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Novo Nordisk reported strong Q3 results, with growth again driven by the GLP-1 diabetes portfolio and launch euphoria for Wegovy (obesity drug). Interestingly, management upgraded its 2021 guidance for the third straight quarter. While the group continues to make sound progress in the diabetes market, with its ever-increasing global market share, lack of immediate growth catalysts beyond the largely mature diabetes market is a key impediment. Hence, our recommendation remains cautious.
Companies: Novo Nordisk (NOVO-B:CPH)Novo Nordisk A/S Class B (NOVO.B:CSE)
Novo reported strong Q2 results on the back of robust momentum in the GLP-1 portfolio, including the successful launch of obesity drug (Wegovy). Importantly, the group again upgraded its 2021 guidance. While the progress of its initiatives in diabetes and related areas is proceeding as planned, the quest for growth drivers beyond diabetes is still on. Hence, despite all the good work, our recommendation is likely to remain cautious, especially given the Danish giant’s expensive valuation.
2021 started on a high as Novo reported robust growth, despite ‘tough comps’, i.e. forward buying-driven Q1 20. Moreover, as management expects this momentum to be maintained, the 2021 outlook has been revised upwards. While diabetes-heavy Novo is doing well via newer innovations in the GLP-1 area and also targeting diabetes-related areas, it lacks major growth catalysts. Hence, even after estimates being revised upwards, the upside is likely to be limited.
Despite the pandemic, Novo Nordisk finished 2020 on a high and reported a healthy operating performance. This was a function of the sustained uptake for GLP-1, despite varying (and persistent) issues elsewhere. Management stuck to its extravagant shareholder reward programme.
However, it is high time that newer non-diabetes growth drivers are identified and pursued. Luckily, the group has the balance-sheet cushion to pursue big growth ambitions. Until new growth avenues are identified, sadly, t
Companies: Novo Nordisk A/S Class B
Unlike the Swiss peers, Novo Nordisk reported healthy Q3 sales and operating profit growth, which also resulted in a 2020 guidance upgrade. Product-wise, this outperformance was driven by GLP-1, which more than offset the sustained erosion in insulins. Geographically, IO led from the front (across various categories) and helped compensate for sluggishness in the all-important US market. Overall, while business-performance-wise, Novo continues to do well, a further re-rating will have to await ma
Novo Nordisk has upgraded is 2020 performance guidance on the back of less severe-than-expected de-stocking. Other than diabetic patients’ high vulnerability to COVID-19 warranting maintained stocking, the re-emerging threat of a second-wave of infections (especially in the US) could have been another contributing factor.
However, given that diabetes pricing is expected to remain a tricky matter, we believe that any re-rating for Novo is dependent on its ability to reduce dependence on the lega
After an impressive Q1, driven by COVID-19-induced stocking, growth fizzled out in Q2. GLP-1 offerings continue to do well, but headwinds in insulins and the lack of major non-diabetes growth drivers have again emerged as major roadblocks. Despite industry-leading return metrics, the group lacks major growth assets/catalysts and, hence, our cautious recommendation should be maintained.
Novo started 2020 on an excellent note, with Q1 CER sales growth of 14%. This was a function of the sustained uptick of GLP-1 and COVID-19-induced panic buying across segments. So far there have been no major manufacturing and/or supply chain effects of COVID-19, but management guides for delays in early-stage trials. While GLP-1 remains Novo’s key value proposition, lack of medium-term growth drivers should result in the limited upside being maintained.
2019 ended on a steady note for Novo Nordisk. While Ozempic continues to do well, the addition of Rybelsus should further solidify the group’s non-insulin offerings. However, insulins – still c.46% of sales – continue to be a pain-point, especially in the US. Overall, there are no major growth drivers in the non-diabetes areas, which could limit the group’s ability to withstand another round of pricing-related uncertainty with US elections due later this year.
With the ongoing price erosion of its older generation insulin portfolio (in the US), Novo Nordisk sees new growth avenues in GLP-1 products, new generation insulins, and new, but, diabetes-related therapeutic areas – cardiovascular, kidney, obesity and retinopathy. Moreover, International Operations are guided to be a major fulcrum of growth. While strategically these targets have been set in the right direction, realisation of these targets may test the market’s patience.
The Danish diabetes giant had a good Q3 – witnessing 6% CER sales growth. Ozempic attained blockbuster status, while Novo Nordisk’s much-awaited oral semaglutide (Rybelsus) successfully secured an approval. Although (pricing) erosion of the group’s insulin portfolio has continued.
Novo Nordisk’s Rybelsus becomes the first oral Semaglutide (GLP-1) drug to enter the non-insulin diabetes drug market. With three different technologies and close to 15 drugs in the market, the competition is fierce. Fortunately, Rybelsus steers past competitors in many key parameters.
Solid momentum of the new drugs, Ozempic and Saxenda, helped Novo Nordisk achieve another healthy quarterly performance, while the insulin woes only furthered. The Biopharmaceuticals clocked growth too, but more due to one-time benefits. Guidance for the year, in effect, was upgraded. Approval of oral semaglutide remains the next biggest catalyst, in addition to any corporate action that the company has been considering for a long time.
Novo Nordisk delivered better-than-expected results in Q1 19, both at the top-line as well as bottom-line. However, some one-offs had a role to play in this. The profit beat was, to a large extent, driven by a reversal of inventory write-down, although completion of some key trials also boosted the margins. We continue to expect the diabetes market to get tougher to operate in and the FDA verdict on oral Semaglutide to be the next big trigger for Novo Nordisk.
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GSK has rejected Unilever’s £50bn bid for the former’s Consumer Healthcare business. The British UK giant believes that the offer significantly undervalues its assets, but the acquirer increasing its offer won’t be an easy affair. Nevertheless, this offer is a validation of the underlying potential of consumer health offerings and, hence, we upgrade our divisional NAV estimates. Overall, GSK remains an attractive under-transition pharma story.
Companies: GlaxoSmithKline plc
OptiBiotix has published a third human volunteer study on the cholesterol lowering effects of the company's proprietary probiotic Lactobacilus plantarum, branded as LPLDL. We believe the study clearly demonstrates the cholesterol lowering effect of LPLDL which we expect to support the on-going commercialisation of the probiotic. Key results were the statistically significant reduction in total cholesterol and LDL (bad) cholesterol of 34.2% and 28.4%, respectively over a six-week treatment period
Companies: OptiBiotix Health PLC
Following the decision not to invest further in hRPC development and seek a partner, there was a steep fall in ReNeuron’s share price. ReNeuron is switching staff and cash into the exciting, but early-stage exosome platform. Investor confidence and full recognition of exosome value will need to be established. ReNeuron has seven exosome research collaborations with more under discussion. It has shown that targeted exosomes can deliver a potent growth factor to the brain in an animal model, a fin
Companies: ReNeuron Group plc
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What’s cooking in the IPO kitchen?
Hercules Site Services a technology enabled labour supply company for the UK infrastructure sector, intends to float on AIM. Hercules is seeking to raise approximately £5.5m to rapidly deliver on the significant demand it is experiencing for its diverse range of services across the UK infrastructure sector, including to scale up its operations to supply labour to the northern section of the HS2 rail project
Companies: WSG ADME AGL CCT EMAN OHG OTMP TLY
Strong recent trading has persisted over the winter months, as Yourgene has been co-opted in to help the UK’s response to the new wave of infections caused by the omicron variant. This comprises the surge testing PCR contracts and a new Covid sequencing service, which has made a strong contribution and is scaling up further for additional expected volumes. As a result, management now expects FY22 revenues of at least £37.0m and for adj EBITDA margins to exceed 10%. We upgrade our current year es
Companies: Yourgene Health Plc
We believe the narrative for the UK equity market remains very good. Some inflation appears embedded in markets and economic growth seems robust. We saw investors show caution into the end of 2021 and so have cash to deploy in our view. This has been corroborated by investor feedback we’ve had already this year. The UK equity market is materially cheaper than global equities on a relative basis so asset allocators have to be looking at UK equities while UK 2022 GDP growth is likely the best of t
Companies: AFM ANX AXL CYAN GLAN MODE OBI MATD SEN SOM WSG
Companies: SourceBio International Plc
Circassia has delivered a strong outturn to FY21, with revenues 2% ahead at £27.9m (+17% YoY) and a maiden positive adj EBITDA, ahead of our expectations of a small loss, which had already been upgraded during the year. Gross margins remained steady at 68% and 84% recurring revenues was also consistent with the previous year. Net cash was also ahead at £12.6m, with the underlying NIOX business generating £1.1m of cash in H2, another notable milestone. We leave our outer years forecasts prudently
Companies: Circassia Group PLC
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Sumo Group has left AIM following a takeover.
