Danish drugmaker Novo Nordisk reported forecast-beating second-quarter profit and raised its guidance but disappointed investors by not giving more solid news on the U.S. approval process for its new diabetes drug.
Earnings before interest and tax (EBIT) rose 44 percent to 4.09 billion Danish crowns ($790.6 million) from the same quarter last year, beat all the estimates in a range of 3.55 billion to 3.94 billion crowns in a Reuters poll of 20 analysts.
The world's biggest insulin producer said in its earnings statement that it was in constructive dialogue with the U.S. Food and Drug Administration on Victoza and it expected formal feedback from the FDA later this quarter.
CFO Jesper Brandgaard told Reuters that the company expected a positive response from the U.S. regulator.
They (the FDA) have told us that we can expect an answer either in August or September, he said.
Novo Nordisk shares had jumped 3.8 percent on Wednesday when Morgan Stanley analysts predicted Victoza -- already available in the United Kingdom, Germany and Denmark -- could win U.S. approval this year.
On Thursday, Novo Nordisk shares initially rose on the results but erased gains and fell 0.6 percent to 316 crowns by 0959 GMT, underperforming a 0.1 percent rise in the DJ Stoxx European pharma index .SXDP.
Some analysts said they were disappointed that company did not say something more definite about the approval process in their quarterly results.
Piper Jaffray analysts said in a research note that the stock was unlikely to maintain recent momentum if meaningful clarity is not provided on liraglutide (Victoza) in the U.S.
Sydbank analyst Rune Dahl said he the results were strong and there was no sign of an immediate slowedown but he had hoped for more news on the Victoza approval process.
It is still not possible to say anything concrete about the time frame for approval, Dahl said.
FY FORECAST UP
Novo Nordisk, a rival to such groups as Sanofi-Aventis and Eli Lilly, raised its forecast for full-year 2009 operating profit growth in local currencies to 12-14 percent from an earlier projection of at least 10 percent.
EBIT growth in crowns would be around 4 percentage points higher than in local currencies, the company said.
The performance in the first half of 2009 is encouraging and we raise our guidance for underlying operating profit growth, Chief Executive Lars Rebien Sorensen said in the statement.
Earnings in the first half of 2009 were driven by 31 percent sales growth for modern insulins and by North American sales of diabetes care products which grew 41 percent in Danish crown terms, Novo Nordisk said.
The strong report followed generally buoyant results from other global pharmaceutical groups, demonstrating the resilient demand for drugs during the economic downturn.
However, despite the strong quarter, CFO Brandgaard told Reuters that the global insulin markets were growing more slowly than the company previously expected due to the global economic crisis. He said Novo Nordisk expected gross margins to improve by between 50 and 100 basis points in both 2010 and 2011 in terms of local currencies. ($1=5.173 Danish crowns) (Writing by Teis Jensen and John Acher; additional reporting by Henriette Jacobsen; editing by Simon Jessop, Mike Nesbit and Karen Foster)