Novo Nordisk's (NVO 0.70%) molecule semaglutide is the active ingredient in its smash-hit therapies for weight loss and diabetes, which you've probably heard of under the trade names Wegovy and Ozempic. With its share prices up by 79% in the last 12 months alone thanks to sales of those semaglutide drugs, the company is being forced to actively limit its own marketing efforts in an attempt to buy time to scale up its manufacturing capabilities to meet the incredible demand. There's even a significant concern that counterfeit versions of these drugs are proliferating because of how unbelievably popular they are.
Much to the delight of shareholders, it's very unlikely that diabetes and obesity will be the only opportunities to market semaglutide. In fact, there's reason to believe that three massive new markets could be within reach over the next decade or so. Let's investigate each of these potential new markets to see how credible they are and what it'd mean for investors if Novo Nordisk were to succeed in securing the necessary additional regulatory approvals for semaglutide to access them.
1. Cardiovascular disease
Cardiovascular disease is perhaps the mother of all biopharma markets, with Precedence Research estimating its value to be above $162 billion in 2022. Per a clinical trial conducted by Novo Nordisk, a weekly shot of a small dose of semaglutide can cut the cardiovascular risks of overweight and obese people over the age of 45 by as much as 20% over five years. That means the business now has a clear pathway to requesting that regulators approve a new indication for the drug to slash the chances of patients experiencing both fatal and non-fatal heart attacks and strokes, which it plans to do before the end of the year.
The trial's results are consistent with the body of prior research on the subject, much of which the company funded. In other words, there's little indication that there is a high risk of regulators rejecting Novo's attempt. Shareholders could start to see significant additional earnings start to accrue as early as the middle of 2024, though it's unclear exactly how much of the massive market it'll be able to secure.
2. MASH (aka NASH)
Metabolic dysfunction-associated steatohepatitis (MASH), commonly known as non-alcoholic steatohepatitis (NASH), is a relatively common liver disease for which there's currently no cure. At most, it could affect up to 30 million people in the U.S., which is approximately 12% of the population, but estimates of its prevalence vary widely, which means that predictions about the market's size do too. While Visiongain Research estimates that the market for MASH therapies will reach a size of $62 billion by 2031, other research groups think it'll only be worth $10 billion.
Regardless of how much money is on the table, there's a chance that semaglutide might be what patients have been looking for. Novo is investigating the molecule's utility in treating MASH in a phase 3 clinical trial. But prior investigations, including its own phase 2 trials, haven't been entirely positive. The gist of the research so far is that patients don't seem to be guaranteed to see their level of liver hardening and scarring decrease with treatment, though some of their major risk factors for experiencing those issues, like obesity and diabetes, are effectively addressed.
So shareholders will need to see what the company reports when the late-stage trials are done to know whether more earnings are likely to be on the way. Its expected conclusion date is in mid-2028, but if the early data looks stunning, expect a sneak peek long before that.
3. Addiction disorders
Last but not least, there's some evidence that suggests that semaglutide might be useful for treating addiction disorders. Per a report by Fortune Business Insights, the market for substance use disorder treatments in the U.S. could be as large as just over $60 billion by 2029.
Several studies in animal models have shown that treatment with semaglutide leads to lower levels of self-administration of alcohol, cocaine, and other addictive substances. But there aren't many published clinical trials of the drug's impact on actual people struggling with addiction disorders, though several are ongoing. Furthermore, the few studies done so far have been very small, and their results have been somewhat ambiguous.
Novo Nordisk hasn't initiated any formal clinical trials to clarify that because it's likely waiting on the scientific community to take a few more stabs at the issue first. So it'll probably be at least a few years before formal research and development (R&D) efforts even begin. But if the ongoing investigations eventually show promise, and the company follows up and finds success in seeking another indication, it'll be yet another driver of serious returns with this stock.
