Daily Management Review

Novo Market Value Exceeds Tesla Based On Results From Experimental Drugs For Obesity


Novo Market Value Exceeds Tesla Based On Results From Experimental Drugs For Obesity
Thursday saw Novo Nordisk overtake Tesla Inc. in terms of market valuation following the release of encouraging early trial results for a much awaited new obesity medication by the manufacturer of the well-known weight-loss medication Wegovy.
Novo Nordisk's shares experienced a significant increase of over 8% to all-time highs, propelling the business to the 12th position in the worldwide valuation rankings. This was achieved after the company informed investors that a Phase I trial of the investigational medicine amycretin, in pill form, had resulted in 13.1% weight loss after 12 weeks.
This is in contrast to weight loss in trials for its popular obesity medication Wegovy that was roughly 6% after 12 weeks and 15% after 68 weeks.
Investors were pleased to hear the news since it suggested Novo has more projects planned besides the wildly popular Wegovy. Since the weekly injections were introduced in the US in 2021, its shares have increased dramatically.
Since launching Wegovy in the US in June 2021, Novo's shares have increased more than threefold, and last year it surpassed LVMH to become the most valuable listed company in Europe.
According to LSEG data, on Thursday, its market worth reached $566 billion, surpassing both Tesla and Visa.
"Novo has made clear that the amycretin molecule likely will form the foundation of the company's rapidly growing pipeline," said Guggenheim analyst Seamus Fernandez.
According to calculations made last week by Berenberg analysts, the company's pipeline of novel investigational medications, such amycretin, accounts for about half of Novo's current valuation.
According to Markus Manns, a portfolio manager at Union Investment in Germany and a shareholder in Novo, the preliminary results also showed good comparisons with other weight-loss medications under research, including orforglipron, a competitor from Eli Lilly.
According to Lilly's mid-stage trial, those who were obese or overweight lost 14.7% of their body weight after taking the experimental drug for 36 weeks.
The positive Novo update caused the U.S. drugmaker's shares to decline, but those of Zealand Pharma, which is testing a medication identical to this one, increased by more than 9%.
Wegovy is a member of the GLP-1 agonist medicine class, which was initially created to treat type 2 diabetes. Studies have shown that this class of medications reduces food cravings and slows down stomach emptying.
Companies are developing further intriguing weight-loss treatments like amycretin, which targets the pancreatic hormone amylin, which influences hunger, in response to the success of these medications.
The first of a new class of very successful weight-loss medications to be introduced was Wegovy. Analysts predict that by 2030, the obesity medicine market, which is currently led by Novo and Lilly, will be valued at $100 billion.
Heart Illness
According to Lars Fruergaard Jorgensen, chief executive of Novo Nordisk, injectable drugs will dominate the obesity treatment roll-out, with oral equivalents coming later in more expensive areas. Pills are expensive to make because they need a lot of active components.
He had also said earlier in the day that the company was going to add treatments for cardiovascular illness to its concentration on diabetes and weight-loss medications.
The decision comes after the drugmaker said in August of last year that a significant trial had demonstrated that Wegovy also had a definite cardiovascular benefit, supporting the company's efforts to shift Wegovy's reputation as a lifestyle medication.
"Any company that is so heavily exposed to one therapeutic area needs to try to develop other pillars to stand on," said Wolfgang Lickl, portfolio manager at KB-Vermögensverwaltung.
"The sheer success in diabetes and obesity will make that difficult, but the cardiovascular field makes sense because of the many synergies," he said.
Since the August study, Novo has been attempting to persuade cautious medical insurers that Wegovy's long-term advantages will be sufficient to lessen the overall load on healthcare systems and the expense of treating cardiac disease in individuals who are overweight or obese.
It anticipates that Wegovy will be authorised for sale in China as early as this year, making that country its second-largest market after the US.