Novo Nordisk shares post their biggest loss in more than 20 years due to CagriSema’s results

Novo Nordisk (NVO) reported that its latest GLP-1 product, CagriSema, caused an average weight loss of 22.7%, but that wasn’t enough to convince investors, triggering a sell-off in the stock.

“CagriSema’s weight loss profile encourages us. This was achieved despite only 57% of patients reaching the highest CagriSema dose,” said Martin Holst Lange, executive vice president of development at Novo Nordisk, in a statement on Friday.

The results come from a study of non-diabetic adults with obesity. A second late-stage study for diabetics is underway. Results are expected in the first half of 2025.

Novo was down more than 20% on Friday morning, its biggest loss since 2002. The news from CagriSema boosted rivals like Eli Lilly (LLY), whose shares rose more than 6%.

The results are significantly better than those of the current GLP-1 preparations from Novo, Ozempic for diabetes and Wegovy for weight loss, which cause weight loss of around 15%. But Novo management was bullish on CagriSema and set the bar at 25%.

“This is below the Street expectation of 25% and is more comparable to the approximately 21% for Zepbound. It appears that the protocol for the CagriSema study allowed for flexible dosing, which resulted in only about 57% of patients reaching the highest dose of the product.” / contributed to the average weight loss being less than expected,” JPMorgan analysts wrote in a note to clients on Friday.

The weight loss achieved by CagriSema in Phase 3 trials exceeds the current leading products for Novo, but only slightly exceeds Lilly’s GLP-1 products, Mounjaro for diabetes and Zepbound for weight loss, which produce an average weight loss of 21% – why investors don’t do this impressed.

“The data is well below expectations considering that NVO mgmt. has a weight loss effectiveness of 25%,” Leerink Partners analyst David Risinger wrote in a note to clients on Friday.

JPMorgan analysts also noted in a separate note Friday that Lilly’s candidate Retatrutid, which is in late-stage testing, could further erode Novo’s lead.

“While it is possible that CagriSema may show greater weight loss in new studies that Novo plans to conduct, it will take time to read out this study. Therefore, we see the competitive playing field remaining largely unchanged, at least in the near term (until LLY’s retatrutide PH3 data arrives in 2026, which we believe could show a 25-30% weight loss), the analysts wrote.

In addition, Lilly’s pill candidate is further in the testing phase than other competitors. If the drug orforglipron proves effective, it would further expand Lilly’s leadership position in the weight loss market.

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