Novo Nordisk (Ozempic)

Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you?

Is it you? Is it you? Sit me down. Say it straight. Another story on the way. Who got

the truth?

Welcome to season 14, episode one of Acquired, the podcast about great companies and the

stories and playbooks behind them. I'm Ben Gilbert.

I'm David Rosenthal.

And we are your hosts. Today's episode is on the company behind these sensational diabetes

and weight loss drugs, Ozempic and WeGoVie. The company is Novo Nordisk. Now, when I first

learned about Ozempic a few years ago, I thought, of course, this is going to be amazing for

a lot of people and could also completely destroy the market for insulin. Those insulin

companies better watch out.

But here is the fascinating thing, listeners. Novo Nordisk is the company behind insulin,

or at least one of the few big ones. Now, you might say, well, that's OK, because they're

probably a big pharmaceutical company that's, you know, very diversified with lots of different

drugs. Nope. No. Novo Nordisk is unique in that the vast majority of their revenue is

concentrated in the category of metabolic health. They have been the insulin and diabetes

company for the last 100 years. And perhaps even more surprising, this pharma giant is

unique in that they are owned and controlled by a nonprofit foundation. The stats around

weight diabetes and its impact on our society are staggering. There are 38 million Americans

with diabetes. That's one in 10 people. Globally, that number is over 500 million with the disease.

Diabetes costs the U.S. alone more than $327 billion a year. And on the other side of things,

in the weight category, around a billion people suffer from obesity worldwide. A billion,

including 40 percent of the U.S. population. If you expand that from obesity to overweight,

75 percent of Americans are technically overweight. It is really hard to imagine a bigger market

to go after, which is why Novo Nordisk has become Europe's largest company, surpassing

even LVMH last year, David. Yeah, it's wild. I mean, there are no other

disease and drug categories besides diabetes and obesity that this could be possible to

have a company of this size to have a pharma giant pretty much just focused on this one

area like this is the Hermes of the pharma industry. Yeah. So why is today in the early

2020s the moment in human history for these new GLP-1 drugs? Well, the crazy thing is

semaglutide, the molecule in Ozempic and Wegovy, was pioneered back by Novo Nordisk with the first

trial in 2008 for type 2 diabetes treatment. And it was built on research started in the early

90s. But here we are in 2023, almost three decades later, talking about it as a weight loss drug

that sort of magically appeared out of nowhere, or that's at least the public perception of it.

Incredibly, the fact that GLP-1 drugs could be used to reduce food intake was actually

discovered way back in the mid-90s in the first sort of scientific publication about it,

but only in 2021 did we finish the clinical trials that truly show how effective it can be.

And as we'll see, that's just the tip of the iceberg. I mean, this company is 100 years old.

The history goes way back and is way more interesting than I think just about anybody

knows. Yep. Pharmaceuticals is without a doubt the most complex industry that we have ever studied.

So to fully understand Novo Nordisk, we need to go back to a simpler time,

before the Food and Drug Administration, before all this industry consolidation and healthcare

oligopolies, before there were treatments for everything we take for granted today,

antibiotics, vaccines for polio, tetanus, measles, mumps, you name it.

That is where we will start our story. If you want to know every time an episode drops,

you can sign up at acquired.fm slash email. These will also contain hints at what the next episode

will be and follow-up facts from previous episodes when we learn new information.

Come talk about this episode with us after listening at acquired.fm slash slack. And if

you want more from David and I, you should check out our second show, ACQ2, where we interview

founders, investors, and experts, often as follow-ups to the topics on these episodes.

Before we dive in, we want to briefly share that our presenting sponsor this season,

which we are so pumped about, is JP Morgan, specifically their incredible payments business.

Yeah, we'll be talking about them in depth later in the episode, but we've known JP Morgan for a

long time. We both personally bank with them, as does Acquired, but we really uncovered the

breadth of JP Morgan Payments as we went deep into our industry research for our Visa episode last

year. Just like how we say here on Acquired that every company has a story, every company's story

is powered by payments, and JP Morgan Payments turns out to be a part of so many of our Acquired

companies' journeys. And it's not just the Fortune 500. They're also helping companies

grow from seed to IPO and beyond. Yep. We're pumped to explore payments through all these

different industries this season through both a technology innovation lens, but also a business

model innovation lens. Much more ahead. So with that, this show is not investment advice. David

and I may have investments in the companies we discuss, and this show is for informational and

entertainment purposes only. David, where are we starting our story? Well, we start in 1921,

over a hundred years ago, in Toronto, Canada, with the discovery and extraction of the pancreatic

hormone insulin by a laboratory group at the University of Toronto Medical School.

