- Novo Nordisk gave investors two pieces of disappointing news about its new obesity drug Wegovy on Wednesday, causing the company’s stock to tumble almost 13% and wiping away more than $30 billion in market value.
- Sales of Wegovy dropped to 1.18 billion Danish kroner, or $162 million, in the second quarter from 1.4 billion kroner in the first quarter amid production issues that have slowed the drug’s rollout. Meanwhile, a critical study of the obesity medicine failed to yield strong enough results to end early, as some investors had anticipated.
- The shares recovered part of their losses early Thursday, rising 6% in early trading. Along with the news on Wegovy, the Danish drugmaker reported a 16% sales increase for the first half and raised its overall revenue and profit growth forecasts for the year.
Novo has put its obesity franchise in the spotlight, promising in March to triple sales of weight loss drugs by 2025. But the company stumbled after winning approval of Wegovy in June 2021, as initial demand outstripped Novo’s manufacturing capacity.
The company had promised that the production issues would be resolved in the second half of the year. On Wednesday, Novo said it expects all dose strengths to be available in the U.S. “towards the end of 2022,” a revision that analysts flagged as yet another delay.
Analysts also pointed to news from a Phase 3 study of Wegovy known as SELECT as a disappointment. The trial is designed to measure whether Wegovy can reduce the risk of cardiovascular events in overweight or obese patients. Investors had hoped that an interim analysis of the data conducted by an independent monitoring board would show such a strong effect that the trial would be stopped early.
Instead, Novo reported the board decided the study should continue. It’s slated to finish in the middle of 2023. The board’s decision suggests the cardiovascular risk reduction related to treatment “is not meaningfully better” than the goal of 17%, Jefferies analyst Peter Welford wrote in a note to investors Wednesday.
Investor jitters about Wegovy have been made worse by the strong start of a rival, Eli Lilly’s Mounjaro, which was approved in May to treat diabetes and has shown in testing it can significantly lower weight. Lilly is further studying the drug as a weight loss therapy.
Doctors appear to be prescribing Mounjaro at a “much higher rate” in the first eight weeks on the market than seen with competitive medicines including Wegovy, according to SVB Securities analyst David Risinger. The drug had sales of $16 million through June, Lilly said Thursday.