Noh and Nord's stock price soared, surpassing Tesla as a market value giant with a new obesity drug.

Zhitong App learned that after Novo Nordisk AS (NVO.US) announced the positive initial trial data of its highly anticipated new obesity treatment drug on Thursday, the company's market value surpassed Tesla (TSLA.US), setting a new record. Novo Nordisk AS had previously launched the popular weight-loss drug Wegovy, and the positive trial data of the new obesity drug further boosted the company's market valuation.

It is understood that the company informed investors that the oral tablet version of its experimental drug amycretin showed participants a 13.1% weight loss after 12 weeks in the first-stage trial, causing its stock price to soar over 8% to a historic high. In comparison, the popular obesity drug Wegovy achieved weight reductions of about 6% and 15% in the 12-week and 68-week trials, respectively.

Investors welcomed this news, believing that it indicates Novo Nordisk AS has more product reserves beyond its highly successful Wegovy.

It is worth noting that since Novo Nordisk AS launched Wegovy in the United States in June 2021, its stock price has been soaring. Novo Nordisk AS's stock price has more than tripled, making it the highest market value listed company in Europe last year, surpassing LVMH.

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

Analyst Views

Seamus Fernandez, an analyst at Guggenheim Securities, said, "Novo Nordisk AS has clearly stated that the amycretin molecule may become the foundation of the company's rapidly growing product pipeline."

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

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

Eli Lilly's mid-term trial showed that its experimental drug reduced the weight of obese or overweight individuals by 14.7% in 36 weeks.

Eli Lilly's stock declined after Novo Nordisk AS's positive update, while Zealand Pharma, which is testing a similar treatment approach, saw its stock rise by over 9%. It is reported that Wegovy belongs to a class of drugs called GLP-1 agonists, originally designed to treat type 2 diabetes, has been shown to reduce appetite and slow gastric emptying.

With the success of these drugs, companies are researching other promising weight loss therapies, such as amycretin targeting the hormone amylin in the pancreas that affects hunger.

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

Expansion into Cardiovascular Disease Field

Novo Nordisk AS CEO Lars Fruergaard Jorgensen stated that the introduction of obesity drugs will be mainly dominated by injectable drugs, with oral versions to be launched in higher-priced markets later. Oral medications require a large amount of active ingredients, leading to higher production costs.

Earlier that day, he also announced that the company will shift its focus from diabetes and weight loss therapies to cardiovascular disease treatment.

This shift occurred after the drug company announced in August last year that a large-scale study showed Wegovy also has significant cardiovascular benefits, prompting the company to transform Wegovy's image from a lifestyle drug.

Wolfgang Lickl, portfolio manager at KB-Vermögensverwaltung, said, "Any company investing heavily in a treatment area needs to try to develop other support points."

He added, "Although the huge success in the fields of diabetes and obesity makes this goal challenging, the cardiovascular field is meaningful because there are many synergies."

Following the trial in August last year, Novo Nordisk AS 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 costs of treating heart disease in overweight and obese populations.

Novo Nordisk AS expects Wegovy to receive sales approval in China this year, making it the second largest market after the United States.