Novo Nordisk, the manufacturer of the Ozempic weight-loss medication, extended a current contract with an artificial intelligence medicine developer on Wednesday.
Novo Nordisk reported that a transaction with Valo Health, a privately held firm in Lexington, Massachusetts, that was originally valued at up to $2.7 billion had been increased to a $4.6 billion agreement. Novo Nordisk stated that a near-term payment of up to $190 million is part of the extended partnership.
According to the corporations, they will endeavor to find and create remedies for cardiovascular illness, type 2 diabetes, and obesity.
Following the announcement of the deal, Novo Nordisk shares (DK:NOVO.B) (NVO) partially retreated their gains in Copenhagen. After rising as much as 5% earlier, the stock increased by 3%.
Following the disappointing trial news last month, experts have been discussing the company’s prospects ahead of the deal.
When Novo Nordisk announced that their CagriSema medication, in a late-stage trial, results in 20.4% weight loss—a figure below Wall Street expectations—shares of the company fell 21% in late December. The demand for weight-loss medications, such as Ozempic, has kept Novo Nordisk as the second-largest firm in Europe by market value despite the decline in stock prices.
Some see the setback as an opportunity to invest. Despite projected 12% to 13% compound annual sales growth, the stock is currently near a 10-year low on a price-to-earnings basis, according to Sachin Jain, an analyst at Bank of America.
Emmanuel Papadakis of Deutsche Bank concurred. “The summary is simple: we are making no estimate changes and, with the stock trading at a 20x FY25E P/E, we continue to view it as a buying opportunity, though we note the debate has been vigorous and we don’t expect that to settle down any time soon,” said the analyst.
According to Jain of Bank of America, the performance of Cagrisema was comparable to that of Eli Lilly’s LLY (LLY) Zepbound. The U.S. pharmaceutical company is aiming for a weight reduction of over 25% with its retatrutide medication, which is now under research. According to the analyst, the efficacy and safety information for patients who receive the maximum dosage of CagriSema may be crucial in influencing investor opinion. Whether the Trump administration seeks more aggressive Medicare pricing of its current weight-loss treatments is another matter.
Peter Welford, an analyst at Jefferies, is more gloomy, predicting that the price may drop by another 10%. In contrast to expert forecasts of $16 billion, down from $20 billion, he predicts peak sales of $7.25 billion, indicating that consensus is still unduly enthusiastic about CagriSema. According to him, Welford might not have a good oral medication for obesity, and Lilly’s weight-loss medication orforglipron might be available in 2026.
When Novo Nordisk releases its results in early February, JPMorgan stated that it anticipates a strong fourth quarter and a “solid” outlook.
