Novo Nordisk shares fell on disappointing weight-loss drug trial data

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Novo Nordisk shares fell sharply on Friday after disappointing results from tests of its latest obesity drug wiped about 90 billion euros off the valuation of Europe’s largest company by market value.

CagriSema helped patients lose an average of 22.7% of body weight in a late-stage trial. Novo Nordisk “It’s only slightly better than the results of Monjaro, a competing treatment from Eli Lilly,” he said Friday.

Novo Nordisk was targeting an average of 25 percent weight loss from its new drug.

Martin Holst-Lange, executive vice president of development at the company, said that only 57% of patients 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 in mid-morning trading in Denmark before seeing a partial recovery to trade 20 percent lower, wiping about 90 billion euros from its market value.

Novo Nordisk and Eli Lilly are competing for dominance in a market that has grown sevenfold in just three years to reach $24 billion in 2023, according to data analytics company Iqvia.

Weight-loss and diabetes drugs Wegovy and Ozempic have transformed Novo Nordisk’s fortunes, seeing its value nearly triple in the past five years. Barclays had previously forecast peak sales of $49 billion for CagriSema, in 2038, nearly double Ozempic and Wegovy’s sales forecast in 2025, their peak year.

But before the trial data was published, some investors expressed concern that Novo Nordisk’s valuation was unsustainably high and that the broader obesity drug market might not be as valuable as expected.

Some wondered whether the administration of US President-elect Donald Trump would make the market tougher for weight-loss drugs.

Robert F. Kennedy Jr., Trump’s nominee for health secretary, criticized the use of medications, rather than diet changes, to control obesity.

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

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

Patients who received Monjaro lost an average of 22.5 percent of their weight in phase III trials when taken as part of an improved diet and exercise regimen. Those on Wegovy, also made by Novo Nordisk, lost an average of about 15 percent in similar conditions.

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

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

A trial of 3,417 people taking a weekly injection found that the most common side effects were gastrointestinal, the vast majority of which were mild to moderate and diminished over time.

Novo Nordisk expects to submit an application for regulatory approval for the drug at the end of next year.

Competitor stocks rebounded, with Eli Lilly’s stock rising as much as 10 percent in premarket trading, and shares of biotechnology companies with potential obesity drugs in production, such as Viking Therapeutics, also rose.

Additional reporting by George Steer in London