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$NVO: The Co. Worth More Than Denmark

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$NVO: The Co. Worth More Than Denmark

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

Paul Cerro
Aug 17, 2023
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$NVO: The Co. Worth More Than Denmark

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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.

Industry/Trends

GLP-1s: Effective But With A Catch

Paul Cerro
·
Jul 10
GLP-1s: Effective But With A Catch

“There is no silver bullet. There are always options and the options have consequences.” Foreword: This is actually my first notebook post on something related to healthcare. It revolves around the ho…

Read full story

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.

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The long-awaited study results, which have not been peer-reviewed, showed that patients on Wegovy had a 20% lower incidence of heart attack, stroke, or death from heart disease compared to those on a placebo.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

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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.

chart

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.


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).
All information provided herein by Cedar Grove Capital Management, LLC (“Cedar Grove Capital”) is for informational purposes only and does not constitute investment advice or an offer or solicitation to buy or sell an interest in a private fund or any other security. An offer or solicitation of an investment in a private fund will only be made to accredited investors pursuant to a private placement memorandum and associated documents.
Cedar Grove Capital may change its views about or its investment positions in any of the securities mentioned in this document at any time, for any reason or no reason. Cedar Grove Capital may buy, sell, or otherwise change the form or substance of any of its investments. Cedar Grove Capital disclaims any obligation to notify the market of any such changes.
The enclosed material is confidential and not to be reproduced or redistributed in whole or in part without the prior written consent of Cedar Grove Capital. The information in this material is only current as of the date indicated and may be superseded by subsequent market events or for other reasons. Statements concerning financial market trends are based on current market conditions, which will fluctuate. Any statements of opinion constitute only current opinions of Cedar Grove Capital which are subject to change and which Cedar Grove Capital does not undertake to update. Due to, among other things, the volatile nature of the markets, and an investment in the fund/partnership may only be suitable for certain investors. Parties should independently investigate any investment strategy or manager, and should consult with qualified investment, legal and tax professionals before making any investment.
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