Strong start to the year; but watch-out for brewing competition in obesity

Novo started the year on an impressive note, with growth again driven by the ever-growing GLP-1 diabetes franchise, and strong uptake for Wegovy. Moreover, sound progress on the pipeline front was encouraging. Having said that, Novo’s leadership in the obesity market is likely to be challenged by Eli Lilly’s upcoming drug Tirzepatide, which has shown much better results than Wegovy in clinical trials. The group’s enduringly-expensive valuation is an added impediment to our turning positive on th

Takeaways from 2022 Capital Markets Day

Novo has shared an encouraging CMD update, supporting healthy growth across focus areas. This is particularly true for Wegovy (new obesity drug), where Novo is confident of resolving supply issues by Q2 22. While on-track development of pipeline programmes outside diabetes was the icing on the cake, it is unlikely to result in near-term operating gains. Overall, our estimates should reset higher, but the cautious stance – citing a high valuation and no major near-term readouts – should be mainta

Strong finish to 2021; but 2022 moderation lies ahead

Novo finished 2021 on a strong note, with growth again driven by the healthily-growing GLP-1 diabetes franchise, and strong launch for the obesity drug, i.e. Wegovy. However, euphoric gains of 2021 are unlikely to be repeated in 2022 due to issues such as supply challenges for Wegovy and further price pressure expected for insulins. Moreover, the group’s ever-expensive valuation and increasingly maturing diabetes markets (leaving limited scope to sustain the exceptional results), our cautious st

GLP-1 portfolio powers another strong performance

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.

Strong Q2 and another guidance upgrade; but such growth seems unsustainable

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.

Strong Q1 prompts an improved guidance

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.

Strong end to 2020, but search beyond diabetes is still on

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

Healthy Q3 growth (driven by GLP-1 and International Operations)

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

2020 guidance upgrade, ahead of the Q3 results

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

Flat Q2, after double-digit Q1 growth

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.

Impressive Q1 20, although partly driven by COVID-19 stocking

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.

Another steady quarter but conservative 2020 outlook

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.

CMD 2019: right strategy, but execution remains the key

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.

Steady growth continues, although insulins’ pricing overhang remains

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.

First oral Semaglutide hits the market

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.

Cenkos: Healthcare Sector - Ward Round

Weekly round-up of AIM-listed healthcare news. Venture Life Group, GENinCode, Kromek, Alliance Pharma, Polarean Imaging, Benchmark Holdings, Ondine Biomedical, Verici Dx, Faron Pharmaceuticals, Avacta Group, Abingdon Health, Open Orphan, Belluscura, Hutchmed (China), Oxford Biodynamics

LIBERUM: Futura Medical* - Strategy on track, FM71 data in Sept

Shield Therapeutics - FY results: focus on funding and growing the US

Full-year results were in line with the preliminary guidance issued in early 2022. Feraccru revenues in Europe increased with a 60% increase in volumes and the US commercialisation of Accrufer continues, with broader insurance coverage (100m lives covered). As with many small cap companies, access to growth capital is currently difficult; however, the group has raised a $10m loan from a major shareholder providing a cash runway till end-2022. Our assumption is that further funding comes from deb

SHORE CAPITAL - Warpaint London+ (W7L) - House Stock at 113p

Record H1 as distribution widens and offer resonates

Trading continues to track ahead of expectations, which have been upgraded twice so far YTD. There is clear evidence the growth strategy is bearing fruit. Distribution gains are increasing brand reach both in the UK and overseas. This appears to be an ideal time for its on-trend value-for-money proposition to gain traction, potentially with counter-cyclical characteristics as consumers start trading down. After the recent pull-back, valuation is undemanding for a 3-yr EPS CAGR of 13% with risk p

Cenkos: OptiBiotix Health Plc -- Final results

OptiBiotix has reported final results for the year to December 2021, with revenues growing 45% to £2.2m and the EBITDA loss increasing to £1.0m, reflecting the increased investment in the business. Post-period end, OptiBiotix has continued to return value to shareholders through the successful spin-out and listing of its ProBiotix Health division. Future growth of the company is supported by commercial agreements with large partners and a substantial pipeline of opportunities through its 2nd gen

Morning Note – 30 June 2022

Next Gen XPLOR and D2C

Belluscura has announced the launch of the next generation X-PLOR portable oxygen concentrator and expanded distribution through a D2C offering and partnership distribution plan for smaller DMEs.

Hybridan Small Cap Feast 30/06/2022

Dish of the day Joiners: Visum Technologies has joined the AQSE Growth Market. The Company's business is to own and operate an "on-ride" video and photographic camera system that it sells and/or licenses to customers (being theme parks, ride manufacturers, souvenir imaging providers, and other leisure operators). Leavers: No Leavers Today. What’s cooking in the IPO kitchen? Immediate acquisitions (IME.L) is to re-join AIM via a Reverse Takeover of Fiinu Holdings Limited. Once complete the Compan

SHORE CAPITAL - Oxford BioDynamics+ (OBD) - House Stock at 16p

Hybridan Small Cap Feast 20/06/2022

Joiners: No Joiners Today. Leavers: Tungsten Corp and Sensyne Health have both left AIM. Hibernia REIT has left the Main Market. What’s cooking in the IPO kitchen? Visum Technologies seeking admission to The AQSE Growth Market. The Company's business is to own and operate an "on-ride" video and photographic camera system that it sells and/or licenses to customers (being theme parks, ride manufacturers, souvenir imaging providers, and other leisure operators). Due 30 June. LifeSafe Holdings, a fi

CMA conclusion; small bolt-on; and in line trading

An update from CVS this morning covering conclusion of the CMA process, a further acquisition and update on trading. The CMA investigation into the acquisition of Quality Pet Care (QPC) is now complete, thereby bringing to an end a 9 month process. As part of the undertaking, CVS yesterday completed the sale of QPC for cash proceeds of c.£9m, implying a c.£12m impairment. Whilst the CMA episode has clearly been a setback, it does not seem to have fundamentally impaired ongoing M&A ambitions give

Positive AGM statement

The strong momentum from Q4-21 has continued into H1-22, with revenues expected to be up by more than 22% YoY. The outlook remains positive supported by strong industry demand and market share gains in the UK, where the group’s sustainability and affordability credentials are increasingly resonating. Whilst some macro pressures remain, these look to be manageable. We therefore make no change to our forecasts at this stage, but are highly encouraged by current trends and remain optimistic for the

LIBERUM: SourceBio International* - Scaling growth and trading well

Continued growth and margin improvement prompt further upgrades

A positive AGM update confirms strong revenue growth has continued YTD and further margin improvement means management again expect EBITDA to be materially ahead of expectations. The business model is now settled, with additional distributors appointed in the US which should help drive further penetration into the Primary Care market there. China revenues were strong and with no sign yet of any slowdown, despite being cognisant of renewed lockdowns there. Gross margins have remained robust on po