Wegovy Cardiovascular Trial Shows Positive Results, As The Weight Loss Category Keeps Winning
Key Takeaways
- Earlier this month, a new obesity drug cut serious heart problems by 20% in a promising trial
- Stock prices for companies making weight loss drugs have been up ever since
- Popularity might result in shortages through the rest of the year
A couple of weeks ago, drugmaker Novo Nordisk reported that its weightloss drug, Wegovy, cut the risk of heart attacks, strokes, and cardiovascular deaths by 20%. Immediately following the announcement, Novo Nordisk stock surged 17.2%.
Let’s take a look at the latest on this blockbuster drug and its ongoing implications for the market below.
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Remind me what happened in this trial
The Novo Nordisk trial included 18,000 adults with cardiovascular disease, which is a significant sample. Another important piece of this is that insurance companies are more likely to pay for this weight loss drug if its prescribed for cardiovascular disease.
So, in short, Wegovy has been a boon for business. Novo Nordisk reported a 30% increase in sales for the first half of this year. The company now anticipates annual sales growth somewhere between 27%-33%.
This growth is substantially driven by Wegovy, although Novo Nordisk also makes a popular diabetes drug that’s contributing to the upswing.
Novo Nordisk’s stock isn’t the only one surging. The whole weight loss drug category took off with all the excitement around potential heart benefits. Eli Lilly & Co. hit a record high. Viking Therapeutics Inc. jumped 12%. Even WW International Inc. (Weight Watchers) skyrocketed 13% thanks to their acquisition of a telemedicine firm that prescribes obesity medications.
What’s the catch?
Novo Nordick has, for months, been restricting lower-dose strengths of the drug to keep up with demand. The company has confirmed this will continue, but also said that its outlook “reflects expected continued periodic supply constraints and related drug shortage notifications across a number of products and geographies.”
The company plans to invest in its capacity to increase supply, but that’s a slow process. Novo Nordisk CEO Lars Fruergaard Jorgensen suggested that Wegovy demand will be significant enough to limit availability of the drug into 2024.
But, so far, the weight loss drug category is still exciting investors. The real loser here is Slimfast, the meal replacement shake, which is down significantly compared to last year.
The bottom line
We’re watching the weight loss category in the coming months to see if any supply issues hurt stock prices. And as always with new drugs, we’re waiting to hear more about side effects and risks before we bet it all on Wegovy.
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