Novo Nordisk said today it is under investigation by authorities in its headquarters country of Denmark after waiting two days to disclose the FDA’s refusal to approve its insulin products Tresiba® (insulin degludec) and Ryzodeg® (insulin degludec/insulin aspart) back in February.
The global leader in insulin production should have disclosed the FDA’s refusal, contained in a Complete Response Letter to the company, the day it happened—February 8, a Friday, instead of waiting two days later until February 10, a Sunday, the Danish Financial Supervisory Authority (FSA) said today.
The FSA reported Novo Nordisk to Danish police, complaining that the company violated Section 27 (1) of the Danish Securities Trading Act, which requires public companies to disclose inside information as soon as possible. In a statement, the company said it carried out “an intensive investigation and evaluation of the implications and impact of the agency’s decision” before disclosing the substance of the FDA’s complete response letter.
“Even if the disclosure obligation could be said to apply already on the Friday evening, the company was entitled to delay public disclosure until the implications of the decision had been adequately analyzed, which they had been on the Sunday,” the company said in a statement. “Novo Nordisk is of the opinion that the company announcement was issued in a timely manner, but acknowledges the decision of the Danish Financial Supervisory Authority and will cooperate with the relevant authorities in their investigation.”
Novo Nordisk also noted that back on February 12, NASDAQ OMX Copenhagen launched a similar investigation into whether Novo Nordisk’s actions had violated disclosure obligations applicable to all companies listed on that stock exchange. Three months later on May 8, NASDAQ OMX Copenhagen told Novo Nordisk it considered the matter closed, since it found no basis for concluding that disclosure rules had been broken.
Fines for disclosure violations are typically in the range of DKK 50,000 to DKK 200,000 Danish crowns ($9,000 to $37,000), Hanne Rae Larsen, head of the FSA's stock exchange division, told Reuters. Novo Nordisk finished last year with a net profit of DKK 21.4 billion ($3.9 billion). Last year, according to its website, the FSA recorded 19 violations with regards to disclosure of inside information, compared with 20 in 2011.
Tresiba and Ryzodeg are two key components in Novo Nordisk’s plans for a beachhead in the long-acting basal insulin segment of the diabetes drug market. The segment is now dominated by Sanofi’s Lantus (insulin glargine), which has grown to generate blockbuster-level annual sales.
In its Complete Response letter, the FDA threw a curve to Novo by insisting on another clinical trial to assess the cardiovascular risk of Tresiba and Ryzodeg. The FDA’s action came less than a month after the European Commission granted Novo approval to market the drugs, with launches taking place across the continent through 2014.
Worse for Novo, the FDA tied any future approval of the drug to the company resolving complaints the agency made in a warning letter December 12, 2012. The FDA said Novo failed to prevent microbiological contamination of drug products and also failed to investigate whether a faulty batch had been distributed from its manufacturing plant in Novo Alle, Bagsvaerd Denmark, following a March 12–20, 2012 inspection there by agency personnel.