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Novo Nordisk's (NVO) Shares Jump 17% in a Month: Here's Why
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Shares of Novo Nordisk (NVO - Free Report) have risen 17.1% in the past month compared with the industry’s 5.0% growth.
Image Source: Zacks Investment Research
This upside is attributable to the company’s popular weight-loss drug, Wegovy (semaglutide).
Earlier this month, Novo Nordisk reported positive data from the phase III SELECT study, which evaluated Wegovy as an adjunctive treatment for preventing cardiovascular (“CV”) diseases in adults with overweight or obesity. Data from the study showed that treatment with the drug reduced the risk of major adverse CV events by 20%.
This was an encouraging response, as shares have risen consistently following this announcement. Obesity is one of the major risk factors responsible for CV diseases. A weight-loss drug like Wegovy having CV benefits will likely boost the drug’s sales. In addition, the drug would likely become eligible for insurance coverage. Currently, obesity drugs like Wegovy are considered lifestyle drugs and not eligible for coverage under Medicare health plans.
Since its launch, sales of Wegovy have been gaining momentum. Wegovy sales were up 543% in second-quarter 2023. The company raised the full-year 2023 sales outlook and profit expectations based on the upside. To further boost the top line, it is also evaluating a once-daily oral formulation of semaglutide for obesity indication in late-stage studies, with a potential FDA filing expected later this year.
The FDA also approved semaglutide in 2017 to treat type 2 diabetes (“T2D”), which is being marketed under the trade name Ozempic.
However, stiff competition from other pharma bigwigs, like Eli Lilly (LLY - Free Report) and Pfizer (PFE - Free Report) , is starting to take shape in the global diabetes market for Novo Nordisk.
In June, Lilly announced that it had completed the regulatory submission seeking label expansion for its dual GIP/GLP-1-RA drug tirzepatide to treat obesity or overweight in adults. A final decision is expected by 2023-end. While data from one late-stage study (SURMOUNT-1) released last year showed that treatment with the drug led to a mean weight reduction of up to 22.5% in patients without diabetes, data from a second late-stage study (SURMOUNT-2) showed that tirzepatide treatment achieved mean reduction up to 15.7% in T2D patients.
Lilly’s Tirzepatide was approved in May 2022 for treating adults with type 2 diabetes mellitus (“T2DM”) and is being marketed under the brand name Mounjaro. Since its launch, Mounjaro has shown an impressive initial uptake, recording $980 million in revenues in second-quarter 2023.An expansion in the obesity indication would help Lilly rake in billions of dollars from Mounjaro sales.
Pfizer (PFE - Free Report) is also evaluating pipeline candidates for obesity. Currently, Pfizer is lagging behind Lilly and Novartis in terms of development for obesity treatments. This June, Pfizer reported a major setback in its obesity pipeline when it announced its decision to discontinue development of a once-daily oral obesity drug lotiglipron, in favor of a twice-daily orally administered danuglipron. This decision was based on data from multiple phase I drug-drug-interaction studies and an ongoing phase II study wherein study participants treated with lotiglipron were shown to have elevated levels of liver enzymes.
Pfizer is currently evaluating danuglipron in a phase II study in patients with obesity and T2DM. If this study is successful, management plans to start phase III studies by year-end.
In the past 60 days, estimates for J&J’s 2023 earnings per share have increased from $10.73 to $10.75. During the same period, the earnings estimates per share for 2024 have risen from $11.28 to $11.30. Shares of J&J are down 4.5% in the year-to-date period.
Earnings of J&J beat estimates in each of the last four quarters, witnessing an average surprise of 5.58%. In the last reported quarter, J&J’s earnings beat estimates by 7.28%.
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Novo Nordisk's (NVO) Shares Jump 17% in a Month: Here's Why
Shares of Novo Nordisk (NVO - Free Report) have risen 17.1% in the past month compared with the industry’s 5.0% growth.
Image Source: Zacks Investment Research
This upside is attributable to the company’s popular weight-loss drug, Wegovy (semaglutide).
Earlier this month, Novo Nordisk reported positive data from the phase III SELECT study, which evaluated Wegovy as an adjunctive treatment for preventing cardiovascular (“CV”) diseases in adults with overweight or obesity. Data from the study showed that treatment with the drug reduced the risk of major adverse CV events by 20%.
This was an encouraging response, as shares have risen consistently following this announcement. Obesity is one of the major risk factors responsible for CV diseases. A weight-loss drug like Wegovy having CV benefits will likely boost the drug’s sales. In addition, the drug would likely become eligible for insurance coverage. Currently, obesity drugs like Wegovy are considered lifestyle drugs and not eligible for coverage under Medicare health plans.
Since its launch, sales of Wegovy have been gaining momentum. Wegovy sales were up 543% in second-quarter 2023. The company raised the full-year 2023 sales outlook and profit expectations based on the upside. To further boost the top line, it is also evaluating a once-daily oral formulation of semaglutide for obesity indication in late-stage studies, with a potential FDA filing expected later this year.
The FDA also approved semaglutide in 2017 to treat type 2 diabetes (“T2D”), which is being marketed under the trade name Ozempic.
However, stiff competition from other pharma bigwigs, like Eli Lilly (LLY - Free Report) and Pfizer (PFE - Free Report) , is starting to take shape in the global diabetes market for Novo Nordisk.
In June, Lilly announced that it had completed the regulatory submission seeking label expansion for its dual GIP/GLP-1-RA drug tirzepatide to treat obesity or overweight in adults. A final decision is expected by 2023-end. While data from one late-stage study (SURMOUNT-1) released last year showed that treatment with the drug led to a mean weight reduction of up to 22.5% in patients without diabetes, data from a second late-stage study (SURMOUNT-2) showed that tirzepatide treatment achieved mean reduction up to 15.7% in T2D patients.
Lilly’s Tirzepatide was approved in May 2022 for treating adults with type 2 diabetes mellitus (“T2DM”) and is being marketed under the brand name Mounjaro. Since its launch, Mounjaro has shown an impressive initial uptake, recording $980 million in revenues in second-quarter 2023.An expansion in the obesity indication would help Lilly rake in billions of dollars from Mounjaro sales.
Pfizer (PFE - Free Report) is also evaluating pipeline candidates for obesity. Currently, Pfizer is lagging behind Lilly and Novartis in terms of development for obesity treatments. This June, Pfizer reported a major setback in its obesity pipeline when it announced its decision to discontinue development of a once-daily oral obesity drug lotiglipron, in favor of a twice-daily orally administered danuglipron. This decision was based on data from multiple phase I drug-drug-interaction studies and an ongoing phase II study wherein study participants treated with lotiglipron were shown to have elevated levels of liver enzymes.
Pfizer is currently evaluating danuglipron in a phase II study in patients with obesity and T2DM. If this study is successful, management plans to start phase III studies by year-end.
Novo Nordisk A/S Price
Novo Nordisk A/S price | Novo Nordisk A/S Quote
Zacks Rank & Key Pick
Novo Nordisk currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the overall healthcare sector is Johnson & Johnson (JNJ - Free Report) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, estimates for J&J’s 2023 earnings per share have increased from $10.73 to $10.75. During the same period, the earnings estimates per share for 2024 have risen from $11.28 to $11.30. Shares of J&J are down 4.5% in the year-to-date period.
Earnings of J&J beat estimates in each of the last four quarters, witnessing an average surprise of 5.58%. In the last reported quarter, J&J’s earnings beat estimates by 7.28%.