Prosper Junior Bakiny, The Motley Fool
5 min read
In This Article:
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Novo Nordisk has been actively pursuing licensing deals over the past six months.
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These have helped the company improve its pipeline in its most important area.
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There are other good reasons to consider investing in Novo Nordisk right now.
It wasn't so long ago that Novo Nordisk (NYSE: NVO), a Denmark-based pharmaceutical company, seemed to be firing on all cylinders. However, the past year has been challenging for the drugmaker.
One reason behind its poor performance over the trailing-12-month period is that it has encountered clinical setbacks. CagriSema, an investigational weight loss medicine, performed well in phase 3 studies, but not quite as well as management had promised. Elsewhere, Novo Nordisk's biggest rival in this area, Eli Lilly, has registered significant clinical wins that arguably put it ahead in this fast-growing market.
Still, Novo Nordisk hasn't said its last word yet. The company has recently made significant moves to strengthen its anti-obesity pipeline. Should investors buy the stock following these developments?
On June 11, Deep Apple Therapeutics, a privately held biotech company, announced a licensing deal with Novo Nordisk. The former will utilize its proprietary platform, which leverages a virtual library powered by artificial intelligence (AI) to identify promising compounds rapidly. Deep Apple will aim to optimize novel compounds for obesity and other related diseases, and will receive up to $812 million, including an up-front payment and milestones for clinical and regulatory achievements.
While it's too early to celebrate this deal -- it's still brand-new and hasn't led to any significant wins yet -- it's worth pointing out that Novo Nordisk has penned several such agreements since the CagriSema setback. One of the more promising of these agreements was with United Biotechnology, a subsidiary of the China-based company United Laboratories International Holdings. Novo Nordisk dished out an up-front payment of $200 million (not to mention potential milestone payments of up to $1.8 billion) to acquire UBT251, a triple agonist -- that is, a medicine that mimics the action of three separate gut hormones: GLP-1, GIP, and glucagon.
Eli Lilly's Zepbound is the first and only approved dual GLP-1/GIP agonist, and Lilly is also working on its own triple agonist. So, with this acquisition, Novo Nordisk is trying to catch up to its longtime competitor. This move, along with others, has helped expand Novo Nordisk's weight-management pipeline. Could that help the stock bounce back?
