Packets of Wegovy
Packets of Wegovy move along a conveyor at the Novo Nordisk A/S production facilities in Hillerod, Denmark. Image Credit: Bloomberg

Novo Nordisk A/S's blockbuster obesity medicine Wegovy reduced the risk of heart attacks and strokes in a highly anticipated study, buoying shares of the Danish drugmaker and the US maker of a potential rival treatment, Eli Lilly & Co.

People with obesity or overweight and a history of heart issues taking the Novo drug were 20% less likely to suffer a cardiovascular event than those who took a placebo, the Danish drugmaker said on Tuesday.

The stock jumped as much as 16.7%, the biggest intraday gain in more than two decades. That lifted the market value to $413 billion, the second-highest in Europe, after luxury group LVMH.

Lilly surged as much as 10% in early trading after the company raised its outlook on the back of stronger-than-expected sales of Mounjaro, a diabetes drug that's expected to be approved for obesity soon. Sales of that treatment hit nearly $1 billion in the latest quarter.

The Wegovy trial results could fuel already frenzied demand for such drugs and broaden access for more patients. Though obesity has long been linked to cardiovascular problems, the study was designed to show for sure whether peeling away pounds with a shot could also have a meaningful impact on heart disease, the leading cause of death in the US.

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The results make Wegovy the first drug to combine effective weight loss with reduced heart disease risk, said Martin Holst Lange, Novo's executive vice president for development.

"If they play baseball in Denmark, Wegovy just hit a home run," Barclays analyst Emily Field wrote in a note.

Reimbursement talks

The study may aid Novo in reimbursement discussions with insurers who might otherwise balk at the cost of Wegovy. The company said it plans to file for an expansion of its label in the US and EU this year. Currently the drug is prohibitively expensive for many patients, costing upward of $10,000 a year in the US.

Begun in 2018, the Select trial followed more than 17,000 patients in 41 countries, focusing on people aged 45 and over with a history of cardiovascular disease. Safety in the study was in line with previous trials, Novo said, another key outcome when testing so many people over such a long time period.

The magnitude of the heart benefit is a best-case scenario, with most investors expecting an improvement closer to 15%, Jefferies analysts wrote in a note. Sales of Wegovy may reach $14 billion, they said.

Novo has been in the limelight after celebrities and key business executives said they were using diabetes drug Ozempic to shed pounds. Both it and Wegovy are injected and share the same active ingredient, semaglutide. They work by suppressing the appetite as well as slowing the movement of food through the digestive tract.

Common side effects include nausea, vomiting and uncontrollable diarrhea, and European authorities are investigating reports of suicidal thoughts associated with the broader class of drugs that includes Wegovy.

Despite the side effects, demand is such that the company has struggled with its manufacturing pace, forcing Novo to temporarily reduce the supply of some dosages in the US. Denmark reported a shortage of Ozempic this week as well.

Analysts have estimated obesity drugs could become some of the biggest pharma blockbusters of all time, with Novo leading the pack.

Lilly's Mounjaro is expected to receive approval this year for treatment of obesity.

Lilly increased its adjusted earnings guidance to a range of $9.70 per share to $9.90 a share, up substantially from the $8.65 to $8.85 a share it had forecast in April.