TIN funds estimated in its review yesterday that the latent demand for GLP-1 products is approximately 100x the current supply:
On the Friday before Christmas, Novo Nordisk attracted global attention by publishing research results for Cagrisema, a phase 3 combination therapy for obesity. Research results are often difficult to evaluate, not least for us laymen. The devil, as in many other areas, often resides in the details. Here, however, the company had announced a more concrete weight loss expectation, which did not materialize in the study. The impact was not long in coming, although the magnitude was somewhat of a shock. The stock fell 25 percent in one day and has since recovered just under ten percent over a few trading days.
Our main thesis for the coming years is that Eli Lilly and Novo Nordisk will more or less share the market for diabetes and obesity drugs. Together they lead the development and have a built infrastructure for production and distribution. They have established brands. The great uncertainty is price and financing. The problem is so large that it has a significant impact on healthcare and pharmaceutical expenditures globally. Reasonably, we must factor in price deflation over time. The point is that latent demand is 100x the prevailing supply. Whoever succeeds in increasing their production capacity the most can win the largest market share.
For this reason, we are surprised that the stock falls 25 percent from the research result, but only rises half a percent when the Novo Foundation receives approval for the Catalent acquisition from EU and US regulatory authorities. As a result, Novo Nordisk can, as previously announced, move forward with its intention to acquire three Catalent factories. This is an important piece of the puzzle in the company’s plans to more than double capacity in a few years. Emotion is often stronger than logic in the stock market. Research results make a better story than factories, not least when the results are here and now, while production growth comes later. We understand this, but still consider the reaction greatly exaggerated.
Novo continues to compete well in the obesity market - major bank reiterates “buy”
According to British bank HSBC, Novo still holds a strong position in the severe obesity treatment market. The bank reiterates its “buy” recommendation in a note dated January 10, noting that concerns about disappointing research results for Novo’s potential future weight loss drug Cagrisema are exaggerated.
The overall data does not suggest that its efficacy profile is yet better than best-in-class. However, the efficacy and tolerability profile is at least competitive with best-in-class, HSBC states, referring to Eli Lilly’s best-selling Tirzepatide, marketed as Zepbound for severe obesity, among other indications.
The bank specifically notes that Novo is also conducting a head-to-head comparative study between Cagrisema and Tirzepatide, which will shed light on the comparison of these two drugs in a direct head-to-head setting under similar conditions.
And when the results from Novo’s Phase 3 program with Cagrisema, named Redefine, become available, the perception of Cagrisema may change.
We do not rule out the possibility that Cagrisema will prove to be a best-in-class treatment in the real world as results from other Redefine studies are published, writes HSBC.
The bank also sees a good chance that Novo will be able to strengthen Cagrisema’s competitive profile with further studies of the drug, which, combined with increased production, could help support the long-term transition of patients from Wegovy to Cagrisema in the large American market.
We believe Novo likely has good opportunities to expand the revenue potential of its obesity drugs after the exclusivity of semaglutide (patent expires, ed.) is lost in the US in 2032, HSBC states in a release published on Friday.
Novo’s share price fell 2.3 percent on Monday to DKK 617.80.
Eli Lilly & Co. is projecting approval of its experimental weight-loss pill as soon as early 2026, Chief Executive Officer Dave Ricks said, one of several in a new generation of the popular drugs.
Lilly expects data on the pill, called orforglipron, to arrive before the middle of 2025, which could lead to clearance early the following year, Ricks said in an interview with Bloomberg TV at the JPMorgan Healthcare Conference in San Francisco.
This H1 data arrival was indeed already known, but the matter was further confirmed here.
Wegovy and Ozempic were selected for the next IRA price negotiations in the USA. Based on the previous round, this has resulted in a significant price reduction (38-79%), which would come into effect in 2027. Thus, significant pressure on the margins of these products is expected long before the expiration of patent protection.
Noise. Whenever something is put into the mouth for the first time, there are risks. It’s about the “risk-reward ratio” so familiar to stock investors as well. The health benefits of Semaglutide are undeniable and widespread (more than just weight loss). When considering these benefits and risks for individuals, the scales will continue to tip in such a way that the benefits are significantly greater.
And for investors, such news has no impact, because it will not affect Novo’s figures.
Here’s a summary of recent events and potential catalysts during Trump’s term. Don’t throw in the towel. At least the stock traded this week near MA200, looking at weekly candles.
22% weight loss in 36 weeks. LEts go. More future prospects (oral drug?)
Novo Nordisk successfully completes phase 1b/2a trial with subcutaneous amycretin in people with overweight or obesity
Bagsværd, Denmark, 24 January 2025 – Novo Nordisk today announced topline results from a phase 1b/2a clinical trial with amycretin, a unimolecular GLP-1 and amylin receptor agonist intended for once weekly subcutaneous administration.
The trial investigated the safety, tolerability, pharmacokinetics, and proof-of-concept after once-weekly subcutaneous administrations of amycretin in 125 people with overweight or obesity. The trial was a combined single ascending dose, multiple ascending dose and dose-response trial investigating three different maintenance doses with a total treatment duration of up to 36 weeks.
The primary endpoint was treatment emergent adverse events. The safety profile of amycretin was consistent with incretin-based therapies. The most common adverse events with amycretin were gastrointestinal and the vast majority were mild to moderate in severity.
