Timing of Complete Response Letter Disclosure Leads to Investigation into Novo Nordisk

Posted 10 December 2013 | By

Danish pharmaceutical manufacturing giant Novo Nordisk is the target of a new investigation into whether the company provided adequate disclosure to its investors regarding the status of two drug products it had sought approval for from the US Food and Drug Administration (FDA).


The investigation, first revealed by Novo in a 10 December 2013 press statement, regards the complete response letters (CRLs) sent by FDA to Novo on 8 February 2013 for two products, Tresiba and Ryzodeg.

CRLs are used by FDA to indicate that a marketing application is not approvable in its current form, and most often includes information indicating which steps must be taken-often additional clinical studies-to make the application approvable.

According to company records, Novo Nordisk did not disclose the existence of the CRLs until 10 February 2013. As with many CRLs, FDA's letter to Novo Nordisk requested that the company obtain additional cardiovascular data from a dedicated trial-a development which serves to significantly delay the application at significant cost to the company.

However, the CRL also brought to light FDA's view that a previous Warning Letter sent to the company in December 2012 regarding current good manufacturing practice (CGMP) violations had not yet been successfully resolved at the time of the CRL.

The Investigation

The problem, Novo explained in a 10 December statement, is that the Danish Financial Supervisory Authority failed to disclose this information to investors "as soon as possible." The company's press release to investors came approximately two days after the information was made available to the company by FDA, increasing the chance that investors could trade based on insider data or other leaks.

"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," the company said in a statement. "Novo Nordisk's view is that 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."

Share prices for the company plummeted (1,070 kroner to 928.5 per share) on 11 February when the market opened, wiping out what Bloombergnoted was almost $14.2 billion of market value.

Any fine would be miniscule compared to the losses already suffered by the company in market share, Reutersreported-about $9,000 to $37,000. The real loss, the publication noted, would likely be with respect to the company's image.


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