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| Novo Nordisk CEO Lars Rebien Sørensen |
In Denmark, bad news about a public company is required to travel fast. So when Novo Nordisk ($NVO) received its complete response letter from the FDA for Tresiba on a Friday evening in early February, the Danish financial authorities believe the company should have gone public with the information that night. Because the company waited to digest the news and actually reported it two days later on the following Sunday, the authorities believe Novo Nordisk violated the rules of the game, an infraction which they have now reported to the police.
Novo Nordisk spelled it all out in a release today, noting that the Danish Financial Supervisory Authority (FSA) informed it of its decision to call in the cops after concluding that Novo Nordisk didn't obey the letter of the law as written in Section 27 (1) of the Danish Securities Trading Act.
Novo responded by saying the company was entitled to a delay "until the implications of the decision had been adequately analyzed, which they had been on the Sunday." And putting out the news on the Sunday, the company added, was still timely in their opinion, an attitude which they say was shared by NASDAQ OMX Copenhagen, which decided to take a look at the timing that same week, only to conclude that Novo had done nothing wrong.
Novo Nordisk won't be sweating out the results of the police probe. Reuters quotes an FSA official as saying that these cases are usually resolved with a fine of anywhere from $9,000 to $37,000--a number that would look very much like a traffic ticket to a company the size of the Danish pharma. But it is another unwelcome sour note for a company that had been expecting to start racking up big sales in the U.S., rather than discussing regulatory rejections and fines.
Novo's real fine came from the market, where its shares dropped 13% on the news. The pharma company also faces a major delay for what has been a hoped-for blockbuster along with untold millions of dollars of additional development costs.
Delaying the release of bad regulatory news is nothing new in the industry. Just a few weeks ago Sanofi ($SNY) waited 5 days to report that the FDA decided to clamp a clinical hold on its program for the cancer drug fedratinib after investigators reported some serious safety concerns. The delay gave it time to review the program and announce that they would shut it down.
- here's the release from Novo
- get the report from Reuters
- and the analysis from the Financial Times