This Could Be Novo Nordisk's Next Big Weight-Loss Product

Novo Nordisk (NVO 2.70%) has a couple of fantastic products in Wegovy and Ozempic. While only Wegovy is approved for treating weight loss, both products have been effective in helping people shed pounds, resulting in Novo Nordisk struggling to meet what has been scorching-hot demand.

And there could be yet another product that to generate even more demand, and perhaps be Novo's best weight-loss product yet.

Oral version shows similar effectiveness to the injectable

In clinical trials, Wegovy has demonstrated that, on average, it can help patients lose about 15% of their body weight. But one of the downsides is that it is an injectable treatment (as is Ozempic), so it may not be as appealing to patients as a pill.

But the good news is that Novo Nordisk has been testing a pill, and in late-stage trials it has been showing similar results. Over a 68-week period, patients who took daily doses of 50 mg oral Wegovy lost just over 15% of their body weight, on average -- similar to the results the injectable version achieved. That's a significant development as it means patients can just take a pill every day versus having to use an injectable.

And the side effects were generally mild to moderate, with the pill not presenting any serious risks for patients; the most common issues were gastrointestinal.

The company plans to file for approval for the oral version of Wegovy later this year, which could lead to some terrific sales growth for the business on top of its already stellar results.

Novo Nordisk's sales have already been soaring

Oral Wegovy could further accelerate Novo Nordisk's top line, which has already been doing great. Last quarter, for the period ended March 31, the company's sales totaled 53.4 billion Danish krone. At constant exchange rates (CER), that's double what the business generated in the prior-year period.

Here's a look at some of the company's top-selling products during the period:

Source: Company filings. Figures in millions of Danish krone. The growth rate is the change from the prior-year period.

These were the top-three drugs for the company in Q1 as they all generated year-over-year growth of more than 20%. All of Novo Nordisk's fastest-growing products have been related to Ozempic or Wegovy -- Rybelsus is an oral version of Ozempic.

The company has also upgraded its guidance for 2023 and is now projecting growth of up to 30% at CER versus a prior forecast that called for growth of no more than 19%.

Is Novo Nordisk stock a buy?

Novo Nordisk may turn off some investors due to its hefty 41-times-earnings multiple. But with some incredibly fast-growing products in its portfolio, and plenty of room to grow, a premium could be justifiable. That's because as sales rise, so too will the bottom line, bringing down the earnings multiple in the process.

Obesity is a big problem in the U.S., with the Centers for Disease Control and Prevention estimating that more than 40% of adults are obese. And there are many diseases related to obesity. Plus, medical costs are an estimated $1,861 more per year for people who are obese than those who are not.

There's a big incentive for the healthcare industry to help people get thinner, which is why a company with promising weight-loss treatments should command a high premium -- they could be in high demand for years to come. Although Novo Nordisk's stock may look expensive right now, that might not be the case in a few years when today's price could prove to be a steal of a deal.