Novo Nordisk shares surge after Wegovy secures green light for liver disease treatment in US

Shares in Novo Nordisk climbed over five per cent on the Copenhagen exchange after the Danish pharmaceuticals firm received crucial approval from the United States Food and Drug Administration for its well-known injection Wegovy to be used in the treatment of metabolic dysfunctionassociated steatohepatitis Mash in patients with liver fibrosis. The move arrives at a turbulent time for Novo, which has seen its valuation erode dramatically since its peak last June amid stiff competition and shifting investor sentiment in the rapidly evolving weight loss drugs sector.

The FDA decision positions Wegovy, based on the active ingredient semaglutide, as the first glucagonlike peptide1 GLP1 therapy officially approved to tackle Mash, otherwise called nonalcoholic fatty liver disease. Novo Nordisk’s latest clinical trial results provided the basis for this approval and the company is now awaiting regulatory verdicts in the European Union and Japan, each representing key global markets.

Martin Holst Lange, Novo’s chief scientific officer, underscored Wegovy’s unique position as the only GLP1 medicine with simultaneous proven weight loss and cardiovascular benefits now extending to Mash patients. With an estimated 22 million adults affected in the US alone, the newly approved indication could open up significant commercial opportunities. Studies suggest that one in three individuals with overweight or obesity globally may face Mash, underlining the growing clinical and societal burden.

Despite this tailwind, Novo faces increasing competition from Eli Lilly, whose obesity drug Mounjaro sold under the name Zepbound for weight management has demonstrated promising results in its own trial for Mash, which may threaten Novo’s brief exclusivity. Additionally, US supply shortages have led to the proliferation of unlicensed generic versions, amplifying pricing and market share pressures.

Investor concerns have been compounded by Novo’s profit warning issued last month, as leadership transitions and downward revisions of forecasts for Wegovy and Ozempic cast a shadow over its mediumterm outlook. The change at the helm places Maziar Mike Doustdar, a longstanding executive, in the chief executive’s seat after the sudden departure of Lars Fruergaard Jorgensen who presided over Novo’s rise to Europe’s most valuable public company only two years ago.

Pricing scrutiny in the US continues to mount as political pressure builds for international drug firms to match American drug prices with those found in other developed regions. Novo has responded by offering significant price reductions for Ozempic in the US for patients lacking insurance coverage, coupled with moves to expand home delivery options. Against a backdrop of rapid change, the company’s next steps will be closely watched by both investors and policy makers.