Novo Nordisk's Wegovy Sales Disappoint — 2nd Update

By Dominic Chopping

Novo Nordisk's blockbuster Wegovy weight-loss drug missed sales expectations after the pharmaceutical giant offered bigger discounts to U.S. buyers, sending shares lower.

The Danish company has benefited from being first to market with the new class of drugs that help patients lose weight by suppressing appetite, delaying stomach emptying and controlling blood sugar, but its soaring popularity has seen demand far outstrip supply and left the company racing to increase production capacity.

Second-quarter sales of Wegovy surged 55% on year to 11.66 billion Danish kroner ($1.71 billion), but this still missed company-compiled consensus estimates of DKK13.54 billion.

U.S. sales of the drug made up DKK9.91 billion of the total, missing a Barclays forecast by 12%, driven by higher gross-to-net rebates in the U.S.--the discount offered between the list price and the actual net sales price.

In mid-morning trade in Europe shares traded 2.1% lower at DKK869.40 after falling more than 7% earlier. This was despite an increase in the company's overall sales guidance for the full year. Shares have still gained around 64% in the last 12 months as the weight-loss drug frenzy intensified.

Barclays analysts said the company had noted a net price decline at the first quarter while rival Eli Lilly also indicated during the summer that net price declines should be expected.

"Was this the picture perfect quarter we'd hoped for? Not necessarily. But at the end of the day, obesity is going to be a volume driven market and the overwhelming message we got from the company this morning is that volume is on track," Barclays said in a note to clients.

As demand continues to exceed supply, Novo Nordisk will continue to cap the supply of starter doses to safeguard supply for existing patients, it said.

The company has committed to invest $6.8 billion in new manufacturing capacity this year in addition to the $11 billion it has already agreed to pay for three manufacturing sites previously owned by Somerset, N.J.-based Catalent. It will take time to bring new capacity on line though and the company still expects continued periodic supply constraints and related drug shortages for both Wegovy and diabetes drug Ozempic across a number of products and geographies.

However, the U.S. Food and Drug Administration on Tuesday updated its drug shortage list to show that two more doses of Wegovy are now available, with only the lowest dose still considered as limited availability.

"Whilst the 0.25mg doses will remain capped in the United States, seeing 0.5mg and 1.0mg come off the FDA drug shortage list is an undoubted positive," Barclays said.

The company said sales of Ozempic rose 31% on year to DKK28.88 billion while sales of its total portfolio of diabetes and obesity medications grew 28% to DKK64.08 billion.

Both Wegovy and Ozempic are based on the same active ingredient, semaglutide. Novo Nordisk is racing to develop the next generation of treatments that combine it with other ingredients to enhance benefits and improve other areas of health, to try and keep ahead as competitors race to grab a slice of the market, currently dominated by the company and Eli Lilly.

Studies of semaglutide-based drugs have shown a reduction in risk of stroke and heart attacks, a slowing of kidney failure progression, and even improvement in pain and physical function in patients with osteoarthritis.

European Union drug regulators last month announced their support for a label expansion of Wegovy to reflect its potential to reduce risk of major cardiovascular events including heart attacks in obese or overweight adults. That followed similar label-expansion approvals from the FDA and U.K.'s Medicines and Healthcare products Regulatory Agency.

The approvals are a timely boost for Novo Nordisk, which is facing increasing competition from the likes of Roche and Viking Therapeutics that have stoked investor excitement over their promising developmental weight-loss drugs.

The company raised its sales guidance due to the continued soaring popularity of both Wegovy and Ozempic, with growth this year expected at 22% to 28% from 19% to 27% previously.

Novo Nordisk's operating profit guidance range was lowered slightly as a recently announced DKK5.7 billion impairment from an unsuccessful drug trial drags on profitability.

For 2024, the company now expects operating growth of 20% to 28% at constant exchange rates, from a previous guidance of 22%-30%.

Novo Nordisk's net profit in the second quarter rose 3.2% to DKK20.05 billion, shy of the DKK21.38 billion forecast by analysts in a FactSet poll.

Sales rose 25% to DKK68.06 billion, again slightly below the DKK68.66 billion FactSet estimate.

It declared an interim dividend of DKK3.50 a share.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

August 07, 2024 06:13 ET (10:13 GMT)

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