Insulin, of course, as most of you know, regulates the absorption of glucose from the blood into the

body, and it's the main anabolic hormone in most, if not all, animals in the world. Insufficient

insulin production in the body, of course, leads to the disease diabetes. So this group, if you

could call it that, at the University of Toronto, is comprised of the physician Frederick Banting

and the medical student, his assistant, Charles Best, along with a chemist and the head of the

laboratory there, and assistant medical school dean, John MacLeod. Now, there's a whole bunch

of controversy around who actually deserves credit for the discovery of insulin. The historical

consensus at this point, now being that it really was Banting and Best who did all the work, but

nonetheless, two years later, when the Nobel Committee awards them the 1923 Nobel Prize in

Physiology or Medicine for the Discovery of Insulin, it is Banting and MacLeod who get the award,

not Best. This will come back up in a minute. Yeah, and to set some context for the time period

here, 1921, the public is not aware of what insulin is. The public is, however, aware of what type 1

diabetes is. This is the juvenile form of diabetes. Only 5% of diabetes sufferers have type 1 today,

but back then, this was the dominant form of diabetes, and it was families whose kids had a

death sentence, and there was basically nothing that could be done. There were lots of rumors of

people trying to figure out what substances you could inject or eat or anything to cure this

sort of mysterious, horrible way to die. People were so convinced in the late teens and early

20s that scientists were on the verge of a breakthrough that the common wisdom was to

go on a diet of like 200 to 500 calories a day and starve yourself so that you could

live long enough, even though you had a terrible quality of life, you could live the months or a

couple of years long enough when the treatment did arrive to finally get it. I mean, we can't

overstate how important this was and how terrible, awful diabetes was. I mean, it was truly a death

sentence. That treatment that you were referring to, that was the official American and globally

accepted treatment for diabetes, it was literally called the starvation diet, and it was just an

attempt to prolong your life as long as possible, but you are going to die unless a treatment

is found. So when we say that this group won the Nobel Prize in 1923, this isn't just like a Nobel

Prize. This is one of, if not the most important advance in all of modern medicine that they're

discovering here. I mean, we're just not that many decades after snake oil salesmen, patent

medicine. We talked on the Standard Oil episode about John D. Rockefeller's father literally

selling snake oil, and that's just barely in the rear view mirror. This is one of the earliest

breakthroughs in modern science. We were still years away from antibiotics and certainly decades

away from the popularization of antibiotics as a treatment. So this was the big breakthrough.

Yep. All right. So what did Banting and Best do? So scientists had known, even going back to the

1800s, that diabetes was caused by the misfunctioning of some type of hormone that was created in the

pancreas. But until Toronto, nobody had been able to actually isolate what that hormone was, let

alone extract it. And to put a finer point on it, Banting and Best didn't even know what the hormone

was. Even when they did figure out what to extract, they thought it was sort of this soup of

a bunch of different chemicals mixed together. They wouldn't figure out for years and years and

years, oh, this is like one very pure specific hormone that we are isolating here. So by

experimenting with dogs and dog pancreases, they're able to extract something that comes to be known

as insulin. And not only extract it, they then experiment with it and inject it into human

diabetes patients who are at severe end-of-life stages. And miracle, the human body is able to

use this extract from dog pancreases, and these patients have miraculous recoveries.

Yeah. I spent a bunch of time reading this book, Breakthrough, by Thea Cooper and Arthur

Ainsbourg, and they go way into this. Basically, this team was the first one to figure out you

could target the pancreatic islets and isolate the extracts in a relatively pure form, and pure

by their standards, not certainly by today's standards. But you're right, totally crazy

extracting from these dogs and injecting in humans in extremely limited quantities.

Once they figured it out, it was still hard to then go from there to getting it to people

because they're like, well, okay, we did this thing that kind of worked once from one dog

into one person. So where do we go from here? And importantly, this new insulin substance,

while it is a miracle, it's not a cure. Injecting patients with it doesn't magically restart

production of insulin in their own pancreases or cure the disease. It only works until your

body uses it all up, which is pretty quickly. So these diabetes patients, they finally have a new

lease on life, but it's kind of also just that, like a lease. In order for them to survive, they

need to regularly inject an appropriate amount of insulin. And by regular basis, especially in

these early days, that's like every couple hours. And you can imagine the incredible high wire act

in the early days where they've extracted from literally one dog. They've kind of written down

the process. Strangely enough, somewhere along the way, the process was forgotten. Someone else had

to replicate it. And then they took his notes, combined them with the original researchers,

and then figured out a path forward. I mean, we discovered the process for refining insulin

