Novo Nordisk owner readies for big Wegovy windfall

By Maggie Fick

COPENHAGEN (Reuters) -The CEO of Novo Holdings said on Tuesday the controlling shareholder of Danish drugmaker Novo Nordisk is ready for a huge windfall from the runaway success of weight-loss drug Wegovy.

Novo Holdings invests and manages the wealth and assets of the Novo Nordisk Foundation, whose newly bulging coffers could make it a major philanthropist and environmental, social and governance (ESG) investor.

Referring to estimates that Wegovy and other drugs will generate returns of more than $12 billion in the coming years, Novo Holdings CEO Kasim Kutay said: “If these forecasts are correct, that’s a hell of a lot of money coming our way over the next decade and hopefully more.”

He was speaking to a group of journalists in Copenhagen, where the investment company, its owner Novo Nordisk Foundation, and the drugmaker Novo Nordisk are all headquartered. Last month, the drugmaker overtook LVMH to become Europe’s most valuable listed company, worth about 385 billion euros ($403 billion) – more than Denmark’s GDP.

Novo Holdings holds 28.1% of economic (or A) shares and 76.9% of voting (or B) shares in Novo Nordisk, whose share price has nearly tripled since Wegovy’s launch in June 2021, with it and another weight-loss and diabetes drug, Ozempic, driving record profits.

According to Berenberg analysts and Reuters calculations, the Novo Nordisk Foundation will receive about $12.5 billion in returns between last year and 2026 – roughly double its income in 2018-2021, before Wegovy launched in the United States.

The Foundation uses its returns to fund investments made by its wholly owned investment and holding company, Novo Holdings, and to make charitable grants.

After years out of the spotlight – it had only three employees in 2009, compared with 180 now, according to its website – the amount of money now at the Foundation’s disposal could make it hugely influential.

It had 108 billion euros in total assets at the end of 2022, the most recent available data.

Kutay said he believes Novo Holdings’ systems and policies are robust and that he is “cautiously optimistic” it can handle the ferocious growth in its wealth.

“It changes my life a lot. I’ve got to invest that money. It comes with a huge responsibility,” said Kutay, who has led the firm since 2016. He previously worked for investment bank Moelis & Co and U.S. bank Morgan Stanley.

GROWTH

As its wealth grows, Novo Holdings will hire more people, potentially open more offices and expand its geographic presence, Kutay said.

Earlier on Tuesday, he said Novo Holdings had 160 employees as of June but is looking to grow to 180 next year. It has six offices globally, including one that opened in Shanghai earlier this year to focus on investments in China.

It also opened an office in Singapore several years ago, and has U.S. offices in Boston and San Francisco.

Novo Holdings’ total returns of were down 6% in 2022, still outperforming its benchmark and many peers, Kutay said, despite negative underlying market trends.

Booming revenues are also transforming the ambition and size of investments.

For example, the Foundation wants to invest 200 million euros in setting up a vaccines and immunity initiative, which its infectious diseases chief Peter Lawaetz Andersen said would be similar to Norway’s Coalition for Epidemic Preparedness Innovations (CEPI), which helps fund vaccine research.

The plan has not yet been approved by the Foundation’s board, but it would not have been possible without the Wegovy windfall, Andersen said.

Novo Holdings’ early-stage investments team now has $200 million to deploy each year, Soren Moller, who heads the seed division, told Reuters.

That is big for a seed fund, he said, but did not give a comparable figure.

($1 = 0.9542 euros)

(Reporting by Maggie Fick, Writing by Josephine Mason;Editing by Louise Heavens and Catherine Evans)