Novo Nordisk stock and Wegovy, the company's blockbuster weight-loss treatment, are under pressure as compounders chip away at sales of the pharma giant's linchpin drug.
But the Danish drugmaker is eyeing a new arena, a market that could nearly quadruple over the next eight years. On Aug. 15, the Food and Drug Administration approved Wegovy, a weight-loss drug with $8 billion in 2024 sales, as a treatment for metabolic dysfunction-associated steatohepatitis, or MASH. This advanced form of fatty liver disease affects about 5% of the U.S. population.
That's a conservative estimate, says Jason Brett, a principal medical head at Novo in the U.S. By 2033, the market for MASH treatments could be worth $8.38 billion, up from $2.47 billion in 2024, according to Growth Market Reports. Some estimates are even more bullish.
By all accounts, MASH is an incredibly underdiagnosed disease. There are blood and imaging tests that can screen for it. But people generally don't develop any symptoms until the disease has progressed to later stages. By that time, it's too late. They need a liver transplant.
"The whole approach here is we want to find people earlier, intervene earlier and prevent them from progressing to more advanced stages of fibrosis," Brett told Investor's Business Daily. "We do know that about 20% of people with MASH progress to cirrhosis, roughly. So, really, finding them earlier and intervening to prevent that progression becomes very important."
Novo Nordisk Stock: Rivaling Madrigal
Novo Nordisk is joining Madrigal Pharmaceuticals, the first company to win approval for a MASH drug, Rezdiffra.
Madrigal Chief Executive Bill Sibold says MASH has been a "tough disease to crack." Roughly 20 drugs across multiple companies failed in testing. Rezdiffra's launch, though, has been "outstanding," he told IBD. Rezdiffra hit the market in April 2024. It works by activating a thyroid receptor in the liver to break down fat.
In its first commercial quarter, Rezdiffra brought in $14.6 million in sales. A year later, it generated $212.8 million in sales, growing 1,358% year over year.
First-to-market products often have numerous issues, kinks that are generally worked out as newer products hit the market, Sibold said. They can be difficult to tolerate, have inconvenient administration or be less effective than desired. Not Rezdiffra, he says.
"We're launching with a once-a-day pill that's effective, well tolerated and just easy to take, no dose titration, etc.," he said. "To get to build a market from scratch with such a high unmet need and bring in a really optimized profile of a product? I often call it kind of the Holy Grail."
Still Early Days For Rezdiffra
Madrigal is targeting the roughly 315,000 patients diagnosed with MASH and fibrosis levels 2 or 3. In MASH, the level of fibrosis, or scarring, is measured on a scale of 0 to 4. The lowest level means there is no scarring on the liver. Four is the highest, meaning a patient's liver has developed cirrhosis.
But Novo Nordisk estimates there are 22 million people with MASH in the U.S.
It's still early days, says Madrigal's Sibold. At the end of the second quarter, there were 23,000 patients on Rezdiffra.
"We see the market growing for literally decades and that it will be able to support multiple products," he said. "Being the first product with such a good profile, we are extremely, extremely well positioned for long-term growth."
Leerink Partners analyst Thomas Smith expects Rezdiffra uptake will "remain robust" in the wake of Wegovy's approval in MASH treatment.
Targeting The Underlying Cause
Brett, the principle medical head with Novo, estimates one in three people who are overweight or have obesity also have MASH. MASH is caused by the same metabolic dysfunction that leads to obesity, type 2 diabetes, insulin resistance and high cholesterol.
Wegovy "is really targeting some of the underlying metabolic drivers of MASH," he said.
Semaglutide, the chemical backbone behind Wegovy, mimics the GLP-1 hormone to suppress appetite and improve blood sugar markers. It's also approved to lower the risk of heart attack, strokes and other cardiovascular problems. Novo sells another formulation of it for type 2 diabetes called Ozempic.
He notes the most common reason for death in MASH patients is a cardiovascular event, like a heart attack or stroke.
Historically speaking, it used to be quite difficult to diagnose MASH. Patients had to undergo a liver biopsy — a hard sell for someone who isn't experiencing any symptoms of liver disease. Blood tests and imaging scans make this an easier proposition today. Sibold, Madrigal's CEO, says there's a newfound push to test for fatty liver disease in people who have obesity and/or type 2 diabetes.
"It just takes time for people to understand the disease, begin to treat it and then the diagnosis rates go up," he said. "So, that's where we are in this journey."
MASH Awareness On The Rise
Jayne Hornung, chief clinical officer for health care technology firm MMIT, expects Wegovy's newest approval to help drive diagnosis rates for MASH. It's important to note Eli Lilly is testing its competing weight-loss drug, Zepbound, as a potential treatment for the same condition.