enough to put it into humans and then lost it and then found it again. This was the state of medical

science. And so you have people ringing off the hook, newspapers reporting, the breakthrough is

here, the breakthrough is here. And they've got like single digits or dozens of vials of usable

insulin, each of which need to be injected into a single patient every few hours in Toronto. So

there's not enough to go around. The path forward is super unclear. And this is foreshadowing a

little bit, but the era that we're in here in 1921, there is a firewall between industry and

medical science. And it was perceived to be unethical to make money on taking your medical

breakthroughs and sort of turning them into companies. And so there's this extreme culture

at the University of Toronto around we have to protect anyone from making too much money off

this thing. So we got to be really careful and potentially even slow down its development and be

really thoughtful about how we distribute it to the world so that nobody takes it and makes too

much money. Yeah. Banting and Best and McLeod aren't going to go, you know, today they would

go like start a company, you know, around this, like that's not going to happen back then. But

all of a sudden the world needs a lot of this animal insulin and in a supply chain that can't

go down because once you start patients on this, they need it forever. So what the University of

Toronto does do is they license production and development rights to a large American drug

company based in Indiana, Eli Lilly. And they give Eli Lilly a one year exclusive development license

to try and mass produce this substance. And again, like you said, this is like a big step for the

University of Toronto to do this, but the need in the world is so great that they're willing to work

with industry here. You literally have presidents and secretaries of state trying to call in favors

and successfully calling in favors to get access to the limited vials that the University of Toronto

has. Yeah. Wasn't Elizabeth Hughes, one of these famous first patients, the daughter of the

secretary of state of the U.S. Right. Charles Evans Hughes. Yeah. Yeah. Wow. So it's obviously

not practical or maybe not ethical. That's beyond the scope of this podcast to use dog

pancreases for scaling mass production here. But it turns out there actually is an abundant

ready supply of animal pancreases that happen to be just sort of lying around in the American

heartland and just about every human food production center in the world. And that is cow

and pig pancreases from, you know, all the meat that we eat. Indiana's got a lot of cow farmers.

And so the clever really start up Eli Lilly. I mean, the company had been around for a while,

but this idea of taking on real R&D risk was sort of a new concept. So they sort of start up. Eli

Lilly is going around hiring salespeople to bang down the door of slaughterhouses all over Indiana

and say, hey, I know your waste product includes pancreases. Do you think you could ship those to

us? We'll pay you for those. Yeah. And it's actually not an easy sale because those farmers

are like, it's going to slow down my process if I have to figure out how to separate the pancreases.

And this is already a real tight ship. So there's a real entrepreneurial tale of Eli Lilly sort of

convincing large, large numbers of slaughterhouses to do this. The other interesting thing to note

about the Eli Lilly license, David, which I thought was really clever is it's a one year

exclusive license where there's two conditions and the conditions are a trade. One, Eli Lilly

has to report back any advances that they make to the University of Toronto. It's almost like

Operation Warp Speed going on, kind of analogous to COVID. As they figure stuff out, they have to

share it back with the University of Toronto to improve the manufacturing yields of whoever else

will be developing the drug. In exchange, the thing that Eli Lilly does get to retain and protect on

their own is a brand. Eli Lilly saw it really important early to say, hey, we want to build

a brand around insulin so that people know it's coming from us, that it's of a certain quality.

And even when we lose our one year exclusive license, and even when we stop contributing

the manufacturing IP back to you, the brand actually stays ours.

Yeah. We're going to talk a bunch more about Eli Lilly here as we go, but this moment,

this insulin moment, this is what really turbocharges them and makes them into one of,

if not the first kind of leading American and international pharmaceutical company,

which it still is to this day, still bigger than Nova Nordisk. Although not by too much.

Well, much more diverse, but not too much larger by market cap.

Okay. So back to this whole Nobel prize thing, which as we said,

was awarded to Banting and assistant medical school Dean John McLeod. Now,

how did McLeod end up being the guy who shares the award with Banting and not Best? And years later,

actually, the Nobel committee would basically admit that they messed that up. It turns out

that the answer to that is the key to the first chapter of our story today,

because the actual nomination, I don't know if you knew this, Ben, the actual nomination

for that prize was put forth by a previous Nobel prize winner in physiology or medicine,

the 1920 Nobel prize winner from Copenhagen, Denmark, a animal biologist named August

Crow, who also happens to be the founder of Nova Nordisk.

Is that how Nobel prizes work? A previous winner nominates the current nominees, or is it just like

it certainly helps their case if a previous winner?

Yeah, I do not think it is a requirement, but certainly a previous winner and a recent

previous winner in the same category you would imagine carries a lot of weight.

So the guy who would go on to found Novo Nordisk is the one that nominated

Banting and McLeod for the Nobel prize before starting the company.

Yeah. Now here's the wild thing about August Crow, founder of Novo Nordisk,

the world's premier insulin company focused on insulin and diabetes for 100 years now,

world's premier GLP-1 company. He's not a physician. He's not even a human biologist.

Yeah, he was an animal biologist, right?

Yeah, he was an animal biologist. Fun fact, though, this is maybe my favorite sidebar in

the episode. He studied at the University of Copenhagen. His advisor was a guy named Christian

Bohr, B-O-H-R. That name might sound familiar to some people.

Descendant of Niels Bohr?

Father of Niels Bohr. That Niels Bohr, father of atomic physics, also winner of the Nobel prize,

major contributor to the Manhattan Project. So yeah, his August's PhD advisor was the father

of Niels Bohr. Everybody's winning Nobel prizes. There must have been something in the water in

Copenhagen at that time.

Also, that tells you how long ago this was, that in my head, Niels Bohr is like someone

from a long time ago, so it would be a descendant, but actually this is his father.

Yeah, right, right, right. Okay, so back to August Crow. How the hell does he end up

going to Toronto, getting involved in all of this, starting, you know, Novo Nordisk?

Well, in 1920, the same summer that he wins the Nobel prize, his wife, Marie Crow, is

diagnosed with diabetes. And this starts weaving together this whole crazy chain of events

that leads to, well, Nordisk. Novo comes a little later. Marie herself is actually a

pretty incredible person. She is a physician. So she's the first woman in Denmark to earn

a doctorate in medicine. And Denmark, I kind of suspect, has always been pretty progressive

relative to the U.S., but even still, like we're talking about like the 19-teens, a woman

to earn a doctorate in medicine and then be a practicing physician was obviously unique.

Yes.

So when she's diagnosed in 1920 and, you know, she basically self-diagnoses, she knows

what's going on. Like she and August, like she knows exactly what this means. Like she's

to die. This is horrible. But given that they're both very, very active in the scientific and

medical community in Europe, they are able to get her the best care possible, which at

this point in time in Denmark is a young Copenhagen based physician named Hans Christian Hagedorn,

who is widely respected as sort of the best endocrinologist in town, even though he's

very young and he's up to date on all the latest workings of the starvation diet and

how to maximize quality of life and prolong life as long as possible. Fortunately, Marie

diagnoses herself very early. He puts her on a closely monitored starvation diet and

they stabilize it enough, enough after a year or so. Now, back to August. Ordinarily, you

know, after you win the Nobel Prize, you go on a major international lecture tour. And

of course, he's invited all over the world, particularly to the elite universities in

America, to come give speeches on his Nobel Prize winning research. But because Marie

fell ill at the same time, he had to delay his trip until 1922. So in 1922, August and

Marie set sail for Boston, which is, by the way, amazing that a type one diabetic has

made it sort of this far in life and is in the early 20s doing transatlantic travel.

Totally amazing. So August is going to give a delayed series of lectures here at both

Harvard and Yale. While they're in Boston at Harvard, they meet with a guy named Elliot

Joslin, who he's actually the inventor of the starvation diet. He is like the world's

foremost diabetes physician and researcher at this point in time. And Elliot tells them

about what's going on in Toronto. This is the world that we're living in back then.

News of the discovery of insulin hadn't really yet reached Europe and certainly hadn't

reached Denmark at this point in time. So it was like a competitive advantage to be

a Nobel Prize winner on an international lecture circuit because you got better,

faster information about brand new medical advances. Yes. Well, and particularly competitive

advantage, like life advantage. They're just concerned about Marie's life at this point

in time. So Elliot says, you know, I know the guy who runs the lab up there, John McLeod,

let's write him a letter and see if while you're in America, you can go up and see them and see

the lab, see what's happening and maybe get some of this insulin. So August and Marie write to

McLeod. Marie also writes back home to Denmark, to Hagedorn and tells him about what's going on

and about this discovery of insulin. She suggests in that letter that since Hagedorn is kind of the

leading diabetes physician in Denmark, maybe while they're in Toronto, they might be able to secure

some rights or ability to bring insulin back to Denmark. McLeod in Toronto, he gets the letter.

He's like, of course, come on up. You and Marie both come stay in my personal home. Sadly,

unfortunately, Marie falls ill and she can't make the trip up to Toronto. So August goes alone,

but he stays with McLeod, observes the insulin production process, sees everything that's

happening. They become close and friendly. Most importantly, McLeod takes August to go meet with

the insulin committee and talk about what Marie had suggested to Hagedorn of like, hey, maybe

these are the right people to bring insulin to Europe, essentially, but at least to Denmark.

