NVO Stock Slips 4% as Roche Inks Obesity Drug Deal With Zealand

Novo Nordisk’s NVO stock declined 4.3% on Wednesday after Roche RHHBY announced a license and collaboration deal worth $5.3 billion with Denmark’s Zealand Pharma to co-develop its lead obesity candidate petrelintide. Roche’s latest deal increases competition in the obesity space.Roche Buys Rights to Obesity Drug From Zealand PharmaRoche is in-licensing co-development and co-commercialization rights to Denmark’s Zealand Pharma’s long-acting amylin analog, petrelintide, being developed in phase IIb studies for people who are obese or overweight without type II diabetes. Roche plans to develop petrelintide as a monotherapy as well as a fixed-dose combination with its lead incretin candidate CT-388, a dual GLP-1/GIP receptor agonist, as a potential foundational therapy for people who are overweight or obese.Amylin drugs work similarly to the popular GLP-1 drugs ruling the obesity space. The GLP-1 space is dominated by NVO and Eli Lilly LLY, with their popular obesity injections, Wegovy (semaglutide) and Zepbound (tirzepatide), respectively. Like GLP-1 drugs mimic a naturally occurring hormone, GLP-1, to regulate blood sugar and promote weight loss, amylin drugs mimic another natural hormone amylin, which is secreted at the same time as insulin in response to food intake. Amylin drugs are being considered the next generation of obesity medicines after the current GLP-1 medicines.In clinical and pre-clinical studies, petrelintide has shown the potential to deliver weight loss comparable to GLP-1 drugs but with a better tolerability profile.For the deal, Roche will make an upfront cash payment of $1.65 billion. Zealand Pharma will also be entitled to development and sales-based milestone payments, which brings the total deal value to around $5.3 billion. The transaction is expected to be closed in the second quarter of 2025.Why Did NVO’s Stock Decline?NVO’s stock declined as competition is heating up in the obesity space. With Roche’s latest deal, a new contender enters the obesity space, which could threaten it and Eli Lilly’s dominance in the market.In fact, NVO’s stock has plunged 14.2% this week. Earlier this week, Novo Nordisk announced disappointing data from a phase III REDEFINE 2 study on its next-generation subcutaneous obesity candidate, CagriSema, a follow-up drug to Wegovy. CagriSema is a fixed-dose combination of a long-acting amylin analog, cagrilintide (2.4 mg) and semaglutide (2.4 mg). Top-line data from the phase III REDEFINE 2 study showed that treatment with CagriSema led to a weight loss of 15.7% after 68 weeks compared to a reduction of 3.1% with placebo alone in people with obesity and type II diabetes. However, the weight loss of 15.7% fell short of expectations as investors were probably expecting a more pronounced weight loss outcome at 68 weeks.NVO’s stock has plunged 44.4% in the past year compared with a decrease of 5.2% for the industry.Image Source: Zacks Investment ResearchCompetition Rising in the Obesity SpaceSeveral companies like Amgen and Viking Therapeutics VKTX are also making rapid progress in the development of GLP-1-based candidates in their clinical pipeline. Earlier this week, VKTX signed a broad multi-year manufacturing agreement with Germany’s CordenPharma, a contract development and manufacturing organization (CDMO), to produce its obesity drug VK2735 (both subcutaneous and oral). VKTX, however, has not yet gained approval for VK2735 but the manufacturing deal reflects its confidence in potential approval of its obesity drug.With Roche’s latest deal and NVO’s data from GLP-1/amylin drug study, competition in the next-generation amylin class also seems to be heating up. Last week, AbbVie also in-licensed rights to develop a long-acting amylin analog, GUB014295, for the treatment of obesity from Danish biotech Gubra.Novo Nordisk currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Roche Holding AG (RHHBY): Free Stock Analysis Report Novo Nordisk A/S (NVO): Free Stock Analysis Report Eli Lilly and Company (LLY): Free Stock Analysis Report Viking Therapeutics, Inc. (VKTX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks