As you probably could have guessed, Ozempic and Wegovy aren't going to be the last popular and profitable medicines that Novo Nordisk (NVO +0.25%) will bring to market. Nor is the Danish pharma juggernaut going to focus exclusively on developing more therapies for diabetes and obesity, despite how excellent its performance has been, thanks to its treatments in those indications.
Instead, the company is planning to diversify into yet another key market, and its shareholders are probably going to eventually become a bit richer as a result.
NYSE: NVO
Key Data Points
Smart positioning will lead to competing in more lucrative markets
On Monday, Novo announced its intention to acquire Cardior Pharmaceuticals, a private German biotech company that is pursuing treatments for cardiovascular diseases, for around $1.1 billion. Its lead drug candidate, CDR132L, is in phase 2 clinical trials, and it aims to help people recover more effectively after heart attacks. It's also being investigated in a phase 1b trial as a treatment for heart failure.
Cardiovascular disease is a gargantuan market. A report suggests the market was worth nearly $67 billion in 2023, and forecast to grow to $84 billion by 2032. It's pretty clear that our modern sedentary lifestyle isn't leading people to experience great heart health outcomes on average.
But thus far, Novo hasn't been positioned to compete for a large share of that ever-growing cardiovascular therapy pie. It doesn't make any approved medicines that treat heart diseases right now. Plus, its pipeline only features two cardiovascular programs, both of which are in phase 1 clinical trials, meaning it will be many years before they reach the market, assuming they get approved by regulators at all. Now, Novo Nordisk will have exposure to yet another important therapeutic area where there's demonstrated long-term demand for more and better drugs.
Cardior's phase 2 trial of CDR132L won't conclude for roughly a year, by which point it'll likely be fully integrated as a research and development component of Novo Nordisk. Sometime between now and then, the pharma giant will initiate another phase 2 trial of the candidate in the context of chronic heart failure.
So well before the end of the decade, Novo could have a new blockbuster drug. And that's another reason to invest in it.
There's more than one factor at play here
Novo Nordisk actually has exposure to more long-term upside from the Cardior purchase than what might be evident at first glance. In short, it now has an opportunity to combine its medicines to create a new product that may have superior efficacy.
Its weekly weight loss shot Wegovy is already a smash hit, with its 2023 sales of more than $4.5 billion (up 407% from 2022). On March 8, the Food and Drug Administration approved the company's petition for the drug to be indicated for reducing cardiovascular disease risk in people who are overweight or obese. For the record, regulators consider 70% of people in the U.S. to be overweight or obese.
As we all know, having excess weight is a major risk factor for developing heart disease. Between the assets from Cardior and Wegovy, it's now possible for Novo to develop a combination therapy that both addresses a factor that increases heart disease risk and also mitigates the damage caused when that risk is realized. And a huge portion of the population is likely to be eligible for such a treatment. The investment thesis for Novo Nordisk practically writes itself.
Nonetheless, the company will have a lot to accomplish between here and that sunny but speculative future. There's always the risk that Cardior's programs won't perform as well as hoped in late-stage clinical trials, or that its candidate can't or won't be co-administered with other drugs. But in this case, the potential rewards for shareholders outweigh the risk, at least given the facts as they appear now.