Now, funnily enough, at this particular point in time, it turns out you actually can't patent drugs

in Denmark. So any blessing or patent licensing from the insulin committee to the Crows and

Hagedorn for Denmark is sort of pointless because it's not legally binding in Denmark anyway.

But the insulin committee says, well, you're really the right people to do this.

How about we give you rights for all of Scandinavia, Norway, Sweden, Denmark? You

have our official blessing and any rights that you need. And this is pretty similar deal that

they cut with Eli Lilly. That was for North America. They basically gave him the same

thing for Scandinavia. Yes. So August and Marie set sail back for Europe. They arrive in Copenhagen.

They go tell Hagedorn the news. Immediately, they all go get to work. And by get to work,

they go buy cow pancreases at the local livestock market in Copenhagen.

This is something. So you read more about the Novo Nordisk history than I did.

Was it cows or was it pigs? Because I know that Denmark has an abundance of pigs,

which actually made it pretty well suited to be an early insulin manufacturer.

Interesting. It was both. I think pigs may have come later, but certainly it was both cows and

pigs that Nordisk and then Novo were using both of them. They were just basically trying to get

their hands on any animal pancreases that they could. Right. If it's got islets, we want it.

Yep. So using the Toronto method, they get a bunch of pancreases. They go to August Crowe's lab at

the University of Copenhagen, run them through a meat grinder, pour hydrochloric acid over them,

they extract insulin, and then they test it on rabbits and mice and they confirm,

yeah, we've got it. This is insulin. Certainly for the first time in Scandinavia. I think maybe

also for the first time in continental Europe, at least insulin is extracted here in Denmark.

So this leaves just one obvious problem, just like insulin in Toronto. This is not going to scale.

Maybe you could do this to treat Marie, but they want to treat the whole country, the whole region.

Right. This is like a very real problem for insulin all the way up until like the 1980s,

which is you are scale constrained by the number of dead animal pancreases you can get your hands

on. I found this wild stat. It takes 8,000 pounds of pancreatic glands from 23,500 animals

to make a single pound of human insulin. Yeah, that's wild. To put that in more real numbers,

that means that even by 1980, with all the advances, it took 1 million animals annually

for 30,000 diabetes patients. And there are a lot more than 30,000 diabetes patients in the

world in 1980. And we'll talk about who the pioneers were and how we eventually got out of

using animals to create insulin in the 80s. But that was also the moment in time where type two

diabetes really took off. Yes, you're foreshadowing. It's been a 45 year massive issue. But like,

we basically could not have continued to use animal based medicine to treat diabetes once

it really exploded. Then we're going to get to this in like two hours. Sorry. All good.

So back to the crows and Hagedorn in 1922-23 in Copenhagen, they need to scale production. So

they go to the Löwens Chemiske Fabrik. And I need to like, majorly apologize to all

Yeah, your Danish is amazing. Danish people out there.

I talked to some Danish folks in research for this episode. And thank you very much. And I just,

I need to give up on trying to pronounce things correctly. Stick to French.

We'll stick to French. Yes. But that translates to English as the Lion Chemical Factory. And it is

owned and run by another man named August. August Kongsted. K-O-N-G-S-T-E-D. And so they partner

together. And by the summer of 1923, the very same summer that the Nobel Committee is debating

on the award for that year. And of course, Crow at this point has nominated his buddy McLeod,

along with Banting. By that summer of 1923, the combo of the crows and Hagedorn and the Lion

Chemical Factory have produced enough insulin that they can complete trials with eight human

patients with great success there in Copenhagen. And at this point, H.C. Hagedorn, who remember

was originally Marie's physician to help treat her diabetes, he resigns his medical post and

decides that he's going to focus full time on this project. So the founders are Hagedorn and

August and Marie Crow. And Kongsted from the Lion Chemical Factory. These are the founders of the

project, but there's no Novo Nordisk yet. And we should say around this time, I believe

Eli Lilly was further along in terms of the volume that they had developed. I think they

were making like hundreds of vials a week of usable insulin. Absolutely. Eli Lilly had insulin

on the American market available to patients at this point in time. Yep. All right. So how does

this actually turn into Nordisk? But before we do that, I want to pick up the thread that we left

earlier with our new friends at J.P. Morgan Payments. Yes, we are excited to partner with

J.P. Morgan Payments this season and discuss all the ways they are helping businesses grow and

innovate across a broad industry landscape. So whether it's a startup that needs merchant

acquiring, which you now know what that is from our Visa episode, or a company building a new

multi-sided marketplace, or even a business expanding across borders and having to manage

the complications of cross-border treasury and FX, the more we dug into the industry and the more we

got to know J.P. Morgan Payments, the more we realized how relevant it is for founders, CEOs,

and operators to be thinking about how to leverage payments as a source of revenue.

Yep. If you think about it, there are whole companies and industries that couldn't exist

a decade ago without today's modern payment infrastructure. It's become central to businesses

with modern product experiences like ride-sharing, the creator economy, or B2B use cases like SaaS

marketplaces or managing supplier relationships. For those types of companies, payments literally

is their business. Yet, thankfully, they don't need to go it alone. J.P. Morgan Payments has

been pioneering in this industry for decades. I mean, they're J.P. Morgan. They move $10 trillion

a day. Yes, that is trillion with a T, and you can literally never outgrow their capabilities.

Like we said for us at Acquired, the peace of mind of having a single innovative banking and

payments partner for the long-term is pretty powerful. Yep. So let's look at the healthcare

industry through the lens of payments. There are multiple ways of innovation on the horizon with

telehealth, preventative treatment, and new clinical trial processes. Seamless and secure

payments are critical to the improvement of patient experience in unlocking innovation

for businesses and providers. When you zoom out this complicated ecosystem of payments,

healthcare providers, insurance networks, specialists, health monitoring services,

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under what terms, and then you layer data privacy requirements on top. You can understand why there

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why J.P. Morgan Payments' array of products, including their healthcare solutions and

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seamlessly. J.P. Morgan Payments believes that no matter where your business falls on the care

continuum, better payments can help healthcare companies deliver better care. Yep. Some of our

listeners may have attended J.P. Morgan's healthcare conference earlier this month in San Francisco,

so if you did, let us know in the acquired Slack. Dave and I are curious what your takeaways were

from the state of the ecosystem. To learn more about J.P. Morgan's end-to-end payment solution

and how they could be used in your business today, head on over to jpmorgan.com slash acquired,

which just feels good to say. I know. Stay tuned to discover how they're accelerating innovation

across all the industries we are covering this season. Okay, so David, the founding of Nordisk.

How does it happen? So the Lion Chemical Factory at this point has established a new production

line for insulin, but it's unclear do they own this production line? Did the Crows? Does Hagedorn?

Is the University of Toronto involved? Crow and Hagedorn are sort of consulting on it. When Hagedorn

makes this decision to go full-time, what actually happens is he becomes an employee of Lion Chemical,

which isn't really what he wants. August Crow steps back and he returns to his other research

at the University of Copenhagen. But once insulin starts rolling off the line later that summer,

under the brand name Insulin Leo, like, you know, Lion Chemical Factory, they use the brand name,

and that would continue to be Nordisk's insulin brand name for the next 60 years, I think. Wow.

Pretty quickly, demand is just off the charts. And they are, like we talked about, essentially

the first mover in continental Europe. So there's a pretty enormous opportunity here.

So in 1924, Crow, Hagedorn, and Kongstad, who owns Lion Chemical, they all come to an agreement.

They're going to set up a new, independent, and self-owning institution to produce and distribute

this insulin throughout Europe. Yeah, what does that mean? Still not a company. Because other than

Kongstad from Lion Chemical, Crow and even Hagedorn at this point, they're not particularly

commercially minded. No, it's a biologist and a physician. Yes. So what they do is they set it up

as an operating company, because that's what they have to do to have employees and make sales and

whatnot. But this operating company is 100% owned and controlled by a foundation that they also set

up. And the three of them are going to be board members of this foundation, and Hagedorn is going

to run it day to day. This is really important to know and really crazy how much this impacts

the future. This is still the corporate structure of the largest company in Europe, and we're going

to get to this hours from now in Playbook, but this governance structure massively affects the

incentives and the way that this company ends up developing products going to market with them.

The future blueprint of the next 100 years is laid right here in this corporate structure.

And foreshadowing, there is a moment much later in history where, absent the control of this

foundation, Novo Nordisk would have ceased to exist. It is only because of this structure

that Novo Nordisk survived and that we have GLP-1s in everything we have today.

It's fascinating. By the way, this is not that uncommon in Danish companies. Lego, same structure.

Maersk, the shipping company, same structure. Well, I dug into this a little bit. Yes, this is a very

common structure in Denmark, mostly for tax reasons, because Denmark has very, very high

taxes. This is a common generational transfer mechanism. Later, we'll talk about Novo in a sec.

