Novo Nordisk pulls out of inflammatory disorders research

Danish diabetes care giant Novo Nordisk (NOV: N) says it has decided to discontinue all its R&D activities within inflammatory disorders while increasing its efforts within diabetes prevention and treatment, obesity and diabetes complications.

The decision, announced this morning, follows a review of Novo Nordisk's strategic position in the therapeutic area after the recent discontinuation of the company's most advanced compound, anti-interlleukin-20 for the treatment of rheumatoid arthritis.

"The discontinuation of anti-IL-20 delays our earliest possible entrance into the market for anti-inflammatory therapeutics to the late 2020s," said Mads Krogsgaard Thomsen, executive vice president and chief science officer of Novo Nordisk. He added: "Significant unmet opportunities remain within diabetes, including prevention, obesity and diabetes complications. We have therefore decided to further increase our R&D efforts within diabetes which is our main business area."

The decision will directly impact approximately 400 employees. Novo Nordisk currently estimates that it will be possible to offer other positions within the company to more than half of the affected employees. The company has initiated negotiations with the relevant local unions regarding redundancy plans.

Financial implications

As a consequence of the discontinuation of all R&D activities within inflammatory disorders, the company expects to incur a non-recurring cost of around 700 million Danish kroner ($123.7 million) in 2014. Of this around 400 million kroner relates to impairment of intangible assets, and around 300 million Danish kroner relates to other exit costs such as project closures and severance payments.

Novo Nordisk expects to provide an update of the financial guidance for 2014 in connection with the release of the financial results for the first nine months of 2014 on October 30, 2014.