What happened
Shares of Novo Nordisk (NVO -0.86%) climbed 16% this week, according to data provided by S&P Global Market Intelligence, after the Danish pharmaceutical company announced encouraging trial results for a key product, then followed that with strong first-half 2023 results and a significantly increased annual sales outlook.
So what
The bulk of Novo Nordisk's rally came on Tuesday at the same time as the leading pharmaceutical stock announced its SELECT cardiovascular outcomes double-blinded trial showed that its once-weekly treatment of weight-management drug semaglutide 2.4 mg (also known as Wegovy®) reduced incidents of major adverse cardiovascular events (MACE) by 20%.
The trial enrolled 17,604 adults aged 45 years or older who were overweight or obese with established cardiovascular disease and no prior history of diabetes. Novo Nordisk expects to file for regulatory approvals of a label indication expansion for Wegovy® in the U.S. and Europe by the end of 2023.
Executive VP for development at Novo Nordisk, Martin Holst Lange, stated:
People living with obesity have an increased risk of cardiovascular disease but to date, there are no approved weight management medications proven to deliver effective weight management while also reducing the risk of heart attack, stroke or cardiovascular death. Therefore, we are very excited about the results from SELECT showing that semaglutide 2.4 mg reduces the risk of cardiovascular events. SELECT is a landmark trial and has demonstrated that semaglutide 2.4 mg has the potential to change how obesity is regarded and treated.
Now what
On Wednesday, Novo Nordisk continued piling on the good news by announcing strong results for the first half of 2023, with net sales climbing 30% year over year to 107.7 billion Danish kronor ($9.96 billion), translating to a 43% increase in net profit to DKK$39.2 billion ($3.63 billion). First-half net profit was also up 44% on a per-share basis to DKK$17.41, or around $1.61 per share.
As such, Novo Nordisk raised its full-year 2023 outlook to call for sales growth of 27% to 33% at constant currency (up from previous guidance for 24% to 30% growth) and for operating profit growth of 31% to 37% (up from 28% to 34%).
"We are very pleased with the sales growth in the first half of 2023," stated Novo Nordisk CEO Lars Fruergaard Jørgensen. "The growth is driven by increasing demand for our GLP-1-based diabetes and obesity treatments, and we are serving more patients than ever before."
Mr. Jørgensen added that from a research and development standpoint, the company is excited about the results of the SELECT trial as it pertains to demonstrating the potential for semaglutide to significantly reduce comorbidities (or the simultaneous presence of two or more medical conditions in a patient) associated with obesity.
In the end, with Novo Nordisk stock up a modest 14% year to date leading into this week of encouraging announcements, it's hardly surprising to see shares extending their rally.
