Denmark's Novo Nordisk
-Ablynx. We are launching our
once-weekly GLP-1, Ozempic in the US
market. We also have a big obesity business. We will continuously
roll out our innovative portfolio of GLP-1s. Here's a two-week chart
of the S&P. But 2500 would be an
important support level. And sales surge at Novo
Nordisk. The CEO says the firm
is seeing a gradual recovery in patients
initiating diabetes treatment. They also
have a recently approved drug for
weight loss with really extreme results. So how does Wegovy
help you lose weight? We have a very
efficacious product now on the market in the
US. Wegovy. Novo was the only
company with FDA approval to market
Wegovy. Other than the fact
that that chart's about the greatest chart
you've ever seen and that's all about one
drug mostly, David. It's a drug called
Wegovy. A new blockbuster
obesity drug Wegovy. Novo Nordisk. Ozempic and Wegovy.
Shares of Novo Nordisk are up sharply this
morning. That the weight loss drug
Wegovy. Novo Nordisk. Here's a headline
Dethroning LVMH as Europe's most valuable
company thanks to Wegovy. Well, here it is
Saturday morning. It's the day that I
give myself my Ozempic injection. This is my
box of Ozempic. This is 65 year old
Mary Tripp. She's struggled with
her weight since she was 11 years old. I did have times in my
life where, um, you know, it was hard for
me to get out and take a walk or get out and
do anything. I mean, it was, you
know, and at those times, yes. I mean, I
felt like a failure. While a gastric bypass
operation in 2005 reversed her Type 2
diabetes, the weight wouldn't stay off
until summer 2022 when her doctor recommended
she try Ozempic. We tried different
diabetes drugs that, you know, that also
help you lose weight. But there was a
several of the older ones that I was
allergic to. So then it had been a
number of years and, and you know, I was
kind of saying to her like, is there
anything else we can do? And she said, Why
don't we try Ozempic and see how that goes. Her diabetes made her a
prime candidate for the drug. She's lost about
60 pounds since June 2022. Results like
Mary's are part of why there's a global surge
in demand for Semaglutide sold under
the name Ozempic for patients with diabetes
and Wegovy for those seeking weight loss. In 2021, national
spending for Semaglutide totaled
$10.7 billion. Danish pharmaceutical
company Novo Nordisk developed it,
transforming an untapped industry and
likely the company's fortunes forever. This is going to be one
of the biggest, the highest demand drugs
in the history of pharmaceuticals. While diabetes drugs
have been effective for decades, drugs for
weight loss have not. And the potential
impact is huge. More than 1 billion
people suffer from obesity worldwide. It's been a crazy ride
and it's it's still ongoing. It's clear
that nobody had expected that it would
be taking off this quickly. In September 2023,
CNBC's Melissa Lee got an inside look at a
Novo Nordisk lab in Denmark. Novo Nordisk
didn't set out to create a weight loss
drug. It was an unintentional side
effect discovered while studying GLP-1s. We had no clue about
this molecule, will come out with higher
efficacy than our past versions of of these
molecules. Semaglutide is the
medical name for Ozempic and Wegovy and
falls under a class of drugs called GLP-1
agonists. GLP-1 drugs mimic
GLP-1 molecules in the body and regulate
blood sugar, stimulate insulin production and
suppress appetite. I guess that's what
I've been looking for is something that will
like tell my brain you really don't need this
and you really don't want it. We knew we had a type
two diabetes product, but we also talked
about if it actually works in obesity, do
we dare to go in and do that development? As it often plays out
in research, there's also some surprises on
the way. Semaglutide was
developed in the early 2000s and released in
2012 as Ozempic a weekly injection for
those with Type 2 diabetes. It passed
FDA approval in 2017. Wegovy was approved in
2021. Neither were an
immediate hit. Weight loss drugs
already in the market weren't as effective,
which made it challenging when
trying to promote to those disillusioned
with the diet industry. Many who live with
obesity have tried a lot of different
things and often failed. So actually,
just mobilizing patients to seek care
is is not easy. It was not a huge
success, so to say. Doctors say demand took
off when fear about death was spreading
during the Covid-19 pandemic. According to
the Centers for Disease Control and
Prevention, obesity could triple the risk
of hospitalization. That was the moment
that everything shifted. I remember
having patients coming to me, patients with
obesity or struggling with weight,
specifically saying, I don't want to die from
Covid due to my weight. In 2020, more than a
million US patients were prescribed
Semaglutide. In 2021, that number jumped to
about 2 million. They didn't see it
coming. No one saw it come. Investors didn't
and analysts didn't. This one drug alone
could be worth 200 $300 billion over time. I think we were maybe 6
to 10 people working on that project. 6 to 10
people in the lab like this? Yeah, we were in
different labs. Pow Bloch was one of
the scientists in the early phases of
Semaglutide's discovery. I made a Semaglutide
the first time in 2004, so it was a long
process before we hit the right one. But Novo Nordisk's
100-year history began with the desire to
cure diabetes, as one of the company's
founders had the disease. In 1922, a
group of scientists traveled to Canada to
bring back a new miracle drug insulin
to Scandinavia, leading to the founding of
Nordisk InsulinLaboratorium. Less than three months
later, they treated the first ten patients. And they didn't have