"This approval also reframes MASH as a metabolic condition rather than a liver-specific issue, which could encourage broader engagement from primary care and endocrinology," she said in an email to IBD. "Ultimately, Wegovy's presence in the MASH space may not only drive diagnosis rates but also reshape the care pathway for millions of patients."
Sibold, of Madrigal, sees the same. Novo Nordisk is a pharmaceutical behemoth with a market cap around $250 billion and huge resources to invest in educating physicians and patients.
"It's a real market growth opportunity for us," he said. "Education of the market by having another large company — one of the biggest companies in the industry — putting their muscle behind it," is a plus.
Pitting Wegovy Vs. Rezdiffra
But the approval could also challenge Rezdiffra, MMIT's Hornung says. She expects the market to split. Patients with obesity are most likely to receive Wegovy, while lean MASH patients will get Rezdiffra.
"While Rezdiffra has seen strong early adoption and persistence, Wegovy's broader metabolic benefits and existing market presence could divert some patients and prescribers," she said. "However, Rezdiffra's oral administration and liver-specific targeting may still appeal to certain subgroups."
Smith, the Leerink analyst, says drugs like Wegovy will have some room to play in the MASH market, especially where there's a metabolic driver behind the disease. He notes one doctor who oversees a large academic center in the U.S. estimates 80% of MASH patients are in that box.
"He envisions trying (Wegovy) first in this group of patients and reevaluating treatment response at one year, after which he would consider adding on Rezdiffra," Smith said in a client note. "In the 20% of MASH patients with a non-metabolic phenotype, he expects to prescribe Rezdiffra as the front-line agent."
High Discontinuation Rates For GLP-1s
Madrigal's Sibold, though, expects most MASH patients to eventually end up on Rezdiffra. Discontinuation rates are fairly high for Wegovy. The GLP-1 drug class is associated with gastrointestinal side effects, including nausea, vomiting and diarrhea.
According to a May 2024 study published in the Journal of the American Medical Association, about half of patients with obesity discontinued treatment with a GLP-1 drug within a year. Other studies suggest there's an even higher discontinuation rate.
"We think that our profile is really the winning profile," Sibold said. "Even if they started (on Wegovy), the majority of them are going to come to us in the future anyways."
The label for Rezdiffra says its most common side effects include, diarrhea, nausea, itching, stomach pain, vomiting, dizziness and constipation.
Notably, Madrigal is planning to test a pill that combines Rezdiffra with a GLP-1. The company licensed a GLP-1 drug from CSPC Pharmaceutical Group in July and expects to start clinical testing in the first half of 2026. Previous testing suggests just 5% weight loss can help patients with MASH. That's a low bar considering the mid-teens to 20%-plus weight loss seen with other GLP-1 drugs.
Already, about a quarter of patients taking Rezdiffra are also receiving a GLP-1-based drug for weight loss or type 2 diabetes, he said.
"And we think that's going to end up happening more and more," he said. "We want to drive that in the future."
Can Novo Nordisk Stock Come Back?
Smith, the Leerink analyst, estimates the market for MASH drugs will be worth more than $15 billion by 2032. It's expected to benefit from Wegovy's approval, he said.
Wegovy is a highly sought-after drug. Though Novo Nordisk has launched several cash-pay options on its website, the list price — the price before insurance, discounts and other rebates kick in — remains north of $1,300 a month.
Medicare doesn't reimburse patients for weight-loss treatments like Wegovy. But it does cover the drug for patients at risk of a heart attack, stroke or other cardiovascular problems. The approval will likely lead to another Medicare-covered condition for Wegovy.
Smith expects Novo Nordisk to focus beyond specialists, marketing Wegovy to primary care doctors to help drive disease awareness and diagnosis.
"This broader outreach should help expand the potentially addressable market for MDGL, as well as other development-stage MASH companies," he said.
Novo Nordisk Stock Under Pressure
But whether the new approval will give Novo Nordisk stock a lift remains to be seen.
Shares have dropped more than 34% this year after Novo cut its outlook for the year. The company now expects sales will grow 8% to 14% with operating profit rising 10% to 16%.
Novo Nordisk stock jumped nearly 4% on Aug. 18, the first trading day after Wegovy's MASH approval. But Madrigal stock reversed early losses and climbed almost 6%, adding to an impressive run for the month.
Hornung, of MMIT, says Wegovy's approval would unlock "a large new market." But "continued success will depend on payer coverage, real-world outcomes and differentiation from competitors like Rezdiffra and possibly even Eli Lilly's Zepbound."
Meanwhile, Novo Nordisk is running tests to determine how long Wegovy works in patients with MASH. The company won approval based on a 72-week study. Now, it expects to have the results of a 240-week study in 2029.
Novo's Brett notes that, like obesity, MASH is a chronic disease.
"This is a serious and chronic disease that needs chronic and ongoing therapy," he said.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
