Novo Nordisk's Next-Gen Diabetes Candidate Could Challenge Ozempic -- Is the Stock a Buy?

Novo Nordisk (NYSE: NVO) is under attack. Although the Denmark-based drugmaker is a pioneer and leader in the GLP-1 diabetes and weight loss drug markets, countless companies are trying to steal its lunch. It's no wonder: Ozempic, a diabetes medicine, and Wegovy, a weight loss therapy with the same active ingredient, have both seen incredible success. Challengers were bound to rise, eventually. However, Novo Nordisk is also working on potential successors for these successful brands.

One of the company's leading candidates arguably looks more promising than most candidates being developed by its peers.

Better than Ozempic and Wegovy?

The active ingredient in Ozempic and Wegovy is semaglutide. The only difference between the two brands is the dosage. Both work well for their respective purposes. That's why their sales are growing rapidly. In the first quarter, Ozempic's revenue came in at 27.8 billion Danish kroner ($4.1 billion), an increase of 42% year over year. Wegovy's revenue of 9.4 billion DKK ($1.3 billion) soared by 106% compared to the year-ago period.

But what if Novo Nordisk could market a therapy that's even more effective than these two? Enter CagriSema, an investigational diabetes and obesity medicine the company is testing in phase 3 studies.

CagriSema is a combination of semaglutide and another compound called cagrilintide. Both are effective at treating diabetes and helping patients lose weight. There is clinical evidence that combining the two increases efficacy. Here's some of this evidence: In a phase 2 study in people with type 2 diabetes, Novo Nordisk pitted CagriSema against semaglutide and cagrilintide. After 32 weeks of treatment, CagriSema proved more effective at reducing blood glucose levels and weight than its individual components, semaglutide and cagrilintide.

The design of this study is important. While other investigational medicines have produced results that seem as good or even better than semaglutide's, they haven't generally been in clinical trials where they are pitted against it. CagriSema went up against semaglutide in the same study and performed better. True, that was a mid-stage trial. CagriSema will have to pass late-stage studies. But things look promising. How will the investigational medicine perform on the market if it is approved? It's hard to say at this point, but there are some estimates.

The research company Evaluate Pharma projects that CagriSema could generate $20.2 billion in revenue by 2030, giving it a net present value of $80 billion. For context, Novo Nordisk's total sales last year came in at 232.3 billion DKK ($34 billion), an increase of 31% year over year. In other words, CagriSema could be yet another massive growth driver if it is approved.

Looking at the bigger picture

CagriSema isn't the only promising candidate in Novo Nordisk's pipeline. It isn't even the only one in this area. Even though the competition in the GLP-1 market is heating up, the pharmaceutical giant has more experience developing medicines in this field than any other company. Success breeds more success. That's why many drugmakers specialize in specific therapeutic areas. Diabetes and obesity are Novo Nordisk's domain. Other than Eli Lilly , no company has been able to pose a significant challenge, at least not yet. But Novo Nordisk is also hedging its bets by developing medicines in other areas.

The company's phase 3 pipeline features investigational medicines against hemophilia, sickle cell disease, and Alzheimer's. Elsewhere, Novo Nordisk is ramping up investment in technology through its parent company, the Novo Nordisk Foundation, which is helping build an AI supercomputer in Denmark . The goal is to help accelerate medical research. The drug development process is currently incredibly slow. Perhaps Novo Nordisk can benefit from technology that will help change that.

Whether or not this project achieves its goal, Novo Nordisk is an innovative giant that leads the most exciting therapeutic area in the pharmaceutical industry -- weight loss -- and is developing medicines in several others as well as its flagship obesity business. It's no wonder the company's stock continues to beat the market. That shouldn't stop anytime soon.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy .