Novo Nordisk stock jumped Thursday — as Omega Therapeutics stock hit the stratosphere — after the drug behemoth inked a pair of deals to bolster its weight-loss drugs franchise.
On the stock market, Novo Nordisk stock popped nearly 3.9% to 107.63. Omega, which snagged one of the two deals with Novo, saw its shares skyrocket 94.7% to 5.32. In fact, Omega stock opened above its 200-day moving average for the first time since June, according to MarketSmith.com.
Novo is tapping Omega to look into thermogenesis, the body's production of heat within tissues to raise body temperature. Doing so will raise metabolic activity and, potentially, help burn fat. This is a different approach from other weight-loss drugs, which focus on appetite regulation.
In another deal, Novo Nordisk will work with privately held Cellarity to develop a treatment for metabolic dysfunction-associated steatohepatitis, or MASH. This is a chronic and progressive liver disease that can lead to liver failure or the need for a transplant. There are no approved treatments.
The news sent Novo Nordisk stock into a breakout. Shares topped a buy point at 105.69 out of a flat base.
Novo Nordisk Stock: A New Approach To Obesity
The deals come together under a previously announced partnership between the Novo Nordisk Bio Innovation Hub, a research unit focused on making new drugs in partnership with academics, biotechs and venture capital groups, and Pioneering Medicines. The latter is from venture capital firm Flagship Pioneering and focuses on developing drugs using its portfolio of biotech companies.
The efforts follow Novo's development of diabetes medicine Ozempic and weight-loss drug Wegovy. Both stem from the same chemical compound, semaglutide. Semaglutide works by mimicking a gut hormone called GLP-1 to slow how fast the stomach empties itself and improve feelings of satiety as well as markers of blood glucose.
The GLP-1 space is hot and, in weight-loss drugs, completely owned by Novo Nordisk and Eli Lilly. But these drugs also carry gastrointestinal side effects. Further, the weight loss isn't specific to fat. Patients also lose muscle mass. This makes it difficult to maintain the weight loss after stopping treatment.
Omega's efforts could offer another means of tackling obesity.
"We are just getting started on this research program and it is too early to say how a fully developed solution may ultimately be used," a Novo spokeswoman said in an email to Investor's Business Daily. "But this is a stand-alone research program, and it has not been the motivation for the deal that approach should be combined with GLP-1 receptor agonists."
Expanded Collaboration With Cellarity
Meanwhile, Cellarity will use its artificial intelligence machines to dive into the cellular dysfunction that leads to MASH. People living with this form of steatohepatitis have an increased risk of developing type 2 diabetes and cardiovascular disease.
The deal expands on Novo's previous collaboration with Cellarity in September 2022 to identify novel cell behaviors involved in MASH disease progression.
Under both deals, Novo Nordisk will reimburse research and development costs. Omega and Cellarity will receive up to $532 million in upfront, development and commercial milestone payments. They will also be eligible to receive tiered royalties on any future sales.
Novo Nordisk stock is highly rated with an IBD Digital Relative Strength Rating of 89. This puts shares in the leading 11% of all stocks when it comes to 12-month performance.
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