Novo stock drops 15% as obesity drug falls short in key trial

Shares of Novo Nordisk fell sharply after the company said its next-generation obesity drug CagriSema delivered weaker weight-loss results than a rival treatment from Eli Lilly and Company.

Novo said on Monday that patients treated with a standard dose of CagriSema achieved average weight loss of 20.2% after 84 weeks, compared with 23.6% for Lilly’s tirzepatide.

Following the announcement, Novo shares plunged as much as 15.4% in Copenhagen trading, while Lilly shares rose as much as 4.2% in premarket US trading.

Although Novo said the trial showed that CagriSema appeared safe and well-tolerated, market reaction reflected disappointment over its relative effectiveness.

Primary endpoint missed

Novo said the trial failed to meet its primary endpoint of demonstrating non-inferiority in weight loss compared with tirzepatide after 84 weeks.

The company acknowledged in its Monday statement that CagriSema did not match Lilly’s treatment's performance, marking another setback in its efforts to defend its position in the rapidly growing obesity drug market.

Tirzepatide is the active ingredient in Lilly’s blockbuster medicines Mounjaro and Zepbound, which have overtaken Novo’s semaglutide-based drugs Ozempic and Wegovy in US prescriptions.

The latest results could limit CagriSema’s commercial potential at a time when Novo is under pressure to regain lost market share.

Strategic importance of CagriSema

CagriSema has been positioned as a central element of Novo’s long-term obesity strategy, particularly as newer, more powerful treatments enter the market and patents for Wegovy and Ozempic approach expiry.

The injection combines semaglutide with cagrilintide, a compound that mimics the gut hormone amylin.

The combination was designed to enhance appetite suppression and improve weight-loss outcomes.

Colin White, an analyst at UBS, wrote in a note before the results that the base-case expectation was that CagriSema would at least not perform worse than Zepbound.

“The base case for the trial was that the newer Novo drug wouldn’t be worse than Zepbound,” White said.

The outcome, therefore, represents a clear disappointment relative to those earlier expectations.

Management changes and market pressure

The trial setback comes against the backdrop of significant internal changes at Novo.

Over the past year, the company has replaced its chief executive and experienced board-level departures amid concerns over competitive performance.

Former head of international operations Mike Doustdar was elevated to chief executive after the departure of the previous CEO.

Since taking over, Doustdar has announced thousands of job cuts and ordered staff back to the office in an effort to restore performance standards.

He also pursued an unsuccessful bid for obesity start-up Metsera, losing out to Pfizer.

Doustdar has since said Novo will go “very big” in its search for future obesity deals.

Novo shares have fallen more than 58% over the past 12 months, reducing the company’s market value to around $189 billion.

In 2024, the company was briefly valued at more than $600 billion.

The company is also exploring additional trials, including higher-dose combinations, to improve outcomes. Novo said it continues to have high hopes for CagriSema despite the latest setback.

For now, however, the results highlight the growing challenge Novo faces in keeping pace with Lilly in a market where incremental differences in weight loss can have major commercial consequences.

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