anything at all when they started. It was
made in a basement. A few years later, two
former Nordisk employees started
their own company, Novo Therapeutic. Novo
Nordisk competed as the world's leading
insulin producers until finally merging in
1989 to become Novo Nordisk. They saw this
competition on a transatlantic
perspective and globally, and there
were huge demands for investments in
development and research. In August 2023, the
company became Europe's most valuable company
by market cap, more valuable than its home
country. Denmark's total economy, its
second quarter earnings in 2023, followed
suit. The company reported a
46% increase in net profits and a 32%
increase in sales compared to the same
quarter the year prior. Sales of Ozempic and
Wegovy rose by 58% and 363% respectively in
the first six months of 2023. And in the same
period, the company recorded overall net
sales of $15.1 billion. To put that in
perspective, the year Novo Nordisk developed
Semaglutide in 2012, the company's full
year net sales were $13.5 billion. In the past five
years, the share price of Novo Nordisk has
more than quadrupled. The stock sold for
$89.99 as of October 5th, 2023. We haven't seen any
performance even close to this. Just days prior to
second quarter earnings in 2023, it was
reported that a late stage clinical trial
showed Wegovy reduced the risk of
cardiovascular events like heart attacks or
strokes by 20% compared to a placebo. Shares
soared by 17% that day. The select trial
exceeded expectations and helped the company
showcase the drug's potential beyond its
image as a vanity drug. We all saw that, okay,
this is not just about weight. The select trial was
really, you know, one of the bigger moments,
I believe, in health care over the past few
years, aside from Covid vaccines. And if these
data stick over the long term, we can come
up with numbers that we just have not seen for
other therapeutics. The company raised its
full year profit and sales forecasts for a
second time. We felt comfortable all
along that dealing with obesity is actually
leading to a number of health benefits. So
far, we have developed it for Type 2 diabetes
and obesity. We are testing it out
also in Alzheimer's. One of the reasons why
it works in obesity is that it deals with
your craving. So you say addiction
for for food. There are some
speculations that close to that center in the
brain is also the control of other
addictions. While the company
continues to diversify its portfolio, at the
moment, it is all in on obesity care. Later in
August, the company acquired competitor
embark biotech for $16.3 million up front
and up to $498 million in milestone payments
and drug developer inverse Argo Pharma
for about $1 billion. More than 100 million
US adults are living with obesity. In its
2020 report, the Milken Institute found that
the economic and social impacts of the disease
in the US alone account for nearly $1.4
trillion. Its estimated annual
medical US costs were nearly $173 billion in
2019. Type 2 diabetes and
obesity go hand in hand. So by improving
one, we improve the other one, right? But
if we look at it in the obesity weight loss
side, we are preventing Type 2 diabetes by
treating obesity. Yet obesity is largely
an untapped market. Prior to GLP 1s,
previous weight loss drugs were either
ineffective or had dangerous side
effects, like the diet drug combo Fen-Phen in
the 90s that was linked to heart and lung
damage in clinical trials, Wegovy was
shown to reduce body weight in people with
a BMI of 27 or greater by around 15%. There's always been a
barrier to break through weight loss of
about 10%. That's always been the
view that once you break through 10%,
this becomes a very, very real market. And Novo achieved
that, frankly, with Wegovy. While Novo Nordisk is a
first mover in obesity care, the company
can't solve the epidemic alone. There
are 1 billion people suffering worldwide. To be able to support
all of the patients who are diagnosed or who
would be diagnosed as obese in the US
market, you'd have to be able to supply over
50 billion pens. That's a pretty
daunting task just to manufacture the
devices. In 2032, Novo Nordisk's
Semaglutide patent expires in the US. Many other
pharmaceutical companies are joining
the race by developing their own GLP-1 drugs
like Eli Lilly, which analysts say is Novo
Nordisk's biggest competitor. Amgen and Pfizer are
also working on products there. There's a number of
other companies, including Viking and
Structure on the small cap biotech side that
are vying for positioning here as
well. Eli Lilly's Tirzepatide
sold as Manjaro is more effective and boosts
higher weight loss results than
Semaglutide. Unlike Wegovy, Manjaro is not
yet FDA-approved for weight loss, but
expected to be in late 2023 or early 2024. I like competition
because if there's no competition, there is
a risk that we do not stay innovative. So we
have been competing with Eli Lilly for 100
years. While growth has been
explosive, there are some concerns. For one, massive
demand for both Ozempic and Wegovy has caused
real supply shortages. The company is
expanding production capacity in its North
Carolina and Denmark facilities. If you look at just the
growth of go in the US, it's, you know, it's
more than doubling year over year. So more and
more capacity is coming in line. Off-label use is
another consideration. Everybody looks so
great. When I look around this room, I
can't help but wonder is Ozempic right for
me? As Jimmy Kimmel joked
at the 2023 Oscars, celebrities are
reportedly using these drugs to lose a few
extra pounds. They wouldn't be the
first. A recent study by data analytics firm
Trilliant Health found that only a little
