Novo Nordisk (NVO.US) capital market is getting cold: CEO admits that there are too many promises and insufficient delivery, and investor confidence must be restored

The Zhitong Finance App learned that Novo Nordisk (NVO.US) CEO Mike Doestal said in an interview on Tuesday that the company must make more efforts to rebuild investor confidence because the Ozempic manufacturer's largest drug will face a patent cliff at the beginning of the next decade.

“The lesson we've learned over the past few years is that too many promises and not enough to deliver on them can quickly lose trust,” Dostar said in an interview. What investors are most concerned about right now is “how things will develop in the future.”

Novo Nordisk's stock price fell on Monday as the Danish pharmaceutical company's capital market day disappointed investors with the lack of details of its transformation plans. Novo Nordisk's Ozempic and Wegovy are facing patent expiration in the US and Europe, and the product line currently accounts for about three-quarters of the company's sales.

The stock fell 1.3% during early trading in Copenhagen on Tuesday.

Novo Nordisk promised to launch more than five major new drugs by 2030, adding more than 23 billion US dollars in sales by 2035. These goals are widely regarded as being in line with investors' expectations.

Dostar said that after his experimental drug ziltivekimab failed to reduce the risk of heart attacks in a study this year, he believes the acquisition of external assets in obesity-related fields such as cardiovascular disease has the greatest potential.

“One of our own assets has just suffered a setback,” the CEO said, adding that Novo & Nord is studying whether it is possible to close this gap through external channels. In the field of simple obesity, Dustal said he doesn't think there are many high-quality potential assets to choose from outside the company.

Dostar acknowledged that investors would like to see test results for the company's next generation drugs such as Cagrisema, and he predicted that the drug would be one of the company's best marketed products next year.

But investors aren't expecting much from Cagrisema because the drug didn't reduce weight as well as LLY.US (LLY.US)'s Zepbound (LLY.US) in a trial earlier this year.

“Novo Nordisk is still a company that needs to 'prove themselves',” BMO capital markets analyst Evan Segman said in a report after Novo Nordisk's presentation on Monday. Investors need a clearer understanding of the company's next-generation drugs and potential commercial performance to “rebuild confidence,” he wrote.

Many analysts also question Novo Nordisk's excessive bets on the obesity sector, particularly at a time when Eli Lilly has expanded its business portfolio into other unrelated fields such as neuroscience.

Jefferies analyst Michael Leuchten said in a report that Novo Nordisk's business portfolio “is still highly focused on the obesity sector. As simeglutide approaches the loss of patent monopoly and competition intensifies, we think this model is too risky.”