Novo's Next Act & What Happened to Nike?

John Corteau (0:00)

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Amazon just told Meta's new AI agent to go Muse somewhere else.

Dylan Lewis (0:38)

And the story behind Novo's slimming market cap.

John Corteau (0:40)

From Monday, September 21st, it's Brew Markets Daily. I'm John Corteau.

Dylan Lewis (0:44)

And I'm Dylan Lewis. Let's get moving and grooving.

John Corteau (0:52)

Dylan, we've got an update on Paramount Warner Brothers, Amazon's reaction to Meta's new AI agent, and of course, what is going on at Nike. But let's kick off the show with you on Covering Denmark.

Dylan Lewis (1:04)

Yeah, weight loss drug, Wigovia made Novo Nordisk, one of the most valuable companies in Europe. The pride of Denmark, really. But now the stock is down 70% since mid 2024, as investors are asking management, what's next? That's because the company is currently in a sales crisis. Full year expectations are for revenue to be flat, to maybe down 6%.

Part of that is competition from Eli Lilly's Zetbound, their weight loss treatment is expected to outsell. Novos will go V this year.

And investors are concerned because the semaglutide patent expires in the early 2030s, meaning that even more competition is coming. The company held its capital markets day today in London. John, what did we learn about management's plans?

John Corteau (1:43)

Some quick numbers. As you mentioned, the semaglutide patent expires in 2032 in the United States. This is so important because half the company's revenue is tied to those patents.

Analysts are looking for a plan on how to replace that revenue as the market matures. And for its part, management proposed a multi-part plan. They want to launch at least five drugs with, quote, multi-blockbuster potential by 2030 and drive $23 billion in pipeline sales by 2035

And the company is also looking to slim down. Since taking over as CEO in August 2025, Mike Doostar has cut Novo's workforce by about 13,000 people. That's nearly 17 percent. And keeping with this slimming down pun, the company officially scaled back its name from Novo Nordisk to simply Novo. And the bull that has been part of its logo for a hundred years is now facing right instead of left, which I saw one brand strategy expert say signals a change in directions, but I think that's pretty thin.

Dylan Lewis (2:43)

I mean, up and to the right is the way you want charts moving, John. I kind of understand it.

Nova is fascinating to me because they built one of the biggest markets in health care with the GLP ones, and they are basically flat from when they introduced the drugs and they started selling them. I mentioned Eli Lilly earlier, and they also have a revenue concentration problem. Roughly two-thirds of their sales come from their terzepatide offerings, and yet Lilly is trading near all-time highs, and the business is worth over a trillion dollars, and that is because their ZeptBound medication is currently outselling Novo's Wigovie. I am no scientist, but the researchers that have studied the drugs against each other have found that people on ZeptBound lost more weight than those on Wigovie, about 20% of starting weight versus 14%.

And the theory here is that Wigovie mainly targets GLP ones, while ZeptBound targets both GLP one and GIP receptors. This dual hormone effect helps assist with more weight loss. Both businesses are very highly reliant on this market, but investors see that patients are choosing Lily's treatments right now. I think one thing that we should probably keep our eye on here is how the drugs are delivered. Novo has a pill form of Wigovie, Eli Lilly has Fondeo, which is a daily pill treatment. Those are generally more preferable ways for patients to get drugs. So if we see a meaningful difference in how those perform, that could change the story for these companies.

John Corteau (4:02)

Yeah, I thought the pill would be more of a breakthrough. Over the last couple of years, when I've seen friends and family have needles around the house and these drugs that are frozen in the fridge have to be delivered, when the pill came out, I thought that was going to be a real promise. But I suppose it's important to the patient which one loses more weight faster.

So, Dylan, this competition between Novo and Eli seems unique in the pharma scheme. Of course, they're both dealing with pipelines and patent cliffs like any other pharmaceutical company, but there's such a large base of consumers who want these weight loss drugs. We recently talked about the company Novartis having disappointing results for some of their stage 3 trials. Those were more focused on targeted treatments for cardiovascular disease and neurological disorders. And while those potential drugs would be very important and make a big difference in the lives of those who it would treat, it only would treat thousands or even millions of people. The World Health Organization says that 1 billion people worldwide live with obesity. So that's an enormous market for these companies. And when I asked about Novo vs. Eli Lilly addressing the market and shots vs. pills, Novo's CEO said it's not going to come down to Coke vs. Pepsi. It's going to be Coke and Pepsi and Fanta and Dr. Pepper and Red Bull.