A massive market beckons, but Novo CEO sees shared purpose in obesity

The race to meet sudden, stratospheric demand for new anti-obesity meds is hotting up, but Novo Nordisk (NOV: N) CEO Lars Fruergaard Jørgensen takes a collegiate approach.

According to analysts, the global market for obesity treatments is set to be worth $27 billion by 2028, growing annually at a blistering average of 17%.

Such swollen forecasts are in no small part the result of R&D investments made by Novo Nordisk, which leads the way in combating a disease which affects 13% of the global population, according to the World Health Organization (WHO).

The WHO also says that the preventable condition has tripled since 1975, and that more than 1.9 billion adults are now overweight.

Despite his firm’s outsized contribution to the science of diabetes and weight loss, Mr Jørgensen, chief executive of the Danish diabetes heavyweight since 2017, wants to emphasize the importance of collaboration.

"We come from a time where there has been a loss of cohesiveness in society and countries and companies have been focused more on their own success than the greater success in society,” he says.

“I think we have a purpose around driving change,” he adds - “everything starts and ends with innovation - it’s our biggest contribution.”

Starting with insulin

Novo Nordisk, one of the pioneers of insulin treatments for diabetes, has not stopped improving on its original offer.

Mr Jørgensen says: "The promise of bringing a weekly insulin - going from 365 injections to 52 - that's amazing, and something many physicians thought was impossible to do without introducing risks. But we're actually proving that it is possible."

All the same, the market for insulin has become congested with generics, limiting the potential for growth and forcing Novo to  restructure itself in previous years.

The company has remained one step ahead of the changes, however, and is now reaping the rewards of  a strategic shift, led by various incarnations of semaglutide.

Now, with the GLP-1 agonist  approved specifically for the treatment of obesity, under the Wegovy brand, the company’s pipeline of anti-obesity meds has stepped out of the shadows to become the clear engine of growth for the future.

Obesity

While it has long been addressed as a way to prevent diabetes, Mr Jørgensen is clear that obesity should be regarded as a core target in itself, describing the condition as “a bigger challenge for patients and for society than diabetes.”

“Demand was almost a straight line upwards...we were taken by surprise."

This is clear, he explains, once you consider “the number of comorbidities that follow it, from a number of cancers, cardiovascular disease, type 2 diabetes, damaging of joints etc."

The arrival of Wegovy, which is backed by striking data showing average weight loss of around 17%, has demonstrated that healthcare professionals and patients are ready to start treating the condition in this way too.

After its  launch in late 2021, Mr Jørgensen says his firm “saw that demand significantly outpaced what we had planned for in terms of supply."

The firm’s supply woes, exacerbated by  a regulatory snafu at CRO Catalent (NYSE: CTLT) and, more recently,  stock outages in Australia caused by off-label prescribing of Ozempic (semaglutide), have been well publicized.

Noting that “demand was almost a straight line upwards,” Mr Jørgensen explains: "We had not forecast that, but also, for what it's worth, the analysts who follow us had not forecast that either. We were taken by surprise."

Competition looms

The clock is ticking for Novo, with Eli Lilly (NYSE: LLY) reacting to Wegovy's launch by fast-tracking an obesity submission for its competitor, Mounjaro (tirzepatide), aiming to knock the wind out of the Danish firm's sails as soon as possible.

As the competition claws its way to market, it's clear that Novo has an opportunity to leverage its first-to-launch status and gain market share.

Asked whether his firm had been able to capitalize on that advantage, given the supply issues it has faced, Mr Jørgensen says: "At least it's clear that our product has gained acknowledgment among physicians and patients."

"We saw in clinical development that patients use some 17-18% body weight on average. If you live with a high BMI and then lose that magnitude of weight, that's the first time for most that they have actually succeeded, and I think that redefines you."

Previously, with Saxenda (liraglutide), he said weight loss was "good, but not great," adding "when you get into the range that you are in now, that's redefining your view of your health.”

Better science

Mr Jørgensen freely concedes that  recent data give his competition an edge on weight loss, but he remains unfazed.

“Whether you lose the 17-18% or the few kilos more that you can get on a competing product, I don't think that changes patients' perspective of what that means, or the health benefits," he says.

