The idea that obesity is something that could be quietly medicated away seemed like a dream until recently, but the new weight-loss drugs seem to be delivering. And there’s word that the next generation of these already-working drugs is in development now, a development that pushed healthcare stock Novo Nordisk (NYSE:NVO) up nearly 1.5% in Thursday afternoon’s trading.
Novo Nordisk is partnering with Flagship Pioneering, specifically its Metaphore unit, to develop the next generation of obesity drugs. Given the success of the first generation in terms of sales and revenue, this is likely to prove a smart idea.
The operation calls for Metaphore’s MIMIC platform to serve as the development platform for two different drugs, both GLP-1 receptor targeting substances that will, hopefully, prove to be that next generation of drugs. Novo, for its part, will pay Metaphore as much as $600 million, as well as tiered payments based on market performance, so Metaphore has every reason to succeed here.
Working on Improving the Time of Effect
The new line of drugs is expected to focus on the time of effect; while the current drugs work, they don’t exactly last long, so the new generation will look to work more once they get into the system. That’s pretty good news, and Novo has quite a bit more in the pipeline. In fact, one of its weight-loss drugs, Wegovy, has proven useful in protecting the cardiovascular system, too, and the FDA just approved it as a treatment for the same not long ago. And that, in turn, should open up the Medicare market, which could be a huge win.
Is Novo a Strong Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NOVO stock based on five Buys, one Hold, and one Sell assigned in the past three months, as indicated by the graphic below. After a 52.92% rally in its share price over the past year, the average NOVO price target of $127.93 per share implies 0.48% downside risk.
