Shares of Novo Nordisk (NVO 0.84%) were jumping 9.6% higher as of 11:25 a.m. ET on Thursday. The big biopharmaceutical company is accustomed to enjoying major catalysts from news related to its type 2 diabetes drug Ozempic and weight-loss drug Wegovy. In this case, though, another product took center stage.
Novo Nordisk hosted its Capital Markets Day on Thursday to update investors about its progress. During this event, the company reported results from a phase 1 study evaluating the experimental obesity drug amycretin. Novo Nordisk revealed that participants receiving the drug achieved an average weight loss of 13.1% after 12 weeks, according to a report by Reuters.
Why are investors so excited about Novo Nordisk's news?
It's not surprising that the big pharma stock moved higher today. Investors recognized that the results for amycretin were better than the 6% weight loss achieved after 12 weeks in a clinical trial for Wegovy. There's reason for optimism that amycretin could be an even bigger commercial success down the road than Wegovy, which is already raking in huge sales for Novo Nordisk.
However, the results for amycretin were from an early-stage clinical study. Novo Nordisk has a long way to go before it could potentially win approval for the drug and launch it. The next step in that process -- advancing into phase 2 testing -- should begin in the second half of 2024.
Is Novo Nordisk stock a smart pick to buy now?
Novo Nordisk should continue to enjoy strong sales growth from Ozempic and Wegovy. It appears to have a potential winner with amycretin. However, the stock's valuation already reflects great growth expectations with a price-to-earnings-to-growth (PEG) ratio of nearly 4.5x. I like Novo Nordisk's business and products, but I think investors can find better stocks to buy right now.
