Trial of latest weight-loss drug propels Novo Nordisk stock market value to €517bn

Phase I trial of the pill version of experimental drug amycretin showed participants lost over 13% of their weight. That compares to a weight loss of about 6% in trials for Wegovy, its blockbuster obesity drug

Thu, 07 Mar, 2024 - 18:30

Shares in Denmark's Novo Nordisk soared more than 8% after early trial data for its experimental obesity drug amycretin showed a higher weight loss compared with its popular Wegovy treatment.

Novo Nordisk shares surpassed Tesla in market valuation after the maker of the popular weight-loss drug Wegovy announced positive early trial data for a highly-anticipated new obesity drug.

Novo shares hit a fresh record high, shooting Novo Nordisk up in global rankings to the 12th most valuable company from 14th previously, after it told investors a phase I trial of the pill version of experimental drug amycretin showed participants lost over 13% of their weight after 12 weeks. That compares to a weight loss of about 6% after 12 weeks and 15% after 68 weeks in trials for Wegovy, its blockbuster obesity drug.

Investors welcomed the news as indicating Novo had more in its pipeline beyond its hugely successful Wegovy. Its shares have soared since launching the weekly injections in the US in 2021. Novo's shares have risen more than three-fold since June 2021 and it last year became Europe's most valuable listed company, ahead of LVMH Louis Vuitton.

Its market valuation reached €517bn, ahead of 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 Séamus Fernandez.

Experimental drugs

Nearly half of Novo's current valuation is based on the company's pipeline of new experimental drugs such as amycretin, according to calculations by Berenberg analysts last week.

Markus Manns, a portfolio manager at Union Investment in Germany and Novo shareholder, said the early read-out also compared favourably with other weight-loss pills in development, such as rival Eli Lilly's orforglipron. Lilly's mid-stage trial showed its experimental pill led to 14.7% weight loss after 36 weeks for people who were obese or overweight.

The US drugmaker's shares slipped on the upbeat Novo update while shares in Zealand Pharma, which is testing a similar treatment, jumped more than 9%. Wegovy belongs to a class of drugs known as GLP-1 agonists, originally designed to treat type 2 diabetes, that have been shown to reduce food cravings and empty the stomach more slowly.

Following the success of these drugs, companies are working on other promising weight-loss therapies such as amycretin, which targets a hormone called amylin in the pancreas that affects hunger. Wegovy was the first of a new group of highly effective weight-loss drugs to be launched. Novo and Lilly are so far the leaders in the obesity drug market, forecast by analysts to be worth $100bn by 2030.

Novo Nordisk chief executive Lars Fruergaard Jorgensen said the obesity drug roll-out will be dominated by injectable medicines, with oral versions introduced later in higher-priced markets. Pills require large amounts of active ingredients, making them costly to produce.