What’s cooking in the IPO kitchen?
Unbound Group PLC, (currently called Electra Private Equity PLC) to join AIM. Unbound Group, will be the parent company for a range of brands focused on the 55 plus demographic. Initially focused on Hotter Shoes, Unbound's curated, multi-brand retail platform will offer additional products and services that will enhance the enjoyment and wellbeing of its targeted customer communit
Companies: TENG PLUS EVG CHAR CCS BARK
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Universe Group has left AIM following a takeover by Inform Information Systems Limited
What’s cooking in the IPO kitchen?
Hercules Site Services a technology enabled labour supply company for the UK infrastructure sector, intends to float on AIM. Hercules is seeking to raise approximately £5.5m to rapidly deliver on the significant demand it is experiencing for its diverse range of services across the UK infrastructure sector, including to scale up its operati
Companies: SPA AREC BBSN CCS EPWN GETB MRL ORPH PEN
East Star Resources (EST.L) the Kazakhstan-focused gold and copper explorer, has raised gross proceeds of £3.1m by way of an oversubscribed placing and subscription of 62,000,000 new shares at a price of 5p, and has today been readmitted to the Official List of the Financial Conduct Authority by way of a Standard Listing following its acquisition of 100% of the share capital of Discovery Ventures Kazakhstan Limited, which holds an initial package of four licences in two producing but un
Companies: TAVI COG CUSN FEN GTLY NSCI LND EME
While we were away
Mac Alpha Limited (MACA.L) joined the Main Market. (24/12/21)
Atome Energy PLC (ATOM.L) joined AIM. (30/12/21)
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Graft Polymer a business focused on the development of polymer modification and drug delivery systems is to join the Main Market (Standard). Graft Polymer has developed a proprietary set of polymer modification technologies, which can improve existing products and processing methodologies by enhancing per
Companies: VLX VRCI LBE RENX SOM TAST DDDD CMH IQG SRC
A positive FY Trading Update that came in slightly ahead of our, and the market's expectations, with revenue of £13.9m vs. our £13.7m estimate. US Dollar (representing the majority of revenue) performance reflected the true operational growth, up some 17% YoY before the FX impact reduced that to 10% growth in GBP (reported) terms. EBITDA (adjusted for share-based payments) was up 294% to £2.1m, and the DXRX platform has grown to provide 57% of group revenue. The company has also announced a ne
Companies: Diaceutics Plc
The six-month trading update to 31 December reflects the discontinuation of non-core products, ongoing COVID-19-related headwinds, principally in Germany and Italy, exchange-rate headwinds (-5%) and product phasing issues, with revenues falling 10% to £48.7m. Underlying like-for-like growth, however, was 3% at constant exchange rates (CER). Period-end cash was £41.4m, which implied a c.3% increase (+£1.m) in underlying cashflows in the period. We have reduced revenue forecasts by 9% in FY 2022 t
Companies: Allergy Therapeutics plc
Belluscura is focused on developing oxygen enrichment technologies. Its lead product, X-PLO₂R, is pitched as the world’s first modular portable oxygen concentrator (POC). It received FDA 510(k) clearance in March 2021 and came to the market in September 2021. Early uptake is encouraging, with the company signing five distribution agreements and exceeding its sales volume projections for the year. We expect recent reimbursement approval from the US Centers for Medicare & Medicaid Services (CMS) a
Companies: Belluscura PLC