* Danish FSA reports Novo to police over slow Tresiba report
* Novo did not reveal Feb. 8 setback in U.S. until Feb. 10
* Novo shares plummeted on Feb. 11 following news
* Company may face Danish fine of $9,000 to $36,000
By Shida Chayesteh
COPENHAGEN, Dec 10 Novo Nordisk, the
world's largest insulin maker, is facing a Danish police probe
after it was reported by the financial watchdog for not
disclosing at once that its big new product hope Tresiba had
been refused U.S. approval.
Although the probe is unlikely to have a serious financial
impact on the company, the largest by market value in the Nordic
region, it may tarnish its reputation and could leave it open to
lawsuits from investors in the United States, where its shares
The Danish Financial Supervisory Authority (FSA) said on
Tuesday Novo should have issued a statement about the U.S.
decision not to approve Tresiba, its new long-acting insulin, on
the evening of Friday, Feb. 8 instead of waiting until Sunday,
The news that the Food and Drug Administration (FDA) had
rejected Tresiba, a treatment for diabetes, and a related
combination drug called Ryzodeg was a major blow to Novo and
confounded the expectations of investors, who had expected a
Shares in Novo fell as much as 17 percent at one stage on
Feb. 11, their biggest daily decline since 2002.
Novo said on Tuesday its announcement about Tresiba was
issued "in a timely manner". However the company said it would
cooperate with the investigation, which could result in a modest
Hanne Rae Larsen, head of the FSA's stock exchange division,
said fines for disclosure violations were typically in the range
of 50,000 to 200,000 Danish crowns ($9,000-37,000), a fraction
of the 21.4 billion crowns net profit Novo made last year.
"When the case goes over to the police, they will usually
try to close it with a fine. If Novo Nordisk accepts any
sanction, the case will close. If Novo does not recognise that
there has been a violation, there will be a lawsuit," she told
Sydbank analyst Soren Lontoft Hansen said: "It will cost
them more in terms of image than it will financially. What might
be a bigger problem financially is if U.S. shareholders get
together in a joint action."
A police spokesman said it was still awaiting details of the
case to be passed on from the FSA.
The drugmaker argues that even if the disclosure obligation
applied from Friday evening - the time it received the bad news
from the FDA - it was entitled to delay an announcement until it
had analysed the implications.
But the situation is complicated by the fact that although
the FDA news came after the Danish market was closed, it was
still possible to trade Novo shares over the counter and through
banking systems. Furthermore, trading in Novo's American
depository receipts was still active.
A Novo spokesman said the company's U.S. unit received
notification from the FDA at around 5 p.m. Danish time on Feb.
8, just as the Copenhagen market was closing, but it only sent
the message on to headquarters "some hours" later.
There was an internal conference call about the matter
between 9 p.m. and 10 p.m. that night and Novo finally published
the information on Sunday, Feb. 10, at 9.09 p.m., according to
Novo has benefited more than any other company from a global
epidemic of type 2 diabetes, which in recent years has fuelled
demand for its products and lifted its shares to a lofty premium
over other European drugmakers.
Tresiba was widely seen as another sure-fire winner,
especially as the drug had already won approval in Europe and
Japan, and also got a positive recommendation from an advisory
panel to the U.S. FDA in November 2012.
In the event, the FDA requested additional data from a new
clinical trial focused on cardiovascular side-effects before it
would consider approving Tresiba.
The U.S. setback, which will delay Tresiba's launch in the
world's biggest market by several years, is good news for rival
makers of insulin medicines, notably France's Sanofi,
whose Lantus product is threatened by Novo's newer
Novo noted that the Copenhagen stock market had launched a
similar investigation in February into whether it had violated
specific stock exchange disclosure rules, but had concluded in
May that there was no case to answer.
The FSA, however, said the fact the local market was closed
had no bearing on Novo's disclosure obligations under the
Security Trading Act.
Shares in Novo were 0.6 percent lower by 1026 GMT, slightly
underperforming a 0.3 decline in the European pharmaceuticals