An activist investor has taken an interest in the manufacturer Ozempic. What is it known for?

The activist hedge fund Parvus Asset Management is increasing its stake in the manufacturer of Ozempic - Danish Novo Nordisk - and seeks to influence the choice of a new CEO of the pharmaceutical company, whose shares have lost almost half of their value over the year. The obesity drug maker's stock jumped 6% on news of this. What is Parvus known for and what can its actions mean for investors?

Activist hedge fund Parvus Asset Management is increasing its stake in Novo Nordisk, the FT reports, citing sources. Parvus does not disclose its stake in the Ozempic producer - according to Danish requirements, it is not obliged to do so as long as it owns less than 5% of the company. According to the FT interlocutors, the hedge fund wants to influence the choice of the new head of Novo Nordisk. Parvus, Novo Nordisk and Novo Nordisk Foundation, the pharmaceutical company's largest shareholder, declined to comment;

According to data Bloomberg, the Novo Nordisk fund controls Novo Nordisk through a two-tiered share structure that gives it a 77% voting stake in the company despite owning just 28% of its capital. This has historically protected the company from takeovers and would likely make it difficult for an activist to effect change, the agency notes.

Novo Nordisk shares have fallen nearly 50% over the past year after disappointing trial results for a new obesity drug and lower-than-expected sales. The company faced stiff competition from U.S. pharma giant Eli Lilly in the market for weight-loss drugs and the rapid spread in the U.S. of cheaper copies of drugs authorized during a period of shortages of originals. 

In May, Novo Nordisk reduced its full-year forecast for revenue and profit growth, and a few days later announced the premature resignation of its CEO, Lars Fruergaard Jorgensen. The decision was unexpected - Novo Nordisk has only changed five CEOs in its century-long history, noted Bloomberg. The company is now looking for a new CEO, and Jorgensen is staying on for now.

He has been with the pharma manufacturer since 1991 and has led it since 2017. Under his leadership, Novo Nordisk became a pioneer in the diabetes and obesity market, achieving rapid growth in sales of Wegovy and Ozempic. Novo Nordisk's market capitalization tripled, and in 2023, the pharmaceutical manufacturer even overtook the French luxury brand owner LVMH, temporarily becoming Europe's most valuable company. Now Novo Nordisk is only in fourth place with a capitalization of $334 billion.

London-based hedge fund Parvus Asset Management was founded by Edoardo Mercadante (former manager at Merrill Lynch). The fund has previously targeted companies such as budget airline Ryanair Holdings and Italian bank UniCredit. Its publicly disclosed stakes are currently worth $7.5 billion, according to data collected by Bloomberg.

Mercadante successfully opposed the proposed merger of UK bookmaker William Hill with rival Canadian gambling group Amaya and a £5.2 billion takeover bid by UK security group G4S for Danish facilities management company ISS, the FT wrote earlier.

On news of the activist hedge fund's interest, Novo Nordisk shares rose 6.5% in New York trading, hitting their highest level in 2.5 months. Still, the stock is 12% cheaper than it was at the start of the year and 47% cheaper than a year ago.

Despite the decline, the majority of analysts tracking Novo Nordisk securities - 19 out of 31 - advise investors to buy (Buy and Overweight), according to MarketWatch. Only three analysts recommend selling the stock (Underweight and Sell ratings). Wall Street's consensus target price is just over $98 per share, up 30% from current levels.