Novo Nordisk stock is Friday's IBD Stock Of The Day. Shares are lingering in a buy zone after the Danish drugmaker inked a pair of deals to bolster its weight-loss drugs franchise.
Novo is the undisputed leader of the burgeoning GLP-1 drug class, ahead of Eli Lilly. These drugs mimic a gut hormone involved in appetite regulation and markers of blood sugar. Now, Novo is teaming up with Omega Therapeutics and privately held Cellarity in deals worth up to $532 million apiece.
Omega is studying thermogenesis, the body's production of heat within tissues to raise temperature. Manipulating this could allow a company to speed up metabolic activity and potentially help burn fat. Cellarity is investigating a treatment for metabolic dysfunction-associated steatohepatitis, or MASH. MASH is a chronic and progressive liver disease with ties to diabetes and obesity.
Novo Nordisk stock broke out Thursday after the announcement. Shares topped a buy point at 105.69 out of a flat base, according to MarketSmith.com. Novo stock is now hanging out in the 5% chase zone, which runs from 105.69 to 110.97. Eli Lilly stock is also nearing a buy point at 629.97 out of a flat base.
Novo Nordisk stock slipped 1.5% to close at 105.98 on Friday.
Novo Nordisk Stock: Obesity Drugs Leader
The GLP-1 craze has taken Wall Street by storm. Big names like Amgen, Merck, Pfizer and Regeneron Pharmaceuticals are trying to play catch-up with Novo and Lilly.
Novo makes semaglutide, which sells as the branded drugs Ozempic and Rybelsus in diabetes treatment and as the weight-loss drug Wegovy. Lilly sells its drug tirzepatide as a diabetes medication called Mounjaro and for obesity treatment as Zepbound.
Novo Nordisk stock analysts expect all three of the company's semaglutide-based drugs to bring in a combined $28.21 billion in sales this year. That accounts for roughly 70% of Novo's projected sales for 2024, according to FactSet. By 2028, analysts expect those drugs to bring in $43.39 billion in sales.
Similarly, Lilly's Mounjaro and Zepbound are projected to generate $12.24 billion in sales this year, and top $31 billion in 2028.
Next-Generation Weight-Loss Drugs
But neither company is resting on its laurels.
In addition to its newly announced deals with Omega and Cellarity, Novo has a large pipeline full of potential treatments for metabolic conditions, including diabetes, obesity, cardiovascular disease and nonalcoholic steatohepatitis.
Investors in Novo Nordisk stock are closely watching the company's efforts to develop an oral version of semaglutide as well as a next-generation diabetes and weight-loss drug called CagriSema. CagriSema combines the GLP-1 approach with another hormone target called amylin.
Meanwhile, Novo is working to expand the uses for semaglutide. In August, Novo said weight-loss drug Wegovy cut the risk of cardiovascular events — like heart attack or stroke — by 20% over five years.
Later, the company said a weekly dose of Ozempic helped delay renal impairment and reduced the risk of death due to kidney or cardiovascular disease in patients with diabetes and chronic kidney disease.
Both pieces of news bolstered Novo Nordisk stock, which climbed 53% last year. Novo shares are listed on IBD's Leaderboard.
Shares also have a best-possible Composite Rating of 99, according to IBD Digital. This puts shares in the leading 1% of all stocks when it comes to fundamental and technical measures. Novo Nordisk stock also has a strong Relative Strength Rating of 91, putting its 12-month performance in the top 9%.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
