David DriscollNovo-NordiskNVOWAITMay 20, 2014

It was a past winner in diabetes treatment, but has lot some edge in the obesity space. They are losing market share to LLY. Only 5% of obese people use GLP-1 drugs, so the pie will grow much larger but more competitors will appear. He likes that there's some insider buying, through the foundation, but it's indirect ownership. The PE is only 11x PE and pays a 4% dividend. The downside is limited, but the upside is big.

His firm first bought it back when Hilary Clinton was going to become president :)  It served them well, but he sold when LLY started winning the GLP-1 race.

Eli Lilly is the leader in GLP-1 drugs, but NVO has a long-standing franchise with their weight-loss drug while their stock is cheap. He wouldn't dismiss NVO at all.

After owning for many years and making a profit, he sold last year when LLY started winning the GLP-1 race.

Doesn't really know this company. He'd buy LLY instead, as it has the better product.

He sold when it became obvious that LLY was winning the weight-loss race.

Still a high-quality franchise, but market expectations are setting lower. Weak chart technicals, with 200-day MA trending lower. Only 3-4% earnings growth over next few years. Long-term it'll come back, but caution is needed short-term.

He prefers LLY, which he owns. 

The difference between LLY and NVO is not significant; slightly in LLY's favour, but that's just currently. Wait out the negativity. Will still grow double digits. Likes it long term, but probably wouldn't look at it for another 5 years.

NVO chart's under pressure. Where are we in the saturation cycle for GLP-1 penetration? Also, what will the price/volume dynamics be, since NVO kicked off a price war?

LLY has the better position in terms of branded drugs. Hasn't pulled the trigger on either.

Losing market share, and LLY is really winning the race. You can see it in the chart. The GLP-1 space has a ton of legs for both diabetic and obesity treatment. Not his choice.

He's out. No clarity regarding its ability to growth the US market. Management change. No question it's a cheap stock. All weight-loss drugs have had prices come down; that's the uncertainty, and how do you value that?

Weight-loss drug was a huge launch for it, yet LLY has been surpassing them on clinical trials and pipeline in the therapeutic area. Drug launch does not equal pipeline. NVO is behind, hence the 10x PE. If you buy, you're signing up for the dividend yield and the hope that it doesn't lose too much market share along the way.

Screaming buy? No. Touchstone, cornerstone, foundation? Absolutely not. Makes sense as a very small part of a broad, diversified portfolio? OK.

There's too much competition in pharma, including generics. NVO is a one-trick pony (weight-loss drug).

He is not interested in the health care sector. Governments are indebted and pharmaceutical companies have patent cliffs because of the companies that produce generic drugs. Like other drug companies there is downward pressure on the stock because of patents coming off.

LLY is dominant in weight-loss, in large part due to aggressive marketing in the US. One positive is that its pill has been approved, rather than injections. LLY doesn't have a pill yet. Needs to right-size the company.