- Wegovy sales come up short
- Operating profit guidance lowered
- Revenue guidance raised
Danish weight-loss drug maker Novo Nordisk (NOVO-B:CPH) suffered a rare setback as its second-quarter operating profit missed expectations and it cut its full-year outlook.
The shares dropped DKK 40 or 4.5% to a three-month low of DKK 848 as investors took some profit off the table after the stock price more than doubled from the start of 2023.
SALES AND EARNINGS DISAPPOINT
For the three months to June, total revenue was DKK 68 billion (£7.8 billion), an increase of 25% on the same quarter last year, but sales of Wegovy, Novo’s first-to-market anti-obesity drug, came in at DKK 11.7 billion against expectations of DKK 13.5 billion.
While Wegovy sales were up 53% on the previous year, it shows how far expectations have risen for the weight-loss treatment that it still wasn’t enough to satisfy investors.
Adding to the disappointment, operating profit of DKK 25.9 billion (£3.3 billion) missed the consensus forecast of DKK 27.3 billion and the firm lowered its forecast for the full year from an increase of 22% to 30% in local currencies to a rise of between 20% and 28%.
Part of the reason for the operating profit miss was an impairment of DKK 5.7 billion (£730 million) due to the early ending of advanced trials of its kidney disease drug which is in development.
REVENUE FORECAST UPGRADED
While investors fretted over the lowered forecast for operating profit growth, the firm actually raised its full-year sales outlook from an increase of between 19% and 27% to a range of 22% to 28%.
‘We are pleased with the sales growth in the first half of 2024, which has enabled us to raise the outlook for the full year,’ commented president and chief executive Lars Fruergaard Jorgensen.
‘The growth is driven by increased demand for our GLP-1-based diabetes and obesity treatments, and we continue to reach more patients with our innovative treatments.
‘Within R&D, we are very pleased with the first phase 3 trial results with Mim8 and its potential for people living with haemophilia A, and with the recent recommendation for a label extension for cardiovascular risk reduction for Wegovy in the EU,’ added Jorgensen.
Some analysts are forecasting the global obesity market could generate as much as $150 billion in annual sales by the start of the next decade, but there are fears Novo Nordisk could lose market share to US rival Eli Lilly (LLY:NYSE).
The Copenhagen-based company has struggled to deliver enough of its drugs due to bottlenecks and is spending billions of dollars to increase production to meet soaring demand.
‘We are only serving a few million patients in the US with obesity,’ the chief executive told analysts. ‘It’s still early days in terms of saturating that market.’