Novo actually has this type of structure that you're talking about. The Nordisk foundation is

not just a foundation of convenience. It really is a charitable foundation with a dual mission.

They give it two missions. The first mission is to produce insulin and sell it, A, at cost

in Scandinavia, in the original territory mandate, in order to maximize access and

humanitarian and public health benefit. B, though, export it elsewhere in Europe and around the world

at market prices and use the profit from those exports to fund further diabetes research and

development. No profits allowed in Scandinavia. Profits are allowed from export activities,

and then all of those profits, literally by contract, get shipped 100% to the foundation

to then be used for grants and research about diabetes and supporting diabetes patients in

Scandinavia. Fascinating. I did not know that. Totally fascinating. More or less, as you said,

that is the same mission and structure that is still in place today. It's obviously changed

a little bit. Yeah, there's some caveats that I'll get to when we get to today.

Yes, the operating company is now publicly traded, but still that foundation controls 77%

of the voting shares of Novo Nordisk and 28% of the economic shares. Yeah, so no shareholder

activism in this company, or at least no one's effective in doing so. Yes. So the name that they

choose for this new institution or really dual institution is, fittingly, Nordisk Insulin,

which Nordisk in Danish means Nordic Insulin. It's the insulin manufacturer for the Nordics.

Very creative. Very creative. So you're listening here, you're probably like,

okay, that's Nordisk. What's the Novo piece of this? Well, it turns out that that is quite the

story too, because among the very first employees of the insulin project, even before Nordisk gets

created, are two brothers, Harald and Torvald Pedersen. And the Pedersens, you got to remember

the time we're in, they're sort of like prototypical 19-teens, 1920s kind of engineers

and tinkerers. We're not that far removed from like the Wright brothers and Henry Ford and that

kind of stuff here. They're like kind of cast from that mold. So the older brother, Harald,

he had been working in August Crowe's lab, doing all the mechanical engineering stuff to carry out

the experiments. Like you need to build devices and contraptions and set up experiments. And so

Harald was in charge of doing that. Once the insulin project gets going, Harald naturally

sort of shifts over and he's the one going out and building and buying and modifying like the

meat grinders and figuring out how to pour hydrochloric acid over it in the right way and

all that sort of stuff. When Lion Chemical gets involved in their spinning up mass production,

Harald goes to Hagedorn and August and Kongstad and says, hey, you're setting up an actual

production line. I've got just the guy to help you set it up and run it, my brother Torvald.

Because not only is Torvald a seasoned factory operations manager who's currently running a

soy factory, he is also trained as a pharmacist and studied chemistry. He's like the perfectly

qualified person to be like an early employee of this new operation. Except it turns out

there's just one problem. Hagedorn thinks he's in charge and Torvald, who's just been hired,

thinks, hey, I know what I'm doing here. I'm in charge. Like Hagedorn, you're this pompous

physician. Like what do you know about running a factory? So this schism happens like in the first

year of Nordisk's existence? Yes. In the first six months after Torvald is hired, he and Hagedorn,

they're constantly fighting. One day they get into a huge, huge argument and Hagedorn fires him.

Six months in. Guess we know who's in charge. Yeah. When that happens, Harald, the older brother,

resigns in solidarity and they're super pissed. They go to see Crow and they're like, hey,

you know, August, I've been working for you for a while. Like clearly we know what we're doing here.

Why is this happening? And Crow sides with Hagedorn. He's like, no, no, he's my guy. He's

Marie's physician. He's going to run this thing. So they say, well, all right, fine. You know,

as you know, here in Denmark, you can't patent drugs. Oh, that's why this is important.

We're just going to go down the street and make insulin too. And the legend has it

that supposedly August looks at them and replies, but you're not capable of that.

To which Torvald yells at him, we will show you. And they storm out of the building and go down

the street and they found a new insulin company, a Novo insulin company there in Copenhagen,

insulin Novo. And that is the beginning of Novo. And for the next 65 years, these two companies

would compete in blood sport, head to head, hated each other, absolutely hated each other

until they finally merged in 1989. Crazy. Yep. Now this is such a key part of the Novo story

that certainly, you know, Crow, but then Hagedorn develops into this amazing scientist,

as we'll talk about the advances that Nordisk is able to bring to market in the science of

insulin and diabetes is huge, but certainly without the like bitter competitive motivation

from down the street, I don't know that they would have moved as fast. And, you know, Novo

ends up building its own scientific research capabilities. And like these two companies in

this unlikely small country in Northern Europe end up leading maybe the most important drug

development of the 20th century. It's amazing. I mean, it's the local and bitter competition.