Lilly has shown recently that its unique dual mechanism approach could offer even greater weight loss, but Mr Jørgensen is sanguine about the scale of the opportunity and the ability of his option to be competitive in the context of sky-high demand.

"...we actually believe we have something that's better."

He says: "If you consider the number of patients out there needing help, it actually takes more than one company," adding: "we welcome a good, decent, science-based competitor to help in doing that."

While presenting a collaborative outlook, clearly Mr Jørgensen is not ready to cede the crown in this therapy area, noting "we have innovations down the road that we believe will be even better than what the competition is now bringing."

On the specific approach adopted by Lilly, adding a GIP agonist to a GLP-1 agonist, he says: "we also have a program around that," before explaining: "we actually believe we have something that's better."

"We are adding another component [to Wegovy], amylin. We believe these two are complementary, in a better way than combining GLP and GIP, so we can actually get to higher weight loss, to 25% or more."

"That's our preferred approach, but we are also testing what we can do with a GLP-1 and a GIP."

Of course, Lilly too is pursuing its own amylin agonist, which has just entered the clinic. As with Novo and its combo candidate, dubbed cagrisema, the American firm could find joy in adding it to its first-gen option down the line.

The battle between these two long-time rivals in diabetes management is set to play out for many years, with tolerability data from Lilly's SURMOUNT trial program key to its future competitiveness, particularly given that weight loss therapies may be prescribed on a long-term basis.

Given what we know about the interconnectedness of obesity, diabetes and heart disease, another essential aspect to the competition is the impact on cardiovascular outcomes.

To this end, data from Novo Nordisk's SELECT trial, an interim analysis from which is due imminently, could be game changing.

As Mr Jørgensen says, the broad comorbidities of obesity could eventually make products like Wegovy and Mounjaro keystone therapies in the treatment of a constellation of conditions, raising the importance of testing connected efficacy endpoints.

Market access

Referring to the market dynamics that could eventually limit this new class of medicine, Mr Jørgensen says "we've had to talk to large employers and tell them about the benefit of  having anti-obesity medicine on formulary."

While Novo has struck deals with all of the three major pharmacy benefit managers, he says employers need "one by one to opt in. So we are now going through those."

Many large, self-insured employers can "see the benefit of treating obesity," he says, "because there is a positive value to the employee, but also a health benefit that reduces costs."

A new kind of innovation

One of the major themes at Novo Nordisk's recent annual press briefing was innovation, a theme of great importance to Mr Jørgensen, who regards the company as having "an obligation to do things in partnership," adding: "Everything starts and ends with innovation."

The firm's  recent deal with Flagship Pioneering testifies to that approach, providing Novo with access to a suite of cutting-edge technologies, the full potential and possible applications of which may yet be discovered.

The novel alliance will see the firms exploring ways to use Flagship’s bio-platforms, across 41 companies, targeting both cardiometabolic and rare diseases.

Mr Jørgensen calls the deal a first of its kind, noting that while Flagship owns or co-owns a wide range of technologies, it does not have "the deep biological understanding" of his company.

He says Novo plans to ask Flagship’s biotechs: "How could you pitch in and help solve those unmet medical needs?", adding that while much of the financial framework has been pre-defined, the collab represents "structured, open source innovation."

Asked if the firm has designs on a particular technology he says "it's not really defined yet," explaining that "there are still technologies we do not have in our toolbox, so it could be some of the gene technologies - something that we have not mastered - that could be interesting to tap into."

For Mr Jørgensen, the value of the partnership does not lie in an opportunity to bring capabilities in-house, but in creating "very specific collaborations," in which "one brings biology and one brings technology."

The company's  recent purchase of RNA interference firm Dicerna Pharmaceuticals, coupled with its East Coast  innovation hub, further entrenches Novo Nordisk's ability to capitalize on American technological breakthroughs.

However, the bulk of the firm's innovation remains European. He says: "from a science perspective, we have a big presence in the UK, inside Oxford University," adding "science is fluid, it moves where the great minds are."

While the science will continue to shift, it’s clear Novo Nordisk is ready to remain at the forefront of its specialism for many years to come.