The stock of Novo Nordisk (NVO +3.76%) has been a hot buy over the past few years (up 270% in three years), largely due to the success of its diabetes and weight loss drugs.
Even if you aren't familiar with the company, you're probably familiar with Ozempic, which has been synonymous with weight loss even though it's approved as a treatment for diabetes. Wegovy is the company's approved weight loss drug, and it has been growing at a scorching rate, with its sales rising by more than 400% last year.
And while those two drugs have been exceptional assets for Novo Nordisk, there could be an even more promising one on the horizon for the company: amycretin.
NYSE: NVO
Key Data Points
Amycretin delivered encouraging results
Earlier this month, Novo Nordisk released phase 1 trial results for amycretin, its weight loss pill. The early indications are that the pill could be more effective than Wegovy, which is an injectable. After 12 weeks of taking amycretin, participants in the trial lost 13% of their body weight. While taking Wegovy, patients lost just 6% by the 12-week mark.
And if the pill is more effective than Wegovy, it's likely more effective than Ozempic as well; the two drugs contain the same active ingredient (semaglutide), with Wegovy being a higher-dose version.
In clinical trials, Wegovy has helped people lose 15% of their body weight after a year, with some losing even more weight than that. The big test for amycretin will be how well it does over a longer period, and if taking the pill daily leads to even more significant weight loss.
Last year, the Danish company's top line grew by 36% at constant exchange rates, thanks in large part to the growth generated from Wegovy and Ozempic. This year, it projects growth between 18% and 26%, with its operating profit growing by as much as 29%.
The future is bright for the business, and with yet another promising weight loss drug in amycretin potentially on the horizon, there could still be a lot more growth in the long run.
The drug might go straight into phase 3 trials
A strong phase 1 result is encouraging, but it also normally means that the finish line for the drug is still several years away, and that's assuming it will be successful in trials along the way. But Novo Nordisk's management is contemplating jumping ahead.
Results from the phase 1 trial for amycretin are promising enough that the company is debating whether or not to go directly into larger phase 3 trials and just skip phase 2. By doing so, the company would expedite the drug's development and bring it to market quicker.
But even in that case, if the drug is successful it could still be multiple years before it obtains approval and gets to market.
Management is optimistic about amycretin, with CEO Lars Fruergaard Jørgensen believing that it has the potential to be a best-in-class obesity treatment. And with a growing number of weight loss options available, it would be an important distinction that could help it dominate the market -- assuming it obtains approval.
Does this make Novo Nordisk a better buy?
Amycretin's trial results are encouraging, but investors need to be careful not to assume that it will be a game changer for the business just yet. Novo Nordisk faces a lot of competition in weight loss, particularly with rival Eli Lilly obtaining approval for Zepbound recently, which is its weight loss treatment.
This news doesn't make Novo Nordisk a better buy; it's still too early to know how amycretin will perform over a longer time frame and in a larger trial. But this is still a top healthcare stock given the success of Ozempic and Wegovy. As long as you aren't setting your expectations too high, especially in the short term, Novo Nordisk can still make for an excellent investment today.
