Novo Nordisk shares fall as weight loss trial data disappoints

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Novo Nordisk’s shares fell sharply on Friday as disappointing results from tests of its latest obesity drug removed around 90bn. EUR of the valuation of Europe’s largest company measured by market capitalization.

CagriSema helped patients lose an average of 22.7 percent of their body weight in a late trial, Novo Nordisk said on Friday, only marginally beating the results of Mounjaro, a rival treatment from Eli Lilly.

Novo Nordisk had targeted an average of 25 percent weight loss from its new drug.

Martin Holst Lange, the company’s group director of development, said only 57 percent of patients had received the highest dose of the drug. “We are encouraged by CagriSema’s weight loss profile,” he said.

The drugmaker’s shares fell as much as 27 percent by mid-morning in Denmark, before making a partial recovery to close 21 percent lower.

Barclays analyst Emily Field said the market had an “emotional reaction” to Novo Nordisk not hitting the 25 percent weight loss bar it had set.

“There could be a kind of problem with the credibility of the leadership in not meeting that bar,” she said.

Field added that the company had told her it was disappointed and was trying to figure out why so many patients had not taken the highest dose of the drug. That could be because of side effects or simply that they were happy with the weight they lost, she said.

Novo Nordisk is planning a new trial in the first half of 2025 to investigate how to increase doses and create the potential for further weight loss.

Novo Nordisk and Eli Lilly compete for dominance in a market that grew sevenfold in just three years to 24 billion. USD in 2023, according to data analytics firm Iqvia.

Weight-loss and diabetes drugs Wegovy and Ozempic have transformed Novo Nordisk’s fortunes, leading it to more than triple in value in the past five years. Barclays had previously modeled $49bn. in peak sales for CagriSema in 2038, almost double its sales forecast for Ozempic and Wegovy in 2025, their peak years.

But before the trial data was released, some investors worried that Novo Nordisk’s valuation was unsustainably high and that the broader market for obesity drugs might not be as valuable as expected.

Some have questioned whether incoming US President Donald Trump’s administration will tighten the market for weight loss drugs.

Robert F Kennedy Jr., Trump’s nominee for health secretary, has been critical of using drugs instead of changing diet to control obesity.

Novo Nordisk had hoped its “next-generation” weight-loss drug could lead the way after its shares struggled to keep pace with Eli Lilly, and it suffered a setback from disappointing results for an experimental weight-loss pill in September.

“CagriSema is really important to us,” CEO Lars Fruergaard Jørgensen told the Financial Times in November. “It’s a next-generation product and it has the potential to be best in class.”

Patients given Mounjaro, also called Zepbound in the US, lost an average of 22.5 percent of their weight in phase 3 trials when taken as part of a regimen of improved diet and exercise. Those on Wegovy, also made by Novo Nordisk, lost an average of about 15 percent under similar conditions.

About 40 percent of patients in the CagriSema study achieved a 25 percent weight loss over the 68 weeks.

CagriSema combines semaglutide, the active ingredient in Wegovy and Ozempic, with cagrilintide, another hormone that makes people feel fuller for longer.

The trial of 3,417 people who took a weekly injection showed that the most common side effects were gastrointestinal, the vast majority of which were mild and moderate and subsided over time.

Novo Nordisk expects to apply for regulatory approval for the drug at the end of next year.

Shares in rivals jumped, with Eli Lilly rising as much as 10 percent in pre-market trading before falling back to 4.8 percent higher on the day. Biotech companies with potential obesity drugs in the pipeline, such as Viking Therapeutics, were also on the rise.

Additional reporting by George Steer in London