Pharma company Novo Nordisk (NVO) has signed a $2.2 billion partnership with biotech firm Septerna (SEPN) in order to develop new oral treatments for obesity, Type 2 diabetes, and other related health conditions. Although these areas are already targeted by current GLP-1 drugs like Wegovy, the deal gives Novo exclusive rights to Septerna’s small-molecule pills and is part of Novo’s push to stay ahead in the competitive weight-loss drug market. As a result, Septerna’s stock jumped over 60% in early trading after the news, while Novo Nordisk’s stock rose slightly.
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Under the Septerna deal, the biotech will handle early research and testing. Once a promising drug is found, Novo will take over development. Septerna will receive $195 million upfront and could earn up to $500 million per drug if successful. JPMorgan analysts said this is a big win for Septerna, especially since it had faced setbacks in other projects. With $421 million in cash as of last year, this deal helps extend Septerna’s operations through 2028. Interestingly, analysts believe that Septerna’s platform has strong potential to develop valuable small-molecule treatments.
It is also worth noting that Novo already has an oral version of Wegovy awaiting FDA approval, and a decision could come by the end of this year. However, Wegovy is starting to lose ground to Eli Lilly’s (LLY) drug Zepbound, which has led Novo Nordisk to expand into new deals. Indeed, it recently signed a $1.75 billion deal with Lexicon (LXRX) for another oral obesity drug. Novo has also struck deals to improve access, like the one with CVS (CVS) to offer its drug on the CVS formulary, along with a $499 monthly cash-pay option. Partnerships with telehealth companies like Hims & Hers (HIMS) are also helping it reach more patients.
Is NVO Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on NVO stock based on three Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVO price target of $92.08 per share implies 41.7% upside potential.
