The GLP-1 (glucagon-like peptide-1) drug market is currently one of the fastest-growing segments in the pharmaceutical industry. Numerous drugmakers, regardless of size, are vying for a share of this field. The GLP-1 field offers vast growth potential, yet individual stock performances are markedly divergent. Novo Nordisk (NVO), as the industry leader, faces near-term headwinds but is poised for a medium- to long-term earnings recovery, supported by the successful launch of oral Wegovy and a robust pipeline. Meanwhile, Kailera Therapeutics (KLRA), a newer entrant with no commercialized products yet, carries higher risk, yet its pipeline candidates, if continued progress is achieved, could offer significant upside.
As the leader in the GLP-1 market, Novo Nordisk has encountered multiple clinical setbacks over the past 18 months. At the same time, intense competition from Eli Lilly (LLY) has also weighed on its financial performance. However, the company may be gradually emerging from its difficulties.
In January of this year, Novo Nordisk launched oral Wegovy in the United States, the first approved weight-loss pill in the country. The product has achieved remarkable success, with over 80% of prescriptions coming from new patients who had never used GLP-1 medications before. Oral Wegovy has surpassed 3 million prescriptions in the U.S. and recently received EU approval, with expectations for strong adoption in the European market as well. Benefiting from this, Novo Nordisk exceeded market expectations in its first-quarter results.
Looking ahead, the company has several highly promising drug candidates in its pipeline that could optimize its product portfolio over the coming years. Notably, Novo Nordisk is developing two triple agonists, drugs that simultaneously mimic the action of three gut hormones. Currently, the best-selling anti-obesity drug on the market, Eli Lilly’s Zepbound, is a dual agonist that activates both GLP-1 and GIP hormone receptors, which partly accounts for its superior efficacy over the original Wegovy. Theoretically, activating three different hormones could further enhance efficacy. UBT251, a triple agonist developed in collaboration with China’s Zhuhai Federal Pharmaceutical International Co., Ltd., has shown positive results in Phase 2 clinical studies.
Leveraging its long-standing leadership in the GLP-1 market, Novo Nordisk is well-positioned to benefit from growing demand for such drugs in the medium term. Although the stock has declined about 29% over the past year, current price levels may offer a compelling entry point for investors.
Kailera Therapeutics went public in April of this year, and its share price has since fallen about 23%. As a biotech company with no products on the market yet, Kailera faces elevated risks, as any clinical or regulatory setbacks could further pressure its stock. However, for investors who can tolerate higher risk and volatility, the stock offers a way to participate in the growth of the GLP-1 market.
Kailera’s pipeline includes KAI-9531, a dual agonist targeting both GLP-1 and GIP, being developed in both oral and subcutaneous formulations. In addition, the company is developing KAI-4729 (a triple agonist) and KAI-7535 (an oral GLP-1 candidate).
The company recently announced positive results from a Phase 3 study conducted in China for oral KAI-7535: after 50 weeks of treatment, subjects experienced an average weight reduction of up to 11.1%, while patients with type 2 diabetes also showed significant decreases in blood glucose levels. Kailera still needs to complete late-stage clinical trials in the U.S. before obtaining marketing approval for KAI-7535, but its overall pipeline outlook appears quite promising.
With a current market capitalization of approximately $2.5 billion, Kailera’s candidates do not need to significantly outperform those of Eli Lilly or Novo Nordisk in efficacy; as long as they achieve a “good enough” profile with a differentiated competitive advantage, the company could capture a meaningful share of the market and deliver substantial returns to investors in the coming years.
