NVO Stock Up on FDA Nod for Wegovy in MASH: More Upside Ahead?

Novo Nordisk NVO announced that the FDA has granted accelerated approval to its blockbuster GLP-1 drug, Wegovy (semaglutide 2.4 mg) for a new indication.

The regulatory body in the United States has now approved Wegovy for the treatment of noncirrhotic metabolic dysfunction-associated steatohepatitis (MASH) in adults with moderate-to-advanced liver fibrosis (consistent with stages F2 to F3 fibrosis) in combination with a reduced-calorie diet and increased physical activity.

NVO shares were up 2.9% on Aug. 15 following the announcement of the news.

The latest FDA nod was based on data from part 1 of the ESSENCE study, which evaluated Wegovy for the treatment of MASH. Data from the same showed that treatment with Wegovy led to a statistically significant and superior improvement in liver fibrosis without worsening steatohepatitis and also helped resolve steatohepatitis without worsening liver fibrosis versus placebo.

Clinical data from the ESSENCE study highlighted the potential of Wegovy in treating MASH. At week 72, 36.8% of patients receiving Wegovy showed improvement in liver fibrosis without worsening steatohepatitis, compared with 22.4% of patients on placebo. Also, 62.9% of the patients on Wegovy achieved resolution of steatohepatitis without worsening liver fibrosis versus 34.3% on placebo.

Per management, Wegovy has now become the first and only GLP-1 therapy approved for MASH, marking a major milestone in liver care. The treatment not only halts disease activity but also helps reverse liver damage, giving patients a much-needed new treatment option.

Novo Nordisk’s success in recent years has been driven by the sales of Ozempic (injection) and Rybelsus (oral) for diabetes, and Wegovy for obesity. The company holds a strong position in diabetes care, with one of the industry's broadest portfolios.

Wegovy is one of the key revenue drivers for Novo Nordisk. In the first half of 2025, Wegovy generated DKK 36.9 billion in sales, up 78% year over year on strong prescription growth.

As of July 1, CVS Caremark, a major pharmacy benefit manager, designated Wegovy as its preferred GLP-1 therapy for weight loss. Wegovy is now approved for reducing major cardiovascular events, easing HFpEF symptoms and relieving osteoarthritis-related knee pain in obesity.

NVO's Competition for Wegovy in the Obesity Space

Eli Lilly LLY is Novo Nordisk’s fierce competitor in the obesity space. It markets its tirzepatide medicines as Mounjaro for T2D and Zepbound for obesity. Despite being on the market for less than three years, both drugs have become Lilly’s key top-line drivers. In the first half of 2025, they generated combined sales of $14.7 billion, accounting for 52% of Lilly’s total revenues.

We note that NVO has already completed a regulatory filing seeking the approval of a 25 mg oral semaglutide for obesity, currently under review by the FDA. A decision from the regulatory body is expected by the end of 2025. Potential approval would give Novo Nordisk a notable advantage as the sole manufacturer of a marketed oral obesity pill, positioning it to capture significant market share and drive ahead of LLY, which is also developing an oral obesity pill.

Several other companies, like Viking Therapeutics VKTX, are also making rapid progress in the development of GLP-1-based candidates in their clinical pipeline. Recently, Viking Therapeutics started two late-stage studies evaluating the subcutaneous formulation of its investigational obesity drug, VK2735. A mid-stage study is currently ongoing, evaluating an oral version of VKTX’s obesity drug, with a data readout expected later this year.

NVO's Stock Price, Valuation & Estimates

Year to date, shares of Novo Nordisk have plunged 39% compared with the industry’s decline of 2.8%. The company has also underperformed the sector and the S&P 500 during the same time frame, as seen in the chart below.

Novo Nordisk is trading at a premium to the industry, as seen in the chart below. Going by the price/earnings ratio, the company’s shares currently trade at 12.75 forward earnings, which is lower than 14.45 for the industry. The stock is trading much below its five-year mean of 29.25.

Earnings estimates for 2025 have declined from $3.98 to $3.89 per share over the past 30 days. During the same time frame, estimates for 2026 earnings per share have declined from $4.57 to $4.24.

NVO's Zacks Rank

Novo Nordisk currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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