Novo Nordisk Enters Anti-Obesity Space With New FDA Approval

| About: Novo Nordisk (NVO)
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Summary

Treatment is a once daily injection and will be marketed as Saxenda.

Saxenda is Liraglutide and is the ingredient in already approved Victoza.

Victoza, a diabetes treatment, touted weight loss as a side effect.

Novo Nordisk (NYSE:NVO) received FDA approval for Saxenda on December 23rd. The pharma giant now adds an anti-obesity indication to the label of Liraglutide, already marketed as a diabetes treatment under the name Victoza. Novo Nordisk enters an anti-obesity space that is getting increasingly crowded. Vivus (NASDAQ:VVUS) markets Qsymia, Arena (NASDAQ:ARNA) and its partner Eisai market Belviq, and Orexigen (NASDAQ:OREX) and its partner Takeda market Contrave. In addition to these players, other companies such as Zafgen (NASDAQ:ZFGN), Janssen, and Rhythm are also seeking to create obesity treatments.

Novo Nordisk has not announced any plans about a possible launch, price point, or how insurance will handle Saxenda. Unlike Qsymia, Belviq, and Contrave, Saxenda is a once daily injection. Similar to these competitors, Saxenda is approved for those with a BMI over 30, or for those with a BMI of over 27 with a qualifying comorbid condition.

It will be interesting to see how Novo Nordisk plans to bring Saxenda to the market. Liraglutide, marketed at a lower dose under the name Victoza carries a retail price point of over $600 per month, which would be well above the pricing of the competitors that offer pills. On the other end of the price scale is Contrave, which can be bought for as little as $45 per month for consumers that have insurance that covers the drug and uses a savings club program. Contrave's MSRP is in the $200 per month range. On the extreme low end of the scale is the long-time anti-obesity treatment phentermine, which can be bought for between $15 and $25 per month. Can Novo Nordisk keep its pricing integrity on Victoza if it offers substantial discounts (in order to compete) for Liraglutide in the form of Saxenda? That remains to be seen. As a pharma giant, Novo Nordisk can likely afford to be aggressive if it wants to be.

Investors in the anti-obesity sector are seeing the sector get more and more crowded with each passing quarter. The crossover between diabetes treatments and anti-obesity treatments has been an interesting dynamic to watch. Diabetes treatments like Victoza, Invokana, and Farxiga are all diabetes medications that tout weight loss. Meanwhile, Qsymia, Belviq, and Contrave are obesity treatments that are touting the benefits to diabetes numbers. The combined space has taken on the moniker "Diabesity."

I do not anticipate the new FDA approval to be a big driver for Novo Nordisk. The FDA had indicated this past September that a positive outcome was likely. The news of approval simply confirms what most already knew. The biggest thing that Novo Nordisk investors will want to watch for is how the company intends to market Saxenda while maintaining the pricing integrity of Victoza. The big thing that sector investors will want to grasp is that the anti-obesity (or diabesity) space is getting more crowded.

Disclosure: The author is long ARNA.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.