By Josh Nathan-Kazis and Elsa Ohlen

Novo Nordisk expects its GLP-1 drugs Wegovy and Ozempic to soon come off the Food and Drug Administration's official shortage list, CEO Lars Fruergaard Jørgensen told Barron's on Wednesday.

That would kneecap the sprawling industry of compounding pharmacies and telehealth companies that has been selling legal Wegovy knockoffs to millions of Americans. If the FDA were to determine the Novo drugs were no longer in shortage, the compounders would need to stop making and selling their versions.

"In the near term," Jørgensen said when asked when he expected the FDA to take semaglutide, the drug he sells under the brand names Ozempic and Wegovy, off the list.

"For Ozempic, we have already supply, and we are ramping up Wegovy starter doses as we speak," he said. "They are actually already in the U.S. and moving their way through the supply chain. It's up to the FDA to assess that."

A Novo executive said on an investor call Wednesday that the company is in "active dialogue" with the FDA on the shortage list. "It is ongoing," the executive said.

The assurance came as Novo reported fourth-quarter results that beat expectations. The company appeared to brush off growing wariness among investors about the GLP-1 stocks.

Years of excitement over the new weight-loss drugs had made Novo the most valuable company in Europe. But worries have mounted that expectations for demand may be overstated as the market's complexities have become apparent.

Novo shares have taken a beating, with the company's American depositary receipts falling nearly 40% in the last six months of 2024. Shares first slid after Eli Lilly's third-quarter results fell short of expectations, and then in response to disappointing trial data for Novo's next-generation weight-loss drug CagriSema.

A positive update about the drug-development pipeline in January wasn't enough to reverse the momentum. The ADRs were down roughly 30% over the past 12 months as of Tuesday.

The financial results Wednesday, along with Jørgensen's projection that Ozempic and Wegovy could soon come off the shortage list, will ease some of those worries. Novo's ADRs were up 4.8% Wednesday morning. Shares of Lilly, which reports its quarterly results on Thursday, rose 0.7%.

Ozempic sales for the quarter came in at 33.9 billion Danish kroner, or $4.7 billion, slightly above expectations of 33 billion kroner, or $4.6 billion, among analysts surveyed by FactSet. Wegovy sales more than doubled from the same period last year, and were largely in line with expectations at 19.9 billion kroner, or $2.8 billion.

Novo posted fourth-quarter earnings of 6.34 kroner per share, or 88 cents, beating the FactSet consensus estimate of 5.98 kroner. Sales were 85.7 billion kroner, beating expectations of 80.1 billion kroner.

Novo's Wegovy and Ozempic are among the most consequential, closely watched new medications in recent history, but they face serious competition both from Lilly's rival drugs Mounjaro and Zepbound and from legal copycats manufactured by compounding pharmacies and sold by telehealth firms. While compounders will soon be barred from selling knockoffs of the Lilly drugs, Novo's drug can legally be copied.

That would change if the FDA were to take them off the shortage list. "There was an opportunity, a window of time, to do this," Jørgensen said of the compounding industry. "I don't see it as a sustainable channel long term."

Novo now forecasts sales growth of between 16% and 24% in 2025, less than the 26% increase it achieved in 2024. Operating profit growth is expected to be between 19% and 27%, compared with 26% in 2024.

Jørgensen told Barron's that the broad guidance range reflects the uncertainties involved in significantly increasing production of the GLP-1 medicines. "The underlying ramp in sellable GLP-1 units is more than 30%," he said. "If you just think about the machinery, the equipment, the scaling of that, that's actually very, very sizable. So there are some fluctuations."

Lingering supply constrains have been a worry for investors because Novo's inability to meet the huge demand for its products has hampered sales.

In December, Novo closed an $11 billion deal to ramp up its supply of GLP-1 medicines, though it could take time for the results of that to be felt in the market.

"If we redirect everything that we have of GLP-1 to the U.S. we will be immediately out of the drug shortage situation," Henrik Wulff, executive vice president for product supply, quality, and information technology at Novo, told Barron's in December. But Novo serves markets worldwide.

"We try to balance these launches up against the in-market demands, and try to guesstimate how we can get out of the drug shortages," he said.

Shares of Novo have yet to recover from a startling update in late December on CagriSema, a drug that combines the active ingredient in Ozempic and Wegovy, semaglutide, with a drug called cagrilintide. Novo had said it expected patients to lose at least 25% of their body weight on CagriSema, but in a Phase 3 trial, patients only lost 22.7%.

On Wednesday, Jørgensen said that Novo remains optimistic about CagriSema despite that result. "When you have more potent biologies like CagriSema, it's actually as much about the weight-loss journey, so what's the duration of the weight loss," he said. "You have to start looking at individual patients to fully assess the value of the product."

In January, Novo unveiled early results on another weight-loss drug, amycretin, which appeared very promising. It has years of studies ahead of it before it can make it to market.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com and Elsa Ohlen at elsa.ohlen@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 05, 2025 11:14 ET (16:14 GMT)

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