Gaining approval to market an exisiting drug for new indications is one of the most important ways that pharmaceutical companies earn additional revenue from their products. Shares of drugmaker Novo Nordisk (NYSE:NVO) fell more than 5% yesterday, after it announced the failure of a phase 3 label-expanding study of coagulant NovoSeven.
NovoSeven is already approved to treat or prevent bleeding in various settings for patients with hemophilia. It's become a blockbuster drug, with more than a billion dollars in sales from this product label alone. In an attempt to expand the label of the drug, Novo Nordisk was testing NovoSeven as a treatment for patients with bleeding in the brain, but the drug failed to provide any long-term benefits in clinical trial results announced yesterday.
Novo Nordisk is best known for its diabetes treatments, but last year, NovoSeven accounted for 14% of its revenues. It also enjoyed 11% sales growth versus 2005. Management stated in its last financial conference call that without new label indications for NovoSeven, it would be hard to see double-digit growth rates in the future for this strategically important drug. On the conference call to discuss the failed study, management reiterated its guidance for 10% revenue growth in NovoSeven this year.
Even though Novo Nordisk won't seek regulatory approval to market NovoSeven as a treatment for intracerebral hemorrhage, the trial may still support off-label usage of the drug -- and corresponding higher sales. The study may have failed because it didn't include enough patients, or for some outside factor besides the drug's efficacy. Management stated that NovoSeven was reducing bleeding in the brain during the trial, but for some reason, this didn't translate into improved long-term patient outcomes. More on these paradoxical results will be known when the study is reviewed further.
NovoSeven is still in testing as a treatment for a host of indications with bleeding-related problems, like acute trauma and heart surgery. Phase 2 and 3 trials are still ongoing in many of these indications, with results from the phase 2 trial in heart surgery expected later this year.
The net result of this failed study is obviously a negative for Novo Nordisk. Since the drug didn't produce any unusual safety concerns or other problems that would affect its use in its already-approved indications, the results aren't as negative as they would otherwise be. Investors looking to pick up shares of Novo on the cheap just got their chance.
Fool contributor Brian Lawler does not own shares of any company mentioned in this article.
