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Novo Nordisk’s Wegovy Sales Increase Reassures Investors

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(Bloomberg) -- Novo Nordisk A/S posted surging sales of its blockbuster weight-loss treatment Wegovy, reassuring investors after rival Eli Lilly & Co. reported disappointing sales of its obesity treatment last week. 

Wegovy revenue climbed 79% to 17.3 billion Danish kroner ($2.5 billion), the Copenhagen-based drugmaker said, above analyst estimates. Sales rose by 50% in the US, even as prices fell, after more insurers agreed to pay for the drug.

“This is good enough to provide some relief,” Emily Field, a London-based analyst for Barclays, wrote in a note. The Wegovy beat came despite slightly worse pricing in the US than analysts had anticipated, Field said. 

The stock climbed as much as 8.9% in Copenhagen, the biggest intraday gain in eight months, before paring those gains on concern over the pace of sales growth next year.

After leading the wave of new obesity drugs to become Europe’s most valuable company, Novo faced skittishness from investors in recent months that drove shares down by more than 25% from their peak in June. Attention now will shift to Novo’s next-generation obesity treatment, CagriSema, which is undergoing a large trial that’s due to deliver results by December. 

Based on earlier studies, Novo remains confident CagriSema will help patients achieve at least 25% weight loss, which would make it a best-in-class product, Chief Executive Officer Lars Fruergaard Jorgensen said in an interview. “I’m as confident as one can be without having seen the data,” the CEO said. 

Novo is vying with Lilly for supremacy in obesity drugs, the pharmaceutical industry’s fastest-growing new business, while an expanding list of rivals rush to develop competing medicines. The market is expected to reach $130 billion by the end of the decade.

Until now, the biggest obstacle has been producing enough medicine to meet demand, and both drugmakers have pledged to increase capacity while working to convince more insurers to reimburse them for patients. Novo said Wednesday it expects periodic drug shortages to continue across a number of products and geographies this year.

The company will be able to ramp up capacity significantly even if antitrust authorities don’t sign off on its proposed $11 billion purchase of three of contract manufacturer Catalent Inc.’s factories, Jorgensen said. Novo anticipates a decision on the deal by the end of the year. 

“There’s perhaps a perception out there that we cannot scale without Catalent — we can,” Jorgensen said. Novo is already operating more than 10 manufacturing sites, he said, adding that the company is on track with answers to regulators’ questions on the deal. “I’m not worried about a plan B.” 

What Bloomberg Intelligence Says:

Novo Nordisk’s 11% 3Q beat for obesity drug Wegovy and reiterated guidance should assuage some concerns about GLP-1 market dynamics following a weak 3Q from competitor Eli Lilly. The mix is unlikely to satisfy those at the higher end of GLP-1 market expectations as sales of diabetes drug Ozempic were 5% light. GLP-1 supply, Cagrisema Phase 3 data timing and initial 2025 comments are set to be the focus of the earnings call.

— John Murphy, BI pharma analyst

Novo’s 3Q Reassures on Obesity Market as Wegovy Beats: React

Novo’s obesity drug sales nearly doubled outside the US in the quarter, helped by the process of stocking up on inventory as the company launched Wegovy in more places. “That doesn’t mean that it’s going to trail off in the coming quarters,” Chief Financial Officer Karsten Munk Knudsen said on a conference call with journalists. Wegovy is now sold in more than 15 countries.

On a separate call with analysts, the CFO suggested revenue may grow by a high-teens percentage next year, which would be lower than analysts’ estimates of 21%. That knocked the shares from the day’s highs.

Asked later on the call about the growth calculation, the CFO said he’s wasn’t trying to manipulate analysts’ consensus figures, adding it’s “just a reminder about the magnitude of growth in terms of absolute growth and a higher base and what that entails in terms of growth rates. I’m sure you can all calculate that.”

Novo will issue detailed guidance next year, he said.

Novo narrowed the range of its forecasts slightly for this year, predicting total sales would grow 23% to 27% at constant exchange rates, while operating profit grows 21% to 27%.

Sales of Novo’s biggest drug, diabetes treatment Ozempic, were about 5% below expectations at 29.8 billion kroner.

--With assistance from Lisa Pham.

(Updates with CFO comments from 12th paragraph)

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