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Novo Nordisk’s shares took a significant hit on Friday, losing about €90 billion in value, following disappointing results from tests of its latest obesity drug. This drop affected Europe’s largest company by market capitalization.
The drug, CagriSema, showed an average weight loss of 22.7% in a late-stage trial, slightly surpassing the results of Mounjaro, a competing treatment from Eli Lilly. Novo Nordisk had aimed for a 25% weight loss with this new drug.
Martin Holst Lange, Executive Vice President for Development at Novo Nordisk, mentioned that only 57% of patients received the highest dose of the drug. Despite this, he expressed optimism about CagriSema’s weight-loss profile.
During mid-morning trading in Denmark, the company’s shares fell by as much as 27% but later recovered slightly to a 20% drop.
Barclays analyst Emily Field noted that the market reacted emotionally to Novo Nordisk not reaching the 25% weight loss target. This could affect management’s credibility. The company is investigating why many patients didn’t take the highest dose, which could be due to side effects or contentment with their weight loss.
Novo Nordisk plans to conduct a new trial in the first half of 2025 to explore increasing doses for greater weight loss potential.
The weight loss drug market, which expanded sevenfold to $24 billion by 2023, is witnessing fierce competition between Novo Nordisk and Eli Lilly, as reported by data firm Iqvia.
Novo Nordisk’s success with Wegovy and Ozempic has significantly boosted its value over the past five years. Barclays had projected $49 billion in peak sales for CagriSema by 2038, nearly double the forecasted sales for Ozempic and Wegovy in 2025.
However, some investors were concerned about Novo Nordisk’s high valuation and the overall value of the obesity drug market before the trial data was released.
There is also speculation about whether the US administration under Donald Trump will create challenges for weight loss drug markets. Robert F Kennedy Jr., Trump’s nominee for health secretary, has criticized using drugs for obesity control instead of dietary changes.
Novo Nordisk was hopeful that its “next generation” weight-loss drug would lead the market, especially after its shares lagged behind Eli Lilly and following a setback with an experimental weight-loss pill in September.
"CagriSema is really important for us," said CEO Lars Fruergaard Jørgensen in November. "It’s a next-generation product with the potential to be best in class."
Patients using Mounjaro, known as Zepbound in the US, lost an average of 22.5% of their weight in phase 3 trials when combined with a healthier diet and exercise. In similar conditions, those on Wegovy lost about 15%.
About 40% of participants in the CagriSema trial achieved a 25% weight loss over 68 weeks. CagriSema combines semaglutide, the active ingredient in Wegovy and Ozempic, with cagrilintide, a hormone that enhances fullness.
The trial involved 3,417 participants who received weekly injections. The most common side effects were gastrointestinal, mostly mild to moderate, and decreased over time.
Novo Nordisk plans to seek regulatory approval for the drug by the end of next year.
Following these developments, shares in competing companies like Eli Lilly saw an increase, and biotech firms with potential obesity drugs in the pipeline, such as Viking Therapeutics, also experienced a rise.
Additional reporting by George Steer in London
