Novo's stock plummeted despite sales plans in the billions. What went wrong?

Danish pharmaceutical giant Novo has announced plans to bring more than five potential “blockbuster” drugs to market by 2030 and generate over $23 billion in new sales in the coming years, according to SeekingAlpha. However, these promises failed to convince market participants: investors were expecting more concrete plans for overcoming the crisis from CEO Mike Dustadar after Novo lost its leadership position in the fast-growing weight-loss drug market to Eli Lilly, according to Bloomberg.

Against this backdrop, Novo’s shares in Copenhagen plummeted 7%, then slowed their decline slightly—at the time of publication, they were down about 5%. The company’s shares are falling by the same percentage in U.S. pre-market trading.

Novo’s stock fell on the Copenhagen Stock Exchange on September 21 after the company’s top management announced at its “Investor Day” plans to launch more than five blockbuster drugs by 2030, generate over $23 billion in new sales by 2035, and, starting next year, begin advancing 15 new drugs annually to the human clinical trial phase. Novo’s presentation took place on September 21 in London and was full of promises. However, it contained few concrete trial results, Bloomberg notes.

“All of our clinical trials are ongoing, and we don’t have much data to present,” said Novo’s chief scientific officer, Martin Lange, acknowledging that investors had asked him whether he would present early data on any new potential developments.

This meeting stood in stark contrast to a similar event two years ago, when early data on the experimental dual-action drug amikretin (which acts on two hormonal receptors simultaneously to promote effective weight loss) sparked a surge of optimism among investors, the agency notes.

"We need to work harder, and we will do so," Dustadar said at an event in London. According to him, the Danish manufacturer will explore acquisition opportunities in addition to developing its own portfolio of projects.

Since the beginning of this year, Novo's stock has fallen 17.8% on the Danish market, while the stock of its main competitor in the weight-loss drug market, Lilly, has risen 7.3% in the U.S.

According to Lange, Novo is exploring new therapeutic areas, including women's health, men's health, pain management, and addiction treatment.

Among the potential growth drivers, CagriSema stands out — a new-generation weight-loss drug based on semaglutide and cagrilintide that has already disappointed investors several times during clinical trials, including losing out to Lilly’s blockbuster Zepbound in a head-to-head study, Bloomberg notes.

Novo has faced a string of setbacks in clinical trials, leading some investors to question its future growth prospects amid intensifying competition from generic drugs for its blockbuster products. The patents for Ozempic and Wegovy in Europe and the U.S. are set to expire in the early 2030s.

"Investors are selling off stocks because they don't see any specific news that could push prices higher," wrote Per Hansen, an investment economist at Nordnet.

“The medium-term outlook depends heavily on CagriSema,” wrote Bloomberg Intelligence analysts Michael Shah and Christos Nikoletopoulos in a research note. Other potential growth drivers are at much earlier stages of development and therefore carry a higher risk of failure.

Novo has fallen behind Lilly, even though it was the first to launch a generation of effective weight-loss drugs, according to Bloomberg.

16 of the 24 analysts covering the company's stock have a neutral stance and advise holding Novo shares in their portfolios. Four recommend buying Novo shares, and four more recommend selling them.

Last week, as part of its marketing strategy to revitalize its business, Novo stopped using the word “Nordisk” in its advertising campaigns and news releases. However, this campaign has not yet yielded any noticeable results: over the past week, Novo’s stock in Copenhagen has lost more than 4%, and in the U.S., it has fallen by 0.48% over the last five trading sessions.

This article was AI-translated and verified by a human editor