The New Wonder Drug: Semaglutide
Semaglutide is quickly shaping up to become the wonder drug of the decade. It was initially developed as an anti-diabetic medication under the drug brand Ozempic. It was first developed by Novo Nordisk (NVO) in 2012.
Semaglutide mimics a weight-related hormone called GLP-1 (glucagon-like peptide-1). If you want more details, you can read a compilation of scientific publications about semaglutide in Science Direct.
However, users of semaglutide quickly started to report it also helped them lose weight, prompting the company Novo Nordisk to begin clinical trials for the treatment of obesity. With the approval of semaglutide under the commercial name of Wegovy in January 2021, it became an instant blockbuster drug.
Novo Nordisk constantly struggled to produce enough to satisfy demand despite repeated increases in production capacity. This, in turn, caused Novo Nordisk’s stock price to more than triple between January 2021 and January 2024. At the time, we discussed the story of Wegovy in detail in “The New Blockbuster Drug: Wegovy”.
However, this might be just the beginning of Novo Nordisk’s success story.
On March 8th, 2024, Wegovy received new approval from the FDA for reducing risks of cardiovascular death, stroke, and heart attack in adults with heart disease with obesity or overweight.
Considering how correlated heart diseases are with obesity or excess weight, this would represent a massive addressable market. Obesity now affects more than 37% of US adults and 22%-30% of other developed countries.
Source: Polaris
Semaglutide Heart Failure Prevention
Even with semaglutide already approved to reduce heart failure risk, more studies are coming to analyze in more detail its effects.
A study published in August 2024 in the prestigious publication The Lancet found that semaglutide can help reduce the death rate from heart failure, even in patients already diagnosed with this condition.
Semaglutide was linked to a 28% reduction in major adverse cardiac events, as well as a 24% reduction in cardiovascular disease-related deaths for this subgroup of people with pre-existing heart failure, and a 19% reduction in deaths of any cause.
This is a very important data point, as cardiologists were concerned semaglutide might actually be a net negative for some sub-type of heart failure, like reduced ejection fraction, where the heart pumps less blood around the body.
Instead, the new study demonstrated that the benefit of semaglutide was similar regardless of heart failure type.
The improved heart failure risk was also found to be independent of age, sex, baseline BMI (Body Mass Index), and clinical status.
Obesity Is Just One Major Metabolic Disorder
While obesity is a major concern, it is just one of the diseases caused by metabolic disorders. Another major concern is diabetes.
Over 37 million people in the United States, or approximately one in 10 people, have diabetes, and approximately 96 million US adults, or one in three, have prediabetes.
This is a problem that predominantly hits some groups, especially those with less favorable socio-economic status.
Higher rates among racial/ethnic minorities, males, older adults, and socioeconomically disadvantaged populations corroborate well-established inequities.
Groups facing obesity, physical inactivity, and lower education/income bore a disproportionate burden, reflecting social determinants of health.
Regional disparities in type 2 diabetes prevalence and associated risk factors in the United States – Diabetes, Obesity & Metabolism
What Can Semaglutide Not Do?
Because semaglutide was initially a type-2 diabetes drug, and both obesity and diabetes are risk factors for heart failure, there has been speculation if nondiabetic patients benefit as well.
This is precisely what was investigated in a new study and published in the New England Journal of Medicine under the self-explanatory title “Semaglutide and Cardiovascular Outcomes in Obesity without Diabetes”.
The researchers found that even in patients with preexisting cardiovascular disease, and overweight or obese, but without diabetes, there was a significant reduction of death from cardiovascular causes, as well as a reduction of non-fatal myocardial infarction, or non-fatal stroke.
So, it appears that semaglutide can:
- Treat diabetes and its original medical role.
- Fight obesity and drive weight loss.
- Reduce all types of cardiovascular risks, irrespective if the patient is already suffering from it or not, and if the patient is diabetic or not.
Meanwhile, most side effects of semaglutide seem linked to gastrointestinal symptoms (nausea, vomiting, and diarrhea) and gallbladder-related disorders, with only very rare and maybe wholly unrelated more serious side effects (which we discussed in further details at the end of our article “Will Amycretin Be the Next Big Thing for Novo Nordisk?”).
Probably the likely way for semaglutide to extend even further its applications would be in the treatment of addiction, something currently investigated but not proven yet.