It's Ferrari and Lamborghini. It's Aldi and Trader Joe's. It's Adidas and Puma. You sort of create

the seeds of competition early and you can really infuse that into a company's DNA for decades.

So I think it's worth a quick pause here. We've already talked about some of this,

but just to clarify why diabetes and insulin is such a interesting market and large market

potential, you know, one, even with just type one at this point in time, it's still a very

large and widespread disease in the world. So it's kind of a large patient and potential

patient market size, but two, unlike many other diseases and drugs for those diseases,

you know, it's chronic, you don't cure it. So what insulin is doing is it is enabling

these diabetes patients who often are diagnosed as children to live essentially normal long lives.

So you're talking about decades, 40, 50, 60, 70, 80 years of patient lifespan here,

where they are injecting insulin daily, if not, you know, in most cases, multiple times daily.

There's basically nothing other than food that you can sell someone for their entire life.

But for diabetics, insulin absolutely has that scenario with a customer.

Yep. And there's also kind of another aspect that makes it particularly interesting commercially,

which is there's also a motivation to constantly improve the insulin product. It's not like

insulin is insulin is insulin. There are so many new products and improvements,

both in the drug itself, but also in the delivery systems. I mean,

this early insulin, as we've alluded to a little bit, it was barbaric by modern standards. Like,

yes, it saved the lives, but it didn't last very long. So you had to inject a lot of it

very frequently. It wasn't super clean. There are tons of impurities in it. So there's swelling,

there's infections. There's allergic reactions to all the impurities.

Totally. It wasn't shelf stable in liquid injectable form. This is wild. I don't know

if you knew this, Ben. No. So everything we're talking about in these days and what Nordisk was

originally producing were insulin tablets, solid insulin tablets. Now, until recent times,

you can't take insulin in tablet form. It doesn't get absorbed by the gut. You have to inject it.

So what patients had to do was take these solid tablets, dissolve them in sterilized,

boiled water, measure and draw that solution into a syringe themselves.

Like a glass syringe with a big needle. No pens. None of this fancy stuff we have today.

Yeah. Big-ass needle. So now you've got patients doing this multiple times a day,

and it's really important that they get the right amount of insulin for them.

This makes it really hard. Yep. And there's no measurement. I mean,

there's no one-touch pinprick. We get to see what your blood sugar content is right now.

We're so far from that existing that you are guessing. You're throwing darts.

Totally. And actually, it's kind of a side note to the story, but

it's Novo in the 1980s that invents the insulin pen.

Oh, I didn't realize that wasn't Nordisk, but Novo.

Yeah. Novo invented the pen and Nordisk focused on pumps, and they were one of several companies,

but one of the leading companies innovating in pumps.

I see. We should say, listeners, and David, you know this, this is a topic that is super

personal to me. A huge number of my family members are diabetic and actively suffer from

the complications and actively benefit from all the advancements in it. And so this is something

I've just had present around me my entire life with family members, as I'm sure many of you have,

too. I'm quite certain that almost everybody listening right now either is diabetic themselves

or has a close family member who is- Or is pre-diabetic. When I was doing research

for this episode, one of the people I talked to, and we'll thank a bunch of folks at the end,

but pointed out, we're all pre-diabetic in some way. And it's basically like the idea that, look,

your A1C levels, if you live long enough, will eventually enter diabetes territory,

especially with the food system today and all these foods engineered to leave us very unsatiated.

All of our natural inclinations that we had as hunter-gatherers and farmers and, you know,

imagine the paleo life long ago. All the things that served us evolutionarily to stay alive

are now the very things that are killing us. So everyone's on the path. It just depends how

long you live. We also weren't really designed to, you know, live this long either. Well,

careful with the word design, David. So when NOVO gets established, this starts the competitive

race that really leads to 100 years of R&D pipeline that changes all this. So the Peterson

brothers, they know right off the bat, they can't really just go clone what Nordisk is doing. I mean,

technically, legally, they can in Denmark, but what physician and what patients are going to buy

NOVO insulin when right down the street, you've got Nordisk, which has a Nobel prize-winning

scientist, the best diabetes endocrinologist in Denmark running it, and the explicit blessing

of Toronto and the insulin committee. If NOVO just sells the same thing, like nobody's going

buy that. But they do have a pretty significant advantage that Nordisk doesn't have, which is

they've got their engineering and tinkering skills. So they go to work and pretty quickly, actually,

they come up with shelf-stable liquid insulin. So what I was just talking about, about how Nordisk

produced these tablets, you had to boil them, NOVO comes out with liquid insulin. You don't have to