Novo Nordisk Surges Past Tesla in Market Cap on Breakthrough Obesity Drug Data

Novo Nordisk's Market Value Surpasses Tesla, Reaching a New Record After Announcing Positive Early Trial Data for a New Obesity Treatment Drug

SmartCom APP learned that after Novo Nordisk announced positive preliminary trial data for a highly anticipated new obesity treatment drug on Thursday, the company's market value surpassed Tesla, setting a new record. Novo Nordisk had already launched the popular weight-loss drug Wegovy, and the positive trial data for the new obesity drug further boosted the company’s market valuation.

According to reports, after the company told investors that the oral tablet version of its experimental drug amycretin showed participants lost 13.1% of their body weight after 12 weeks in the first phase trial, its share price soared more than 8% to an all-time high. In contrast, its popular obesity drug Wegovy achieved about 6% and 15% weight loss in 12-week and 68-week trials, respectively.

Investors welcomed the news, seeing it as an indication that Novo Nordisk has more products in its pipeline beyond its highly successful Wegovy.

Notably, since Novo Nordisk launched Wegovy in the U.S. in June 2021, its stock price has soared, and to date, Novo Nordisk's shares have increased more than threefold. Last year, it became the most valuable publicly traded company in Europe, surpassing LVMH.

According to LSEG data, as of Thursday, Novo Nordisk's market value reached $566 billion, surpassing Tesla and Visa.

Analyst Viewpoint

Guggenheim Securities analyst Seamus Fernandez said: "Novo Nordisk has made it clear that the amycretin molecule could become the foundation of the company's rapidly growing product pipeline."

According to calculations by Bernstein analysts last week, nearly half of Novo Nordisk's current market value is based on the company's pipeline of novel experimental drugs, such as amycretin.

Markus Manns, portfolio manager at Germany's Union Investment and a shareholder of Novo Nordisk, said that the early trial results of the drug are also favorable compared to other weight-loss drugs under research, such as competitor Eli Lilly's orforglipron.

According to Eli Lilly's mid-term trial, its experimental drug reduced the weight of obese or overweight people by 14.7% within 36 weeks.

Eli Lilly's stock slipped after Novo Nordisk's positive update, while Zealand Pharma, which is testing a similar treatment, surged more than 9%.

It is reported that Wegovy, a drug belonging to a class called GLP-1 agonists, was originally designed to treat type 2 diabetes and has been proven to reduce appetite and slow gastric emptying.

With the success of these drugs, companies are researching other promising weight-loss therapies, such as amycretin, which targets amylin, a hormone in the pancreas that influences hunger.

But overall, Wegovy is one of the first highly effective weight-loss drugs to be launched. Currently, Novo Nordisk and Eli Lilly lead the obesity drug market, which is expected to reach $100 billion by 2030.

Expansion in the Field of Cardiovascular Diseases

Novo Nordisk CEO Lars Fruergaard Jorgensen stated that the rollout of obesity drugs will be primarily led by injectable medications, with oral versions introduced later in higher-priced markets. Oral drugs require a large amount of active ingredients, resulting in higher production costs.

Earlier in the day, he also announced that the company would expand its focus from diabetes and weight-loss therapies to cardiovascular disease treatment.

This shift occurred in August last year, when the pharmaceutical company stated that a large-scale study showed Wegovy also has significant cardiovascular benefits, prompting the company to work on transforming Wegovy's image from a lifestyle drug.

"Any company that is so heavily invested in one therapeutic area needs to try to develop other pillars of support," said Wolfgang Lickl, portfolio manager at KB-Vermögensverwaltung.

He said: "Although the great success in the fields of diabetes and obesity has made this goal difficult, the cardiovascular field is meaningful because there are many synergies."

Following last August's trial, Novo Nordisk has been trying to convince skeptical health insurance companies that the long-term benefits of Wegovy are sufficient to reduce the overall burden on the healthcare system and the cost of treating heart disease in overweight and obese populations.

Novo Nordisk expects that Wegovy will receive sales approval in China this year, which will be the second-largest market after the United States.