UPDATE 2-Novo Nordisk hits high as FDA approves diabetes drug

COPENHAGEN, Jan 26 (Reuters) - Shares in Novo Nordisk rose to an all-time high on Tuesday after U.S. regulators approved its type 2 diabetes drug Victoza drug, which has the potential to be a blockbuster for the Danish drugmaker.

The diabetes drug, which was approved in Europe last year, had faced delays in the U.S. after a FDA advisory panel raised questions about the medicine's safety.

Novo Nordisk, which plans to launch Victoza in the U.S. within weeks, said on Tuesday the price of the drug would match that of Eli Lilly's and Amylin Pharmaceuticals Inc's rival drug Byetta.

North America has the highest prevalence of diabetes in the world, with more than 10 percent of the adult population affected.

The U.S Food and Drug Administration approved Victoza for treatment of type 2 diabetes late on Monday.

Shares in the world's biggest insulin maker hit a record high of 371.60 Danish crowns on the news. By 1201 GMT the stock was up 5.1 percent at 365.10 crowns compared with a flat Copenhagen blue-chip index.

'Novo got Victoza approved in the U.S. with one small restriction concerning information to patients on risks, but that doesn't alter the fact that great earnings are on the way,' Amagerbanken said in a research note.

Besides Eli Lilly, Novo will also compete with Amylin Pharmaceuticals Inc with Victoza.

'The pricing, I think, for our 1.2 milligramme product (daily dose) will be equal or similar to that of Byetta, 10 microgrammes, which is $8 per day,' Chief Executive Officer Lars Rebien Sorensen told analysts and journalists in a conference call on Tuesday.

'We repeat our expectation that Victoza has potential for being a blockbuster within the first five years of the launch, i.e. sales of more than $1 billion,' Novo Chief Science Officer Mads Krogsgaard Thomsen told the conference.

Victoza and Byetta both belong to the GLP-1 class of drugs that stimulate insulin release when glucose levels become too high. Other GLP-1 drugs are also being developed by rival drugmakers, such as GlaxoSmithKline Plc and Roche Holding AG and Ipsen.

Analysts at Jefferies in London said the approval would pave the way in the U.S. for the other drugs in the same class.

'This approval removes much of the uncertainty around the GLP-1 class in the U.S.,' they said in a note.

'We continue to believe that Roche/Ipsen's taspoglutide has the potential to best-in-class.'

Shares in Ipsen rose 3.3 percent by 1203 GMT.

For Novo itself Jefferies analysts were less bullish, saying they thought the market still looking 'for unrealistically high peak sales for Victoza given the boxed warning for cancer and once-daily injection profile'.

FDA said Novo Nordisk must evaluate the risks of thyroid and other cancer risks.

Piper Jaffray & Co analysts, too, said the upside for Novo Nordisk shares was limited by the labelling restrictions.

'Although Victoza is approved as monotherapy the FDA specifically notes that it should not be used first line. We believe that, although the stock may react positively to this announcement, we view the outcome as less than desirable and that the current stock price already factors in Victoza,' they said in a note.

Victoza, also known as liraglutide, has been launched in Germany, Britain and Denmark with other markets such as Japan set to follow this year.

Novo releases its fourth-quarter earnings on Feb. 2.

(Reporting by Anna Ringstrom, additional reporting by Kate Kelland in London; Editing by Erica Billingham and Louise Heavens) Keywords: NOVONORDISK/ ([e-mail]; [phone], Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.