more than half of US patients on GLP-1
drugs have a history of Type 2 diabetes or
received a prescription after a medical visit. It's a challenging
situation because it's a it's a new situation
for us. It's something we
cannot control. So we are really
doubling down in making sure that physicians
are educated around our products. But some experts don't
necessarily see off label use as an issue
and rather a challenge to solve for the
future. After treatment becomes available for
those who need it most, the next step is
likely reaching the average consumer. That
is, people who want to lose a little extra
weight. Consumer products don't
command the same profit margins that
pharmaceutical products do. But in terms of
being able to scale into a market, this
vast- The ability to kind of take this to
the consumer, assuming that we continue to
see good safety of this category over time,
would be potentially a next leg of the story,
not just for Novo Nordisk, but also for
the industry. If they can't innovate
successfully beyond Semaglutide, that's a
fundamental problem for the pharmaceutical
industry that they have to solve for. There are some
questions about side effects. Many users
have reported experiencing minor
symptoms like nausea. Others more serious,
like stomach paralysis, depression and
suicidal thoughts. On October 5th, 2023,
a study, the first of its kind, found an
increased risk of gastrointestinal
issues stemming from GLP -1 drugs. The Danish drugmaker,
along with Eli Lilly, was already facing a
lawsuit over what plaintiffs say is a
failure to disclose these types of health
issues. Any report of a safety
issue is, of course of concern because
patient safety is is fundamental. We
collect all these these data and we look at
all the clinical data we have. Each and
every safety report is investigated. We feel
that we have a robust data set and we share
that with the authorities who do
investigate this. But we believe that
there is no concerns besides what is
already established in the label. And while those effects
aren't widespread, they could derail the
company's growth. You could go all the
way back to 2003, 2004 with Vioxx, Celebrex
and Bextra, the Cox two inhibitors, where
those products were projected to be 15 to
$20 billion market, it actually ended up sort
of reversing and going back to, you know, a
$3 billion market. Do we think that's
going to happen here? Absolutely not. For Mary, so far, side
effects aren't a concern. A negative. Like whatever. If I'm still around in
20 years, I'll be thrilled. What is an issue? Price. Pens cost about $1000
to $1300 a month out of pocket and if used
correctly, should be taken indefinitely. As of 2023, Medicare
does not cover Wegovy and only some plans
fully cover Ozempic and Mounjaro for
diabetics; putting another barrier
between US users and the drugs. We have a situation
where there's a very steep demand and we
cannot meet that demand. And I can only
think about what it would mean if we start
giving it away. So we cannot do that. But that too could
change as society's understanding of
obesity evolves. The American Medical
Association officially recognized obesity as
a disease in 2013. American Medical
Association is changing this concept of BMI. They said that
insurances cannot deny weight loss medication
based purely on the BMI. Now, that is
huge, and that's going to open the door for
many other patients to have access to this
drug. The big question is
whether the American insurance system can
support coverage for millions of people
needing these treatments in the
future. These two drugs are
going to have multiple benefits for patients
in a variety of health areas. So if that's
the case, I think we have to consider can
insurance afford all of this? And if they
can't, what do they do about it? Analysts predict that
competition among pharmaceutical
companies, along with availability, will
eventually drive prices down. The obesity treatments
will be available ultimately, you know,
certainly a decade or more from now for
pennies on the dollar. And so treating
obesity may become dramatically easier. To get there. Novo
Nordisk will first have to tackle quality
control on September 21st, 2023, Reuters
reported the FDA had found manufacturing
shortfalls in the company's North
Carolina production plant in July that
could date back to May. Stocks fell by 3%. In a statement to
CNBC, Novo Nordisk said the FDA does hundreds
of routine inspections with all
pharmaceutical companies every year. Novo Nordisk has
responded to the FDA observations and the
facility continues to run and produce for
the market. Even if Novo Nordisk
and its peers can achieve the lofty goal
of helping those suffering from
obesity, there are some apprehensions. If Eli Lilly and Novo
Nordisk can continue to deliver and meet the
demand, then it could really change the
world. There is another risk. It could be
something completely different than just a
drug, but something you could use as you use
makeup. Maybe people would
forget to do exercise and to to eat healthy
because we simply take a drug. We are only
scratching the surface. And that's a little
bit scary, in fact. Still, according to the
company's leader, the attempt is worth the
risk. I think nowadays we
mankind is not struggling because of
infections, but I think we are struggling
because of of how we live. And with aging
populations, we see less and less
productive workers living with more and
more chronic diseases like cardiometabolic
diseases. And if we can address
that in in safe, efficacious ways, I
think that's good for all of us. I think
medical history will look back at
semaglutide as as one of the major
breakthroughs, a molecule that kept
giving, so to say.
