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7 months ago
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Shares of Danish pharmaceutical giant Novo Nordisk slid 2.5% on Friday, extending a 2.7% loss on Thursday as analysts pored over the details of the firm's first-quarter results and monitored a potential rival weight loss treatment.
The company reported that sales for its blockbuster injectable weight loss treatment Wegovy, more than doubled to 9.38 billion Danish kroner ($1.4 billion). Novo Nordisk, which also makes diabetes treatment Ozempic, said the rise in sales had offset a slight reduction in prices.
Novo Nordisk expects prices to drop further as new entrants enter the market, CFO Karsten Knudsen said on a media call, adding that the company was not seeing much evidence of Wegovy users moving to other rival treatments.
Analysts expected even higher weight loss drug sales in the quarter, and some noted that Novo Nordisk's 2024 outlook raise for both sales growth and operating profit was due to one-off accounting adjustments.
"While we continue to see Novo as a wide-moat firm, with strong intangible assets surrounding its cardiometabolic business, we think high obesity drug demand and a scarcity of supply have driven share prices above their intrinsic value," Karen Andersen, strategist at Morningstar, said in a Thursday note.
The boom in demand for weight loss treatments saw Novo Nordisk overtake French luxury group LVMH to become Europe's most valuable company last year. Shares gained 49% in 2023 and are up 25% year to date.
Sales numbers were "a little bit light, expectations got ahead of themselves ... and you still have these supply challenges at Novo," Jared Holz, health-care equity strategist at Mizuho, told CNBC's "Fast Money" on Thursday.
Analysts at Stifel trimmed their target price on the stock to 950 kroner, down from 960 kroner on Friday.
Weight loss drug makers were meanwhile broadly lower after U.S. firm Amgen said it was "very pleased" with initial trial results for its injectable obesity treatment MariTide.
The potential increase in competition is hanging over both Novo Nordisk and U.S. juggernaut Eli Lilly, which also raised its outlook this week, as more weight loss players emerge to shake up what has largely been a two-horse race.
Both companies are consequently researching new potential weight loss treatments to maintain an edge.
"When we look at the entire space, Novo and Lilly are dominating because they were already great existing players in diabetes. This obesity market is very tangential, it's very simple for them to pivot a very similar patient population to obesity," Holz said.
It might be possible for newer players like Amgen to take 5% to 10% market share over time, or for the totality of competitors to take 10% of the market, but the advance of Eli Lilly and Novo Nordisk is "going to make it really tough," Holz added.
Correction: The company reported that sales for Wegovy more than doubled to 9.38 billion Danish kroner ($1.4 billion). An earlier version misstated the U.S. dollar figure. Karen Andersen is a strategist at Morningstar. An earlier version misspelled her name.
