Novo Nordisk stock popped to a record high Friday after higher doses of its popular drug, semaglutide, led to greater weight loss in diabetes patients.
The company tested three oral doses of semaglutide. The highest doses — 25 milligrams and 50 milligrams — led to greater reductions in body weight and blood sugar than the already approved 14-milligram dose. Novo Nordisk's study took place over a year in patients with type 2 diabetes.
The results add fodder to a growing cult following for semaglutide, which sells under several branded names for diabetes treatment and weight loss. Recently, its Ozempic iteration has made headlines for its use among Hollywood elite to shed a few pounds. Ozempic is actually an injectable diabetes drug. Its counterpart in weight loss is Wegovy. Both are currently in short supply.
Evercore ISI analyst Umer Raffat doesn't expect Friday's news to change market dynamics, where Novo is facing off with Eli Lilly in next-generation diabetes treatment. Amgen is also in the mix with an earlier-stage drug that uses a similar mechanism for weight loss.
On today's stock market, Novo Nordisk stock jumped 2.9% to close at 152.75. That put shares at a record high. Novo stock recently broke out of a flat base with a buy point at 144.88, according to MarketSmith.com. Shares are now trading near the top of the buy zone.
Novo Nordisk Stock: Improving Weight Loss
In addition to injections Ozempic and Wegovy, Novo also sells an oral version of semaglutide called Rybelsus for diabetes treatment. Rybelsus is available in 7- and 14-milligram dosages. But the 25- and 50-milligram doses outperformed the approved 14-milligram dose, Novo said Friday.
On average, patients lost roughly 15.5 pounds to 20.3 pounds on the higher doses of semaglutide. In comparison, the 14-milligram dose led to a nearly 10-pound loss.
Bullishly for Novo Nordisk stock, the higher doses also resulted in lower hemoglobin A1C levels. This is a measure of blood sugar over three months. Those levels declined by 1.9-2.2 percentage points at the higher doses vs. a 1.5 percentage point decline for the 14-milligram dose.
Ozempic Vs. Oral Drug
But Evercore's Raffat doesn't expect oral semaglutide to take over the market from Ozempic. Oral drugs must be taken daily vs. a weekly injection for Ozempic. Oral medications also carry a tricky dosing regimen that involves timing out when to eat food.
Further, manufacturing would be a challenge. The higher doses of oral semaglutide would equal out to 175 milligrams to 350 milligrams per week for each patient. In comparison, Ozempic is 2 milligrams each week.
"From Novo's perspective, that's a huge difference in amount of drug that needs to be made per patient," Raffat said. He kept his in-line rating on Lilly stock.
Notably, Novo Nordisk stock has an IBD Digital Relative Strength Rating of 94, which puts shares in the leading 6% of all stocks in terms of 12-month performance. Its matching Composite Rating lands Novo shares among the top 6% of stocks when it comes to fundamental and technical metrics.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
