Novo Nordisk’s top-selling obesity medication reduces the risk of strokes or heart attacks, according to findings from a late-stage study that sent the shares of the Danish pharmaceutical firm and its main competitor Eli Lilly into record highs Tuesday.
According to the study’s preliminary findings, patients who received Wegovy had a 20% lower risk of experiencing a cardiovascular event like a stroke or heart attack than those who were given a placebo.
Analysts predicted that the results of this study would force public health systems to cover new weight-loss medications called GLP-1 Agonists, developed by US drugmaker Lilly .
Some health insurance companies in the US have refused to cover the medications due to their high costs and the sheer volume of people who are eligible to take them. About 40% of the US population is obese.
Evan Seigerman of BMO Capital Markets said that the health benefits shown by Novo’s trials now make it “unethical”, for payers not to provide these potentially lifesaving medications to those patients who need them.
He said that expanding insurance coverage for Wegovy and Lilly’s diabetes drug Mounjaro could unlock more than $100bn in annual obesity market. The drug is expected to receive approval to treat weight loss by the fall.
Novo shares rose as much as 16% after the publication of the report, while Lilly shares rose by 16% to a new record high of $527.50 at early trading. US drugmaker also saw a boost from the publication of its financial results which revealed that sales of Mounjaro reached almost $1bn during the second quarter. Lilly increased its annual sales forecast for the full year by $2.2bn, to a range between $33.4bn and $33.9bn.
In the last 12 months, Lilly’s stock has increased by 75%. This allows the Indianapolis-based firm to surpass Johnson & Johnson in terms of market capitalisation as the most valuable drugmaker worldwide.
According to Novo, the Wegovy study, which included 17,604 adults 45 years and older, achieved its primary goal by showing that patients who took 2.4mg semaglutide (the main ingredient of Wegovy) experienced a statistically significant decrease in major cardiac events compared to those who were given a placebo.
Novo will use the results of the trial to convince health systems and insurance companies to purchase the drug.
Martin Holst Lange said that there was no weight-loss drug approved that reduced heart attack and stroke risk.
He said that the “landmark study” showed how the drug could “change how obesity is treated and viewed”.
Novo anticipates filing for regulatory approval to expand the uses of Wegovy in the US and EU, demonstrating that it can lower cardiac risks. The results of the study will be revealed at a conference in 2023.
The National Institute for Health and Care Excellence (NICE) in the UK has announced that the NHS will pay for the drugs, but only for those who have higher BMIs and for a maximum of two years.
Investors’ faith in Wegovy’s potential has changed the fortunes for Novo. The Danish company is now Europe’s biggest drugmaker based on market capitalisation.