Morningstar

Novo Nordisk: New CEO Executing on Focused Strategy With Akero Acquisition

We think Novo Nordisk stock is moderately undervalued.

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Securities in This Article
Novo Nordisk AS Class B
(NOVO B)

Key Morningstar Metrics for Novo Nordisk

Novo Nordisk NOVO B announced plans on Oct. 9 to acquire Akero Therapeutics and its phase 3 FGF21 analog efruxifermin for USD 4.7 billion upfront and a potential additional USD 500 million contingent value right. The deal is expected to close around the end of the year.

Why it matters: As the first acquisition under new CEO Mike Doustdar, the Akero deal fits with Novo’s narrowed focus on cardiometabolic disease.

  • Efruxifermin is in phase 3 development for treating patients with metabolic dysfunction-associated steatohepatitis. As 80% of MASH patients are also obese or overweight, we see potential for Novo to combine efruxifermin with GLP-1 therapy Wegovy, which was just approved for MASH in August in the US.
  • The class of FGF21 analogs has been sought after in recent months. GSK closed a deal, up to USD 2 billion, for Boston Pharmaceuticals’ efimosfermin in July, and Roche announced an acquisition, up to USD 3.5 billion, of 89bio in September, which brings the other two advanced FGF21 programs into the arms of large pharma firms.

The bottom line: We’re maintaining our DKK 458/USD 71 fair value estimates for wide-moat Novo Nordisk after incorporating this acquisition into our model.

  • We think efruxifermin has a solid, leading position in the MASH pipeline, and if approved, will likely improve efficacy for patients with F2-F3 fibrosis, or moderate to advanced stages of liver scarring, and potentially provide a first-to-market treatment for F4 cirrhosis, the most advanced stage.
  • We assume phase 3 data in 2027 could lead to approval in 2028, and with 16 million Americans with F2-F4 disease, we expect this to further extend Novo’s position in MASH to more advanced patients. We assume combined MASH sales from Wegovy and efruxifermin of more than USD 2 billion by 2034.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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