Investing In Semaglutide
Semaglutide and Novo Nordisk stock has already been a major money maker for investors since the release of GLP-1 for treating obesity, which we discussed back in 2023 in “The New Blockbuster Drug: Wegovy”.
With the treatment seemingly a lifelong requirement to avoid regaining the weight, new patients enrolling, and the obesity epidemic showing no signs of stopping growing, this is likely to continue.
Semaglutide is also likely to be approved in the EU soon for reducing cardiovascular risks, with the announcement in July 2024 of a “positive opinion for an update of the Wegovy label to reflect risk reduction of major adverse cardiovascular events”.
You can invest in GLP-1 companies through many brokers, and you can find here, on securities.io, our recommendations for the best brokers in the USA, Canada, Australia, the UK, as well as many other countries.
If you are not interested in GLP-1 companies solely, you can also look into biotech ETFs like WisdomTree BioRevolution UCITS ETF (WBIO), VanEck Biotech ETF (BBH), or First Trust NYSE Arca Biotechnology Index Fund (FBT) which will provide a more diversified exposure to capitalize on the growing biotech economy.
Novo Nordisk was historically mostly known for its diabetes therapies, which represent the bulk of its revenues.
It was a company we covered in “Top 5 Blue Chip Pharmaceutical Companies”.
Source: Novo Nordisk
A smaller part of Novo Nordisk’s activity is obesity, but together with GLP-1 diabetes, semaglutide is now the majority of the business. In addition, some of the GLP-1 diabetes sales might be off-prescription obesity therapy.
It is worth noticing that the on-prescription obesity business has been growing at 37% globally and 47% in “international operations” (non-North American operations). In comparison, insulin is looking almost stagnant, with “only” a 10% growth in the first 6 months of 2024, leading to an overall sales growth of 25%.
The company’s main market is North America, a geography growing at 36% and already much larger than the rest of the world.
Source: Novo Nordisk
The company’s growth is coming partially from the growth of the overall market with the obesity and diabetes epidemic, but also due to growing market share in diabetes and GLP-1 markets.
Source: Novo Nordisk
The stellar launch of Wegovy (the commercial name of semaglutide for obesity) led to the issue of producing enough to satisfy the market.
When Wegovy disappeared from inventory, the other Novo Nordisk treatment for type 2 diabetes, the drug Ozempic, using the same molecule, was often used as a substitute. Even Elon Musk referred to Wegovy as a way for him to lose unwanted weight.
Novo Nordisk has partially solved these supply issues through increased production, through the $16.5B acquisition of drug manufacturer Catalent, as well as a $8B investment in expanding its production facilities.
Future Products
When it comes to diabetes, Novo Nordisk is working on weekly and monthly insulins, better insulin pumps/implants, and DNA immunotherapy.
Novo Nordisk’s R&D pipeline also includes other diseases, notably MASH (metabolic dysfunction-associated steatohepatitis) with 4 candidate drugs.
And last but not least, Amycretin, a new molecule, could outperform semaglutide by targeting both GLP-1 (the same target as semaglutide) and amylin, a pancreas hormone controlling hunger.
Initial results for Amycretin are impressive, with a phase I trial of the pill version of Amycretin showing participants lost 13.1% of their weight after 12 weeks, a bigger reduction early on than from semaglutide/Wegovy. The drug was also still taken voluntarily by 80% of patients after 12 weeks, showing that possible side effects were tolerable enough for most patients.
The easier-to-use pill format and the stronger results could make amycretin an even larger commercial success than Wegovy, especially considering its users’ high retention rate.
(we discussed amycretin potential in “Will Amycretin Be the Next Big Thing for Novo Nordisk?”)
Financials
Novo Nordisk’s management is very vocal in making it clear that its newfound revenues from obesity and, soon, cardiovascular risk prevention will contribute to increased distribution to shareholders in the form of dividends and share repurchases (which have grown strongly since 2021).
Source: Novo Nordisk
Together with a rising stock price, this could make Novo Nordisk a long-term holding to bet on the obesity therapy market. Especially with net sales up 24% and net profit up 16%.
Of course, you should also take into account that other pharmaceutical companies will look to enter this market with their own product.
You can also read more about Novo Nordisk competitors developing products similar to semaglutide in our articles “The New Blockbuster Drug: Wegovy” and “Top Companies In Obesity Treatments”.