir the last time. What exactly do you expect to get out of making two list price squeezes while you still see net prices going down, and run the risk of a Twitter storm if somebody would notice?

Mr. Lars Jørgensen (CEO): We all know that in the basal insulin category we see pricing going down. We have a market structure where we can agree that it's not working with the gross-to-net business model. But that is how the market works right now. We have to compete in the market structure as it is. And when we have to give rebates and rebate enhancement on a yearly basis, the option we have is to work with list pricing. So this is how we compete. And when you look at the price increases we have taken and compare them over a two-year period, they are not that different compared to what our key competitors have taken. So I think the price and list price changes are similar across the industry, and this is how the market works right now, and we have to play along with that. We are committed to participating in changing the market structure, but we cannot do this on our own.

Q: The U.S. administration has their blueprint out there – how do you think that could impact the diabetes market in 2019?

Mr. Jørgensen: I think the size of the blueprint and also the complexity of all of the answers submitted from the pharmaceutical companies illustrates nicely the complexity of it. There is a lot of talk about how rebates could disappear, so that we actually start competing on a transparent net price basis and competing on clinical differentiation and classical competition. Like other pharmaceutical companies, we would welcome something that goes in that direction, but I’ll also acknowledge that that is hard to do overnight because the rebates we put into the supply chain today are used to fund various aspects of the health care system. If you look at it from a diabetes point of view, I think this is a category that's different from some other categories in the sense that we have quite high rebate levels and we see declining pricing. And I think the administration understands that there's tough competition in the insulin space and I do not think that all the rhetoric that comes out about pricing is actually linked to that.

Q: You have said that you keep pricing rather neutral on short-acting insulin. Do you see significant traction for the biosimilar [Admelog] going into 2019, potentially putting pressure on your volumes in short-acting insulins?

Mr. Jørgensen: We do not see a significant pressure from analogs going into 2019. As I understand it, they are mainly going to play in the Medicaid segment, and this is a segment where the margins are very, very low.

On GLP-1

Q: Will there be roughly mutual pricing for GLP-1 into 2019? Is your commentary mutual price in each channel, or does it include further channel mix changes that we could anticipate into 2019?

Mr. Karsten Knudsen (CFO): Our commentary around 2019 pricing is average pricing across channels. Channel mix is included in this comment. In terms of GLP-1 pricing for 2019, we do not expect any significant price decreases on our other product groups, including GLP-1s and short acting insulins.

Q: You say you've got about 60% market access for Ozempic in the U.S. Is that enough to not annoy some doctors, since when they write the script, that means that almost 1 in 2 patients will be rejected? Meanwhile, you do have 90% or 80% plus acceptance for Victoza. Should we imagine that as you are now starting that very active promotion for Ozempic, do you think that 60% will quickly rise to 80%+ before the end of the year?

Mr. Jørgensen: We are very pleased with the access we have achieved in the US and we have explained in the past that we look at this on a territory-by-territory level. There are still a few pockets where we do not have access, and in these areas the sales force is continuing to focus on Victoza. I do not believe we have a big issue, as you allude to, where physicians get frustrated about not being able to prescribe a product. Regarding future access, we expect that we will gradually expand the access level. I cannot tell you what it will be as we exit the year. Of course, we're glad to see the recent formulary update from Express Scripts, where they have not included Ozempic on the exclusions list 2019.

Q: You indicated that you have essentially switched marketing efforts from Victoza to Ozempic. Victoza, when one adjusts for the rebate affect, has done remarkably well in the absence of that promotion. How promotion sensitive is the GLP-1 category in the U.S.? How does that influence your thoughts on the Ozempic launch and, going forward, the launch for oral semaglutide?

Ms. Camilla Sylvest (EVP, Commercial Strategy & Corporate Affairs): It has been very important for us to make sure we have ensured access for Ozempic before we shift our marketing efforts to Ozempic. Having said that, access is above 60% now, and we feel that's the right time to make sure that almost all districts are in “strike mode.” We do see and expect that we will continue to accelerate uptake on Ozempic, but we stay within the guidance given earlier in the year to DKK 1 billion (~$160 million) for 2018, though we expect to land above that. In terms of the impact on Victoza, as Karsten alluded to before, there has indeed been an impact on Victoza and we do expect that putting all our promotional efforts, including the new DTC campaign, on Ozempic will mean that we will have a net benefit on the GLP-1 segment in terms of market share, as you can already begin to see in the last few weeks and months.

Q: What will you be presenting at EASD this year?

Dr. Mads Thomsen (CSO): There will be a dedicated symposium for the oral GLP-1 field (Wednesday, October 3 at 5:30pm). It will be academic and clinical investigators at the highest level who will be presenting this data, not Novo Nordisk colleagues.

Q: For Ozempic, can you comment on how many markets you see you’re launching into for the remainder of 2018?

Ms. Sylvest: We are continuing our rollout in Europe now. Over the next half-year, we expect to rollout in a number of countries in Europe, starting a few weeks from now. In addition to the US, we’ve also seen a very strong launch in Canada, where Ozempic is seeing really good uptake and being very well received.

On CVOT Changes

Q: Could you give us some more detail on the CVOTs behind Ozempic and oral semaglutide? As you discuss these with European authorities, are they as open as the US ones?

Dr. Thomsen: Inasmuch as the European Commission and CHMP are already including case-by-case data from the cardiovascular outcome trials, it is mostly an American discussion and the discussion has evolved to the tune that FDA recognizes that SUSTAIN 6, despite being a short trial with only slightly more than 3,000 patients, still created a quite significant and robust MACE reduction. And this has led the agency to say that, if such findings can be confirmed, be it with oral semaglutide, that will mean that we can bridge between the two formulations, injectable Ozempic and oral semaglutide, and use the data for achieving a cardiovascular indication in secondary prevention. There's the upside scenario where PIONEER 6 reads out, before Christmastime, with data that are strong enough for the FDA to accept a SUSTAIN 6 like labeling in the Ozempic package insert just based on the amalgamated data from SUSTAIN and PIONEER 6 trials. But that is what I would consider an upside case.

In general, I think we are moving into a scenario where the Agency is looking at the clinical relevance of data. And nobody will belittle the fact that the SUSTAIN 6 data are highly clinically relevant in magnitude – but they also have to be reproducible, and that reproducibility will occur either via the oral SOUL trial, or if we are extremely lucky via the PIONEER 6 trial. So, that is the thinking of the FDA. And then in obesity, we have decided to conduct a big CVOT with 17,000 patients, the SELECT study. We’re doing that because we believe it serves a dual purpose, one of which is to create a yardstick in pharmacotherapy of obesity to demonstrate that chronic treatment in obese patients may actually prolong their lives and significantly improve their heart outcomes.


--by Ann Carracher, Martin Kurian, Peter Rentzepis, Payal Marathe, and Kelly Close