Shares of Novo Nordisk (NVO) rallied on May 25^th after the U.S. Food and Drug Administration (FDA) approved the combination drug IdegLira for the treatment of type II Diabetes.  The drug combines two of Novo’s previously existing drugs; Tresiba, (insulin degludec) along with its GLP-1 agonist, Victoza (liraglutide) showed in clinical trials that the drug helped patients control their blood sugar with one injection rather than two. It will take some time for investigators to further study whether this is a good first line therapy, but the combination of the two medications will make it more convenient for patients who use both drugs separately, and is likely to improve sales to existing patients.   

We think the company is undervalued and continue to like its prospects for the future due to its methodical implementation of its long term business plan. We expect a move to the low $70s on a break above the $60 area.  Novo also pays a $0 .96 per year annual dividend (1.8%) and continues to expand its market share around the world. Novo’s recent earnings report was encouraging as was its forward guidance.   Novo continues to position itself well on a global basis as the world’s leader in Diabetes treatment. There are 22 million diabetics in the U.S. alone, and an expected area of growth for NVO is in China where diabetics numbers are increasing as is access to treatment.

Disclosure: I own shares in Novo Nordisk.