DAY (4/15) - PRRN CHALLENGE!

 

Hello! I am Priya, and thank you so much for being here! :)

I recently watched the '100 day challenge' to build a career in finance by The Valuation School, and immediately jumped into it. This is a series where for the next 15 days I:

1) 'Pick' a sector

2) 'Read' relevant news articles, annual reports, sector analysis reports etc 

3) 'Report' what I've read

4) Make 'Notes' and see how they evolve!

To make it more interesting I've decided to pick a sector that has always been intriguing to me - the Pharma sector. I've picked 3 companies for my reference - Eli Lilly, Novo Nordisk, Johnson and Johnson.

A quick disclaimer, none of this should be treated as professional investment advise. Life is all about evolving into the best version of yourself, and I'd like to take you all on this journey of mine. Kindly only read this for gaining some additional insight, and feel free to give me any sort of feedback.

As a writer, I strongly advise you to do your own research as our team cannot assume any liability for your use of this information.

Let's get learning! 

20/03/2025

Hello again!

Quick disclaimer: There are a lot of medical and pharmaceutical terms mentioned below. Kindly note that this blog is simply to reinforce my learning and spread knowledge as needed. I do not have a pharmaceutical background, so kindly make some provision for scientific inaccuracies, which may be possible! :)

Today's reading was a big shift from the usual: I moved onto my second company, Novo Nordisk and read their concalls! This was really insightful and a big opportunity to learn!

About Novo I learnt they are a big name in branded obesity medication! They're pretty much a market leader everywhere and are close competitors to Eli Lilly too! Currently they have more than 64% market share in the GLP-1 based treatments for diabetes (international markets), are even growing in endocrine disease treatments!

Growth rate of Novo Nordisk on a product by product basis in North America and other regions

I learnt that they have 3 developments in pipeline, which was what the first section of their concall (till where I read) mostly focussed on:

                                    

1) Cagrisema: When going through news articles, I read about how Novo's shares have currently slipped down because clinical trials for Cagrisema only indicate about 13.7% effectiveness while the other medications in this category are generally showing more than 20-25% efficacy.

Given that is Eli is a close competitor its shares naturally went quite up. However I was in for a surprise when I read their 2024 Q4 concall because it talked about the exact same drug!

So basically there were 3 trials of this drug last year. The last one of these was called REDEFINE 1 and they basically kept the trial quite flexible by allowing patients to modify their doses depending on how they were feeling and the symptoms they experience. 

With this, 2 subgroups were created: One which consumed the maximum dosage of CagriSema and the other which took a lesser dosage but they would adjust their doses depending on individual patient requirements.

The results however was a big twist: the group that took the max dose only showed 22.2% weight loss while the other group showed 25% weight loss! The R&D director at Novo Nordisk however says that this difference came about because the second group were doing personalized escalations and deescalations of their dosages which proved to be useful.

The markets however did not take this positively since this performance and the performane of current clinical trials, was way substandard compared to Mounjaro.

Still its performance was way better than semaglutides (their own star injections, Wegovy and Ozempic use this compound), and it had a far lesser drop out rate, so it'd be interesting to see where this goes!

2) SEMAGLUTIDE 7.2mg: Semaglutide is already Novo's STAR compound. It's worked BEAUTIFULLY for them. Essentially what I've understood is that Semiglutide 2.4 mg is their key injection Wegovy and a higher dosage is what constitutes Ozempic.

In 2024, they introduced the 7.2mg on a gigantic clinical trial, and about 25% weight loss was observed on average, with no major side effects! 

This is definitely a milestone breakthrough!

                                                       Creator: LEE SMITH 

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Credit: REUTERS

Similarly the concalls indicate a good progress with their amycretin products as well.

SOME NOTICEABLE TRENDS

One of the main advantages of exploring a concall is that the management of a company always seem to have better idea about the external environment and trends that affect their industry, which one cannot decipher via the news alone.

1) Once a week treatments: The branded obesity market has almost entirely began preferring once a week treatments rather than those that are to be used in frequent intervals of time.

I noticed that Novo's injection Saxenda has earned lesser realized prices due to the exact same reason. 

Of course I'm not 100% certain about this, but I'd suspect that Novo is trying to check the efficacy of higher dosages of their existing compounds for the exact same reason? Maybe it will reduce the frequency of usage which is what consumers want?

2) Growth in obesity market: The obesity market has expanded by 119% between 2023 and 2024. Interesting insight - I was randomly discussing my blog with my mom and turns out she has a good number of friends who are already using the Ozempic injections, which just shows the reach!

CREDITS: VECTORJUICE AT FREEPIK

An article from Morgan Stanley goes into beautiful detail about this. They enlist 2 specific factors that companies must capitalize on in order to maximize their potential:

1) Strong supply: TBH all my mom's friends have somehow mentioned to her how tedious it can be to procure weight loss injections. 

Indeed I noticed this trend in Eli Lilly too, where matching the growing demand is a big challenge and it seems to be for Novo as well. Both companies seem to be focussing on acquistions and capacity expansions to overcome these.

2) Ability to reduce other ailments: I was quite pleasantly surprised to read that Ozempic does not just cure obesity, but it targets chronic kidney failure and perhaps even the risk of heart disease (although this was more applicable to Wegovy).

That's the reason why the obesity market has suddenly grown into this undestructibe force - they don't just cure one problem, their formulations target the million others that it eventually leads to. 

This hits close to home since many chronic diseases technically end up leaving their bread crumbs in other parts of the body too, and it's really really sad what patients have to go through with a smile on their faces.

I can understand why this makes them a big hit - when it's not just the primary but all secondary ailments that seem to get a cure, customers are bound to go nuts over it.

MS goes onto say that insurance reimbursements can help to improve accessibility of drugs, and hence we'd be able to better encourage research in these segments. Companies should be encouraged to invest into their discoveries by allowing them longer and better clinical trials for their medicines so a variety of variables may be tested.

KEYWORD OF THE DAY

1) Gross to net sales adjustments: Adjustments due to discounts/rebates/sales returns.

2) CMO: Contract Manufacturing Organizations that are the primary customer in pharma.

NEW KPI'S TO TRACK

1) Discontinuation rate in clinical trials: Can help measure the degree of side effects a drug could cause and estimate how much acceptance a new patient would have of it.

One of the reasons why Cagrisema is still a ray of hope is because its discontinuation rates were very low.

2) No of weekly prescriptions: This measures the number of prescriptions where doctors have presribed a specific medicine.

AND THAT'S A WRAP! SEE YOU ON DAY 5 :))