When evaluating the effects of treatment if all people adhered to treatment1 from a mean baseline body weight of 92.7 kg, people treated with amycretin achieved an estimated body weight loss of 9.7% on 1.25mg (20 weeks), 16.2% on 5mg (28 weeks) and 22.0% on 20mg (36 weeks). People treated with placebo experienced an estimated 1.9%, 2.3% and 2.0% body weight gain, respectively.
“We are very encouraged by the subcutaneous phase 1b/2a results for amycretin in people living with overweight or obesity,” said Martin Lange, executive vice president for Development at Novo Nordisk. “The results seen in the trial support the weight lowering potential of this novel unimolecular GLP-1 and amylin receptor agonist, amycretin, that we have previously seen with the oral formulation.”
Based on the results, Novo Nordisk is now planning further clinical development of amycretin in adults with overweight or obesity.
This needs to be installed. And probably the first products from the pipeline are as well, because this is how it has been tested… But since I don’t understand again where I’ve placed it, I thought about this point
The control group, which received a placebo, lost only two percent of weight. Amycretin was injected into patients once a week in the trial. An oral form is also under development.
Note here that the control group gained weight, not lost it.
Novo Nordisk has previously tested the drug in a small group of patients in pill form. The test subjects lost 13 percent of weight in three months.
According to Reuters news agency, amycretin patient trials will in any case take years before the drug can come to market.
The pill could be a continuation of cagrisema 2030-. The pipeline looks good.
No impact on forecasts at this stage.
Here’s a really comprehensive tweet thread about Novo Nordisk, so you might want to set aside some time to read it.
If I were to summarize this thread somehow, perhaps it would be like this:
Novo Nordisk is at the forefront of diabetes and obesity treatment, but intensifying competition and price pressure require careful situational awareness + work. Maintaining its market position depends on its ability to respond to challenges and innovate better than its competitors.
Novo has fallen below its 10-year average when measured by EV/EBIT. I am considering an investment in the company, but the analysis is still somewhat incomplete. My own understanding of this pharmaceutical business isn’t really sufficient, other than knowing that lifestyle diseases follow the rise in living standards, and there are already a huge number of potential patients It also has tremendous returns on invested capital, and free cash flow has grown nicely over the years. The research result that triggered that stock price drop was not, in my opinion, too bad at all. Probably just the expectations placed on the company have been far too high. In a growing market, profitability is unlikely to be pressured downwards immediately, right? (though this was already discussed in the Neste thread a year ago… )
Shares of Danish pharmaceutical company Novo Nordisk appear very attractively valued after weak performance in recent months, Ålandsbanken believes.
This is despite the fact that 2025 appears to be a transitional year for Novo Nordisk, partly due to the integration of the Catalent acquisition. Over 20 percent earnings growth is expected in the coming years, and share buybacks are expected to continue in 2026, with the long-term value estimated to be DKK 1,090.
Ålandsbanken also commented on the release of Amycretin’s Phase 1 data.
“Novo Nordisk presented Phase 1 data on Friday for Amycretin, a drug that could become the company’s next major seller of obesity drugs. The data was very strong, with a placebo-adjusted weight loss of up to 24 percent after 36 weeks. This makes Amycretin the most effective drug against obesity to date – both compared to existing preparations and competitors’ research projects,” it states.
The share price has fallen by 1.3 percent to DKK 614.30.
There is such a big political risk associated with Novo (in Denmark) as Trump wants to take over Greenland and threatens Denmark with, among other things, tariffs.
Or does Novo have factories in the US so that potential import tariffs would not affect it?
Novo Nordisk was arguably our most surprising poor performer in
2024. It remains the market leader in weight loss drugs, which it
pioneered, and the year was marked by a stream of news about other
conditions which these drugs treat effectively and label expansion
applications which drug regulators seem willing to approve. Yet not
only did the share price fall 10% but it finished the year on a P/E ratio
half that of its nearest competitor Eli Lilly.
In investment it is always better to travel hopefully than to arrive and
there is certainly an arms race going on amongst drug companies to
develop competitor drugs. Yet we are still dealing with a company in
Novo which is the market leader and holds production and labelling
advantages which should sustain that position, with revenues that
are growing at 20% p.a. Moreover, we originally bought Novo
because of its radical approach to drug discovery and would not rule
out further developments.
Terry also referred to other companies when he mentioned at the end of the letter that this is likely a temporary problem (‘blip’) in the company’s development. The letter also discussed Novo’s investments.
I quickly couldn’t find at what valuation or price Novo was bought for Fundsmith, but it would probably become clear by reading the investor letters.
E: In the January 2016 letter, it’s mentioned that purchases were started recently. So perhaps around these valuation levels (EV/EBIT).
PS. Terry Smith’s book “Investing for Growth” is quite good, but it is, of course, a collection of his texts that can be read elsewhere. I should have remembered this Novo from that book, but my memory apparently sours quickly.
It also has tremendous returns on invested capital, and free cash flow has grown nicely over the years. The research result that triggered that stock price drop was not, in my opinion, too bad at all. Probably just the expectations placed on the company have been far too high. In a growing market, profitability is unlikely to be pressured downwards immediately, right? (though this was already discussed in the Neste thread a year ago… 