Novo Nordisk stock dropped Monday after the drugmaker licensed a Chinese competitor's diabetes and weight-loss drug for up to $2 billion.
Novo will pay The United Laboratories International $200 million up front and up to $1.8 billion in milestones. The China-based company will also be eligible to receive royalties on sales of the drug it calls UBT251 outside of Chinese mainland, Hong Kong, Macao and Taiwan. United Biotechnology, a subsidiary of The United Laboratories, will retain the rights to UBT251 in those regions.
UBT251 works by mimicking a trio of hormones — GLP-1, GIPR and glucagon — to improve satiety and markers of blood sugar. The drug uses the same mechanism as Eli Lilly's retatrutide. The deal adds "important optionality" to Novo Nordisk's pipeline, Martin Holst Lange said in a written statement. Lange is Novo's executive vice president for development.
Novo Nordisk stock slipped 2% to 75.33, while Lilly shares rose 3.3% to 864.90.
15% Body Weight Over 12 Weeks
United Biotechnology recently wrapped a Phase 1 study of UBT251 in 36 patients. Patients received a weekly shot for 12 consecutive weeks. At the highest dose, patients lost up to 15.1% of their body weight compared with a 1.5% loss from the placebo group.
In comparison, Eli Lilly's retatrutide led patients to lose up to 17.5% of their body weight, on average, over 24 weeks and up to 24.2% of their weight after 48 weeks.
William Blair analyst Andy Hsieh says interest in triple agonists "reached a fever pitch in 2023" after Lilly presented midstage data for retatrutide.
Novo previously investigated its own similar drug, but discontinued its efforts in August 2020 due to the success of approved obesity drug Wegovy and the development of cagrilintide. Cagrilintide mimics another hormone, amylin, and is being tested alone and in combination with Wegovy.
The side effects of Lilly's retatrutide also proved more severe than other weight-loss drugs like Novo's Wegovy and Eli Lilly's approved drug, Zepbound. Still, triple agonists like UBT251 and retatrutide could benefit patients with a higher body mass index, or BMI, he said.
He notes United Biotechnology is currently testing UBT251 in patients with obesity, but the company has also been cleared for testing in patients with type 2 diabetes, metabolic dysfunction-associated fatty liver disease and chronic kidney disease.
Novo Nordisk Stock Is Under Pressure
Novo Nordisk stock is trading well below its 50-day moving average, according to MarketSurge.
Shares also have a poor IBD Digital Relative Strength Rating of 12, which means Novo Nordisk stock ranks in the bottom 12% of all stocks when it comes to 12-month performance.
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