Novo defends economics of Wegovy capsule as decrease costs weigh on gross sales; inventory falls

Novo Nordisk‘s CEO sought to reassure traders that its Wegovy capsule can drive worthwhile progress regardless of decrease costs, as traders despatched the drugmaker’s shares decrease following quarterly outcomes.

The Danish firm raised its full-year steering after reporting better-than-expected adjusted gross sales and working revenue, however traders remained centered on pricing stress, the standard of the earnings beat and whether or not oral Wegovy can change into a big sufficient progress driver to revive Novo’s fortunes.

Novo stated decrease costs continued to weigh on gross sales, however CEO Mike Doustdar stated that rising volumes and the early efficiency of the Wegovy capsule confirmed the technique was working.

“We might not be capable of… present a optimistic progress on the highest and the underside if objects just like the capsule weren’t doing nicely and weren’t worthwhile,” Doustdar informed CNBC’s Carolin Roth on Wednesday.

Doustdar additionally informed reporters the corporate was looking for a “candy spot” between pricing and quantity, arguing that decrease costs had been driving sturdy demand and that Novo would proceed adjusting costs because the market evolves.

Within the second quarter, “we’ve got a stable quantity uptick, nicely into double-digit numbers, whereas, after all, we’re having a headwind and a problem due to the costs on our financials this yr,” he stated.

Novo Nordisk’s quarterly beat and steering enhance did little to resolve Wall Road’s greatest concern: whether or not the Ozempic maker has a convincing path again to sustainable progress as competitors from Eli Lilly intensifies.

Analysts stated the better-than-expected quarter benefited from rebate changes and different non permanent elements, weight problems drug gross sales had been broadly according to expectations, and oral Wegovy barely missed forecasts. 

On the similar time, Novo reported one other blended medical consequence for next-generation weight-loss drug CagriSema, reinforcing investor questions concerning the firm’s longer-term pipeline.

“General nothing to encourage,” Citi analysts wrote, whereas Jefferies stated the steering enhance left little room for consensus gross sales estimates to maneuver increased.

The Danish drugmaker hiked its full-year steering and stated it now expects adjusted gross sales and working revenue to be down 6% to flat at fixed change charges, an enchancment from earlier steering of a decline of between 4% and 12% for each metrics.

Adjusted gross sales rose 7% at fixed change charges within the second quarter, whereas adjusted working revenue elevated 11%, with quantity progress partly offset by decrease costs.

Copenhagen-listed shares fell as a lot as 5% in morning buying and selling earlier than paring some losses to final commerce 4.3% decrease after the quarterly report was revealed sooner or later sooner than anticipated.

Novo is racing to revive investor confidence in its pipeline and talent to execute, particularly within the difficult U.S. market, amid intense stress from Eli Lilly’s rival medicines Zepbound and Mounjaro, which have quickly gained market share regardless of being launched years after Novo’s.

Coming into Wednesday buying and selling, the corporate’s Danish shares had fallen about 5% year-to-date and had been down practically 70% from their mid-2024 peak, even when they’ve recovered some floor this yr following the Wegovy capsule launch.

Novo stated the improved outlook was pushed by elevated expectations for GLP-1 product gross sales and particularly its Wegovy product portfolio, which incorporates each an injectable and a capsule. The capsule has reached greater than 5 million prescriptions since its launch, alongside encouraging early uptake in markets exterior the U.S. and the rollout of a newly authorised increased dose of injectable Wegovy, Novo stated.

“I may see a future the place really this market is, to a big extent, a capsule market,” Doustdar informed CNBC, whereas stressing that the launch was solely six months previous.

He additionally pushed again on issues that momentum was slowing after oral Wegovy gross sales got here in barely beneath some analyst forecasts.

“The superb element is that [the] first 1 million prescriptions took us 11 weeks to do with none competitor out there. This final 1 million prescriptions took us 4 weeks to do, whereas there is a competitor on the market making an attempt actually onerous to take these prescriptions away from us, and we’ve got not allowed that,” he stated.

Novo stated round 80% of sufferers taking the capsule had not beforehand used a GLP-1 therapy, suggesting it’s increasing the weight problems market moderately than merely drawing customers away from injectable Wegovy.

Brian Mulberry, chief market strategist at Zacks Funding Administration, informed CNBC over e mail that Novo administration is relying on sufferers preferring capsules over injections to gas progress, however warned success will depend upon the corporate’s capability to execute and scale. 

Eli Lilly launched its rival weight reduction capsule Foundayo in April, roughly 4 months after the Wegovy capsule hit the U.S. market. It has seen slower preliminary uptake, and Lilly CEO David Ricks has beforehand informed CNBC that it’ll take time to construct the model since it is a new drug that medical doctors and sufferers do not know.

Eli Lilly is ready to report earnings early Wednesday.