TD Cowen downgrades Novo Nordisk on concerns over semaglutide patent loss, pipeline outlook

Novo Nordisk could face more pressure ahead due to mounting competition and looming patent risks for semaglutide, said TD Cowen. The bank downgraded the pharmaceutical stock to hold from buy. Analyst Michael Nedelcovych also lowered his price target to $42 from $45, which implies a gain of just 6%. Shares of Novo Nordisk have struggled of late. They slipped 22% this year and are down 50% in over the past 12 months. NVO 1Y mountain NVO 1Y chart Nedelcovych said Novo Nordisk is not prepared to blunt its loss of semaglutide exclusivity. While the Wegovy pill offers a catalyst, he noted its potential cannot completely right the ship, especially when considered alongside lagging Ozempic prescriptions and Novo Nordisk’s CagriSema trials — which have failed or underwhelmed. CagriSema is a treatment Novo Nordisk is developing that aims to offer more effect weight loss results versus semaglutide. “NVO is an innovative company that can be fairly credited with unlocking the obesity market’s potential. But the business faces enormous challenges — first from branded competition, then from semaglutide LOE — and it is no longer clear the pipeline can answer the call,” Nedelcovych wrote. “CagriSema, amycretin, ziltivekimab all have meaningful potential, but do not combine to create a compelling post-sema trajectory.” Novo Nordisk’s semaglutide patent is secured through 2032. However, it expires in several countries later this month. Nedelcovych also believes that Novo Nordisk’s semaglutide patent expiration could begin to weigh more heavily on investor psyche beginning this year. While GLP-1 compounding is likely to wane, the analyst predicts a rise in branded competition. “Unfortunately, to the most jaundiced eye, success of Wegovy Pill simply creates a larger hole to be filled in the not-too-distant future,” he wrote. “For Wegovy’s franchise, the rise of the cash pay market and decline in net price could blunt the impact of patent expiration down the road, but it is not clear that a longer, slower decline through the 2030s would be viewed more favorably by investors.” The analyst added the Novo Nordisk faces staunch competitive pressures and it remains less and less likely that the company will retain its duopolies in the diabetes and obesity treatment businesses.