$NVO: The Co. Worth More Than Denmark

Recent GLP-1 news has sent the value of $NVO to new highs

Last month, I posted my thoughts on the GLP-1 market and outlined in a quick primer the pros/cons but reiterated how bullish I was on the space.

If you’re interested, you can read about it below.

Since then, Novo Nordisk NVO 0.00%↑ had some great news that came out of a large study that showed GLP-1s not only being efficacious for obesity but also having a clear cardiovascular benefit.¹

The study, called SELECT, involved 17,500 overweight or obese people with a history of heart disease aged 45 years or older with no prior history of diabetes. It started almost five years ago to test if the weekly injection has medical benefits.

The long-awaited study results, which have not been peer-reviewed, showed that patients on Wegovy had a 20% lower incidence of heart attack, stroke, or death from heart disease compared to those on a placebo.

That is significantly better than the 15-17% expected by investors and analysts.²

This is big news since many just viewed the drug for weight loss but now it seems that the drug can have multiple benefits that could make it look much better in the eyes of patients, doctors, insurers, etc.

So why am I writing this post? Well, interestingly enough this news sent the stock above $400 billion in market cap.

Source: Seeking Alpha.

I found this interesting because Novo Nordisk is a Danish company (Denmark) and is now worth more than the entire country’s GDP which sat at ~$395 billion as of 2022.

To make things even more interesting, Novo Nordisk has had quite a success in pharmaceuticals.

Over the last 10 years, the stock is up over 500% and almost 200% in 3 years.

While insurers are taking their time with wanting to support the drug for weight loss specifically, having a potential double benefit could be used to change policy and coverage.

Estimates for how big this market could be hovering around the $100 billion mark by the end of the decade.

Additionally, as part of the study, it was estimated that 93 million U.S. adults would meet the eligibility criteria for the STEP 1 trial, which studied people who are overweight or obese and excluded those with Type 2 diabetes. 

Researchers projected that nearly half, or 43 million people, would no longer have obesity after treatment with Wegovy for 10 years. 

An estimated 83 million Americans without established cardiovascular disease would also experience heart health benefits after taking Wegovy for a decade. 

If you’re long obesity in America, and frankly the world, the potential for expanded use of Wegovy (manufactured by Novo Nordisk) could easily expand market dominance ahead of others like Pfizer PFE 0.00%↑ and Amgen AMGN 0.00%↑.

If you’re looking for an opportunity, I would suggest diving deeper into GLP-1s for yourself and seeing the potential that these drugs could really offer current and future patients.

However, as I mentioned in my original post, there’s always a catch. Currently, there is a massive shortage of the drug for both on and off-label use.

Something to keep in the back of your mind.

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Until next time,

Paul Cerro | Cedar Grove Capital

Personal Twitter: @paulcerro

Fund Twitter: @cedargrovecm

HoldCo Twitter: @cedargrovech

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Disclaimer: I personally hold private shares in Ro (Roman Health Ventures) at the time of writing this article as well as a position in Novo Nordisk (NVO).

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1. Reuters

2. Reuters