*Denmark's Novo Nordisk AS, with a 90-year-old world diabetes treatment franchise, is getting into the related business of treating obesity. NVO chief scientist told Bloomberg at the inauguration of its new plant in Seattle that it plans to hire 500 researchers in the USA. This unit will work on weight-loss and obesity and will seek partners in academia and among institutions. NVO expects in October to win US Food & Drug Administration approval to launch its injectable Saxenda, a higher dose version of its liragluide (Victoza) diabetes treatment as an obesity drug. The FDA advisory committee on Sept. 11 voted 14 to 1 in favor of this new use of liragluide.

NVO's Mads Krogaard Thomson told the news service that “obesity is increasingly being treated as a disease, much the same way as diabetes.” He added that this is something “Novo Nordisk and its $2 bn R&D operation know a thing or two about.”

In addition to Washington State, NVO has also bought a manufacturing site in New Hampshire for making biopharmaceutical product active ingredients.

Diabetes complications if it is not controlled with insulin include heat disease, stroke, blindness, kidney disease, nerve damage and loss of limbs, and premature death.

Yesterday at the European Assn for the Study of Diabetes, NVO reported on new trials of its daily Tresiba (degludec insulin) in type 1 (juvenile) diabetes, head to head against detemir insulin. The new drug, in combo with bolus insulin in both children and adolescents improved long term glycemia control. It has to be taken only 1x/day vs 2x for detemir and also offers better long-term control.

It is also working on new insulin varieties for type 2 (adult onset) diabetes. Mexico earlier this month was the first country to allow a combined jab of two different insulin varieties, long-duration bolus as well as base insulin, in a single mealtime pen device. It is called Ryzodeg.

Apart from diabetes it also works in research into hemophilia, growth hormone therapy, and hormone replacement therapy. It recently exited its research into inflammatory disorders to focus more closely on diabetes and obesity.

The Danish drug giant has a $100 bn market cap and trades at 28x earnings, not cheap. Its ADR is currently $48.3 and it yields 1.7%. It has a share-repurchase program in Denmark to buy back up to DKK 15 bn ($206 mn) in stock by the end of next Jan. This helps offset the 42.75% that NVO has risen over the past year. It is underfollowed by Wall Street where most analysts rate it a hold for lack of interest. Only 8% of its shares are owned by US insitutitional investors. One reason is that being Danish it doesn't use investment banks much, and has almost no debt, unusual for a drug or biotech firm.

Even without the new obesity line, diabetes is a growth industry. I am grateful to 3 readers who suggested that this is an area where I should find a stock. NOV earnings are growing 10%+ per year while sales are only up 2.4%, as it upgrades its products. Its return on assets is over 40%; its return on equity a whopping 72%; and its return on invested capital 65.8%. It has a 1:1 ADR for its Copenhagen B shares which are also listed on the Q OMX exchange in Europe. There are A shares with 10x as many votes as the Bs and they also have pre-emptive rights. They are owned by a foundation. Both B shares were split 10:1 early this year.

In DKK the dividends have risen a steady 15% to 30% this century. They are paid annually in March. Pay $48.4 or less.