Diabetes: Novo Nordisk Takes Big Risk With Victoza

Novo Nordisk, with its US headquarters in Plainsboro, has become a pharmaceutical powerhouse in the battle against diabetes.

Novo Nordisk’s gamble on Victoza, its new drug for Type 2 diabetes, often looked like a long shot.

The company’s scientists spent nearly 10 years trying to develop a molecule that would act like a naturally occuring hormone called GLP-1. Once they did, there were still costly setbacks, puzzling questions and enormous doubts, none of which managed to thwart one researcher’s passionate belief in the hormone’s ability to be turned into a drug for lowering blood sugar.

In many ways, the determination that drove Victoza’s development demonstrates just how Novo Nordisk has become such a powerhouse in the battle against diabetes.

After nudging Eli Lilly out as the dominant player in the U.S. diabetes market nearly a decade ago, Novo Nordisk has seen its sales soar. Of course, that’s due in no small part to the nation’s troubling epidemic of diabetes, which creates a huge market for new medicines such as Victoza.

And as the disease grows more prevalent and more costly, the Danish health-care giant, which employs about 1,000 people at its US headquarters in Plainsboro, finds itself trying to balance its search for new treatments with an even more daunting quest: finding a cure.

“They’ve come a long way,’’ Donny Wong, an analyst who follows diabetes drugmakers for Decision Resources. “They’ve been growing rapidly.” When Novo Nordisk entered the US market, Eli Lilly’s insulin sales volume outpaced its new competitor 2-to-1. Today, Novo Nordisk controls 42 percent of the total US insulin market, with products such as NovoLog and Levemir.

Lars Rebien Sorensen, chief executive officer of Novo Nordisk, said the company’s insulin business in the US remained small for years, but has grown steadily. Its sales force has ballooned from 165 in the late 1990s to about 1,900 today.

“The last eight years or so have been extraordinary,’’ Sorensen said during a recent interview in New York City. “If you look at our growth, two-thirds of it comes from the U.S.’’

To understand the significance of the US to the company, just look at the prospects for Victoza, which was approved by federal drug regulators earlier this year. Nearly 70 percent of the drug’s value is projected to come from the US, according to Sorensen.

BUILDING A PRESENCE

Novo Nordisk was formed in 1989 when two 76-year-old Danish insulin makers merged. From the start, the company focused on diabetes.

While Novo Nordisk, which generated $9.5 billion in sales last year, remains focused on making insulin, it also makes money on treatments for hemophilia and hormone-replacement therapies. In fact, the hemophilia treatment NovoSeven provided Novo Nordisk with the commercial tail wind it needed to begin building its presence in this country.

With an estimated 24 million Americans diagnosed with diabetes — and many millions more around the world — the market for drug companies is huge and growing. Decision Resources, a research firm that follows the health-care industry, expects the global market for Type 2 diabetes to reach nearly $35 billion, up from $17.5 billion in 2008.

While Novo Nordisk wrestled market share away from Eli Lilly and steadily grew its insulin business in the US, other drugmakers were developing treatments to help address the surge in Type 2 diabetes.

Amylin Pharmaceuticals was one of them. The San Diego-based drugmaker, which partnered with Eli Lilly, beat Novo Nordisk to market with Byetta, the first drug in the GLP-1 class.

GLP-1 is short for glucagon-like peptide 1, a naturally occuring compound that works on different organs to lower the levels of blood sugar. For overweight diabetics, there’s another benefit: GLP-1 attaches to a receptor in the brain to decrease appetite, which over time, leads to weight loss.

Wong said although insulin is used to treat both types of diabetes, Novo Nordisk has few other targeted therapies for Type 2. “It is a relative newcomer to that space,’’ he said.

Novo Nordisk jumped into the race early on, according to Sorensen, but its progress getting to the finish line was slow and hampered by the sort of issues that characterize all drug development.

“It took us some time, I have to admit,’’ Sorensen said.

‘MRS. LIRAGLUTIDE’

Lotte Bjerre Knudsen, a senior scientist at Novo Nordisk, led the 20-year effort to develop Victoza. Before the drug received its brand name, it was known by its scientific name, liraglutide. And in the research laboratory, Knudsen’s dedication earned her the nickname “Mrs. Liraglutide.’’

“There were doubts about whether this would ever be a drug,’’ Knudsen said in an interview last week from Buenos Aires, where she was vacationing. “When you’re making something completely novel, it’s not so untypical.”

The promise of the GLP-1 class of drugs fueled the company’s efforts through major setbacks, including a flawed dosing study that cost researchers 18 months. With each setback, Knudsen had to defend the project to management.

Knudsen said her team postponed celebrating Victoza’s development until the drug was approved by U.S. regulators. “It wasn’t good enough until we received that,” she said.

Sorensen isn’t ruffled by the criticism that his company took too long to get Victoza to market. “This would typically be our philsophy, to ensure that we have the most optimal molecule,’’ he said. “It has occasionally led to us being second to the market.’’

But being second does have disadvantages. Wong, the analyst with Decision Resources, said Novo Nordisk already has a new competitor nipping at its heels.

Wong said analysts at Decision Resources are contemplating lowering projections that suggested Victoza would generate about $500 million a year by 2019. The company has predicted Victoza will be a blockbuster — a name typically given to a drug that generates $1 billion in annual sales — within five years.

Wong said Victoza’s challenge will come later this year when Amylin and Eli Lilly are expected to launch Bydureon. The new drug offers patients a more convenient medicine they have to inject once a week compared with three times a day or Victoza’s once-a-day regimen.

The ability of Novo Nordisk to capture market share depends on how rapidly it can persuade diabetics to try its once-daily formulation before Amylin’s Bydureon comes on the market.

“The problem is Novo Nordisk has a very narrow window of opportunity,” Wong said.

WORKING ON A CURE

In the business world, it seems counterintuitive for a company to diligently work on something that has the potential to put it out of business. Yet, at Novo Nordisk, scientists have spent the past decade doing stem cell research in hopes of discovering a cure for diabetes.

“We have a deep commitment to this, but there’s also a realization that it’s a tough nut to crack,’’ said Alan Moses, chief medical officer at Novo Nordisk. “It’s getting closer to reality.’’

But David Kendall, chief scientific and medical officer for the American Diabetes Association, said researchers have had high hopes of finding a cure for diabetes for decades. In addition to stem cell research, scientists are studying other possibilities, including the development of an artificial pancreas.

“We’re talking about years of development that are still necessary,’’ he said. “Is it three to five or is it 20, it’s difficult to say.’’

Susan Todd/The Star-Ledger

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