Shares of Novo Nordisk (NVO), maker of the popular obesity drug Wegovy, rose over 2% early Tuesday on the weight loss potential of its new drug amycretin.
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NVO’s rise pared losses from the previous day after revealing negative results from its Alzheimer’s drug trials. According to the embattled drugmaker, a once-weekly shot of amycretin helped participants in its phase 2 clinical trial — people with type 2 diabetes — to lose as much as 14.5% of their body weight in 36 weeks.
What’s Amycretin?
Amycretin is a dual agonist drug, meaning that it targets both GLP-1, a hormone that regulates appetite and insulin secretion in the body, and amylin receptors that influence satiety and metabolism. The Danish pharma heavyweight is developing the drug as a treatment for both obesity and type 2 diabetes.
Similarly, the oral version of the new drug resulted in 10.1% weight loss in participants, Novo Nordisk said. The highly valued European firm plans to advance to phase 3 clinical trials next year.
Can Amycretin Boost Novo Nordisk’s Pipeline?
The positive results come as Novo Nordisk has been losing its share of the obesity market to key U.S.-based rival Eli Lilly (LLY). Indiana-based Eli Lilly hit a $1 trillion market capitalization last week — a rare achievement for a non-technology company that shows the momentum of the American drugmaker’s obesity drug sales.
Novo Nordisk is working to optimize its operations to regain market share and recently installed Lars Rebien Sørensen, its former CEO, as board chair.
The failure of its Alzheimer’s trial — it found that semaglutide, the active ingredient in its diabetes drug Ozempic and in Wegovy, failed to slow the progression of the disease — had heaped further pressure on the company. Earlier this month, the Danish company also lowered the direct-to-consumer prices of both drugs, leading analysts to observe that a price war could be brewing in the obesity market.
Whether amycretin will turn out to be another blockbuster medication like Wegovy that could help Novo Nordisk turn around its slower sales growth and weaker profit will become clear over time.
The immediate and future impact of the drug on NVO stock — which has plunged more than 46% since the start of the year — also remains to be seen.
Is Novo Nordisk a Buy or Sell?
On Wall Street, analysts’ approach to Novo Nordisk’s shares remains cautious, with the stock holding a Moderate Buy consensus rating. This is based on six Buys, two Holds, and one Sell assigned by nine analysts over the past three months.
At $59.48, the average NVO price target implies over 32% upside potential from the current levels.
