Novo Nordisk (NVO-NYSE, $47.12) Successfully Demonstrates Oral GLP1 Efficacy.

Novo Nordisk, a long held position within the model portfolio, today announced phase 2 test results on its new oral diabetes medication.

There are potential breakthrough implications that one can glean from this result. Until now, the newest and most effective diabetes medications have failed in oral formulations. This is due to a combination of factors which include molecular size as well as the premature breakdown of synthetic hormones in the human digestive system. A successful phase two test may represent a watershed for Novo Nordisk, as well as for the diabetic community in general.

Of late, there has been some retail investor chatter about the prospects for inhaled medication; institutional investors tend to be less sanguine about potential market share for companies who focus upon inhaled diabetes products. My view is that those currently enamored with inhaled insulin may greatly be underestimating the potential for cancerous tumor growth in the pulmonary system. Exubera, an inhaled insulin formerly produced by Pfizer, indicated a lung cancer rate roughly 5X that of other insulin medications, prior to its hasty removal from the market. Eli Lilly also shelved a late stage inhaled insulin product with a far superior delivery system, after noting impairment of lung functions in users. In fact, the vast majority of pharma giants recognized the pulmonary risks in early drug developments and shelved their research. Novo Nordisk was one of those companies that evaluated inhaled systems but ultimately opted to discontinue product development. Diabetes is a chronic, but treatable, condition; lung cancers, the third most common form of cancer and one that affects roughly 6% to 7.6% of the population, is acute.

Given the substantial body of medical evidence, and all else being equal, a patient with diabetes will logically prefer an oral delivery system over an inhaler. Medical practitioners will have few objections to prescribing an oral GLP1 over injections or inhalers. A successful phase 3 study outcome, while not assured, could be very disruptive for competing delivery systems; an oral medication could obviate the need for certain products, currently on offer, by competitors.

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