BiQ: Notes on Novo-Nordisk from BiQ Chat 04/06/26

I've had a few questions from subscribers about my thoughts on Novo Nordisk. As chat members are aware, I recently took a meaningful long position in the company. The information below is taken directly from the BiQ chat room, as I thought it might be helpful to other subscribers interested in the name. Note that this is not meant to be a comprehensive article or thesis for NVO, just thoughts shared previously in chat.

Posted 03/26/26 2:18PM

The chart below shows the core valuation metrics I'm looking at for NVO. It's not much different from what you can find elsewhere. Just for kicks, I've also added a comparison to LLY; however, one should be careful about making a direct comparison, as these are two very different companies with different pipelines. However, I think it's safe to say that a large part of LLY's valuation is being driven by optimism around Orforglipron.

To start with, NVO's valuation looks very attractive to me, with the P/E of between 10-11 sitting at historic lows, and with a TTM EV/CFO of under 10, and this is excluding the effect of the roughly $4.2B one-time bump NVO expects to receive in 2026 from the reversal of the 340B rebate provisions. Also, NVO spent several billion dollars in one-time costs in 2025 on manufacturing expansion and clean-up. Some of this hit FCF, but I believe a chunk of it also hit CFO; so again, I expect the EV/CFO net of these one-time events would probably look even better than it does in the chart above. Regardless, under 10 remains very attractive, even if we ignore the one-time adjustments.

LLY's Zepbound gained significant market share in 2025 due to manufacturing and supply issues at NVO. While only time will tell for sure, my take is that these issues are largely behind the company heading into 2026, as further evidenced by NVO's deal with HIMS, which suggests NVO and HIMS are reasonably confident about supply.

Oral Wegovy has become one of the most successful drug launches in history. However, my take is that the market is expecting LLY's oral Orforglipron, once launched, to take significant market share from oral Wegovy. I don't think that's true for a few reasons:

1. The market, with TAM penetration below 20%, is more than large enough for both companies.
2. The Lilly Pill's primary advantage is that it can be taken with food. I agree that the dosing convenience is a differentiator, but I don't think it's a Wegovy-killer.
3. The biggest point I think the market is overlooking is that Wegovy, in both oral and injectable formulations, is the only weight loss drug that currently carries a label for cardiovascular risk reduction. Zepbound (injectable) is expected to receive label expansion in 2027. Orforglipron's MACE trial won't read out until 2030. Orforg also increases bpm, which is a risk factor for patients already at high CV risk (which represents 90% of the obese population). Insurance providers and Medicare will only cover cardiovascular risk reduction, not weight loss. This means that patients who want reimbursement have only one option: Wegovy.

There's a lot more here, and we haven't even gone into NVO's other pipeline assets, but this post is getting pretty long, and I think I've touched on the main points. Again, all of this is just my opinion, so please do your own research.

Posted 03/26/26 2:27 PM

Just a couple other quick points I forgot to mention above:

• NVO does have some disadvantages. Wegovy's manufacturing costs are significantly higher than LLY's for Orforg, which probably means a 15-20 point advantage for LLY in gross margins, and also makes Orforg easier to scale.
• Finally, while I think NVO has mostly addressed its manufacturing issues, this still remains to be proven. As for the generic competition issue, I think it will affect NVO and LLY equally, so I don't consider it NVO-specific. IMO, the market won't pay a materially higher price for Orforg's dosing convenience just because it still has patent protection. This forces LLY to compete with NVO directly on price, regardless of IP status.

Please refer to the BiQAP Live spreadsheet on the Active Portfolio page or the iQCS for additional information.

NVO share price at time of publication: $36.67
BiQ ACB: $30.89

Please note that the BiQ ACB includes any open options positions, which are accounted for using a "worst case scenario" assumption, plus trading profits (and losses) around my core position.

Not a BiQ Premium member, or have a friend who may be interested? Try BiQ Premium for $50 per month, or $375 (25% off) for the first year.

Biotech iQ is 100% subscriber supported. If you find this information helpful, please spread the word. You can also follow me on X @ Biotech iQ (_Biotech_iQ).

Biotech iQ is not an investment professional, and nothing on this page or this website should be considered investment advice. Please consult with a licensed investment professional as necessary. Past performance is not indicative of future results.