Rising Competition Gets Lilly and Novo Nordisk Down

It’s been a rough month for investors in Lilly and Novo Nordisk – largely because of the prospects for rising competition to their wildly successful obesity medicines.

Accelerating VK2735

This week, Viking Therapeutics announced they are accelerating development of injectable form of VK2735, a dual agonist that works on both GLP-1 and GIP receptors. This is similar to the mechanism for tirzepatide.

Previously, the company had said it was planning more phase 2 research on this molecule. But the news this week was a plan to move into a pivotal phase 3 trial after reviewing plans for that study with FDA. Viking has a lot of moving pieces in this space and it makes for a slightly confused picture.

The bottom line message was clear enough, though. We are moving ahead faster than you might have thought.

Big Moves in Stock Prices

With that news, Viking’s stock price shot up by 30%, while Lilly and Novo tumbled 7% and 4% respectively. This extends a month-long losing streak for those stocks that has them down by 12%.

Rising Competition

The rising competition that plagues both Lilly and Novo stock prices comes from more than just Viking. Pfizer is feeling bullish about their oral GLP-1 agonist and getting attention for it. Roche bought itself a portfolio of obesity medicines with the purchase of Carmot Therapeutics last year. This week, Roche told industry analysts that they are investing to develop a broad range of obesity medicines with “best-in-class” potential. Most significantly, Roche CEO Thomas Schinecker articulated what is driving this frenzy:

“We do believe that cardiovascular and obesity is probably the biggest unmet need today and there are a lot of diseases that are linked to this. In order to have a holistic approach, we believe that it’s prudent to have in our portfolio.”

At this point, there can be no doubt. Competition to meet the need for obesity treatment is gathering steam. Complacent days of high prices, short supply, and limited access to care will be coming to an end. Lilly and Novo will either rise to the occasion or fall to the wayside. Pressure on health plans to cover these medicines will not fade, either.

Hang on for a bumpy ride.

Click here and here for more on the news from Viking, here and here for reporting on Roche. For perspective on the implications for Lilly and Novo, click here and here.

Self-Portrait, painting by Kees van Dongen / WikiArt

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July 27, 2024