The value of the drugmaker Novo Nordisk has shot up by more than £6.5bn after research showed its new anti-obesity pill resulted in almost as much weight loss as its Wegovy jab, as it races against its US rival Eli Lilly to get a tablet treatment to market.
Stock in the Danish company climbed by more than 4.5% on Thursday morning on hopes it could claw back market share lost to Eli Lilly and cheaper generic versions of GLP-1 drugs.
The shares had fallen by nearly 60% in the past year as sales slowed and Novo issued several profit warnings, prompting its new chief executive, Mike Doustdar, to plan 9,000 layoffs.
Novo said on Thursday that a once-daily pill version of Wegovy achieved “significant weight” loss in a clinical trial, with close to one in three participants losing 20% or more weight. Side-effects were similar to the injectable version.
It is the first oral GLP-1 drug submitted to the US regulator, the Food and Drug Administration (FDA), and the company expects a decision on whether the FDA will approve it for use by the end of the year. Production has already begun at Novo’s US sites.
In a 64-week late-stage trial involving 307 obese or overweight adults, patients lost 16.6% of their body weight, on average.
The Danish company is going head to head with Lilly’s daily weight loss pill, called orforglipron. On Tuesday, the US drugmaker said that one in five people lost 20% or more weight over 72 weeks, in a trial of 3,127 adults. Patients lost 12.4% of their body weight on average at the highest dose.
Lilly developed orforglipron with a compound it acquired from Japan’s Chugai Pharmaceutical in 2018. Eli Lilly plans to submit the pill to the regulator for approval later this year, and some analysts say it could be fast-tracked by the FDA. Analysts estimate peak sales of $10bn a year for the drug, with investment bank Jefferies seeing potential for up to $25bn.
Matthew Weston, a UBS analyst, said he saw “clear leadership” for Novo’s oral obesity pill, forecasting peak annual sales of $5bn, including $4bn in the US, where 40% of people are obese. He added: “Orforglipron still presents a threat on being a more scalable product, and therefore potentially discounted price. It also doesn’t require the 30 minutes fasting, so could be seen as a more convenient option.”
While anti-obesity jabs, which mimic a gut hormone called GLP-1, have been immensely popular, they are very expensive, especially after Lilly’s recent price increase of up to 170% in the UK. The NHS has limited their availability to people with high clinical need.
Pill versions are easier to store, distribute and administer and are expected to be cheaper, paving the way for millions more people to lose weight at a time when obesity is increasing around the world.
The main problem with developing a tablet version that the peptide in semaglutide, Wegovy’s main ingredient, breaks down immediately in the acidic environment of the stomach, but Novo has added an absorption enhancer to speed its passage into the bloodstream.
The shares of GLP-1 drugmakers have vastly outperformed pharmaceutical companies that do not make those weight loss drugs. The investment platform eToro said on Tuesday a basket of Novo, Lilly, Sanofi, Teva and Hikma stocks has risen by 106% over the last five years, while a basket of Johnson & Johnson, GSK, AbbVie and Bayer had gone up by 27%. Lilly shares are up by nearly 395% over the period while Novo is still 69% ahead, despite its sharp decline in the past year.