Novo Nordisk shares plunge 20% after disappointing test results; Lilly jumps

Shares of the Danish pharmaceutical giant Novo Nordisk fell about 20% on Friday after reporting results from a late-stage trial for its experimental weight-loss drug CagriSema that fell short of expectations.

The maker of the wildly popular obesity drug Wegovy said its new drug candidate helped patients reduce their weight by 22.7%, below the 25% it previously predicted, according to CNBC.

Shares of rival obesity drug maker Eli Lilly rose more than 5% in early trading.

The study results represent a setback to expectations that CagriSema could become a next-generation obesity drug. The two-drug injectable treatment combines semaglutide, the active ingredient in Wegovy, along with the amylin analogue cagrilintide, a new form of weight loss treatment.

However, in comments to CNBC, Novo said that CagriSema outperformed Wegovy in weight loss and that its performance was “on par with best-in-class treatments.”

“We are encouraged by CagriSema’s weight loss profile, demonstrating superiority over semaglutide and cagrilintide monotherapy in the REDEFINE-1 study. 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, according to a separate press release.

“With the findings from the REDEFINE-1 study, we plan to further explore the additional weight loss potential of CagriSema,” he added.

The phase 3 study was based on around 3,400 people with obesity or overweight with one or more comorbidities and took place over a period of 68 weeks. It followed a flexible protocol, meaning patients could change their dosage during the study. In the end, only 57.3% of CagriSema-treated patients received the highest dose.

Novo said initial and complete results will be presented next year and that regulatory submission of the drug is expected by the end of 2025. Results from a second phase 3 trial, REDEFINE 2, based on adults with type 2 diabetes who are either obese or overweight are also expected in the first half of next year.

Soren Lontoft, pharmaceutical equity analyst at Sydbank, told CNBC that Friday’s stock reaction was justified for those who see the market’s future as being driven solely by overall weight reduction.

However, he pointed to increasing segmentation within the market – including those who cannot tolerate traditional GLP-1 supplements and those who prefer less weight loss – and that some people are more drawn to alternative options.

“If you believe that the obesity market in the future will be defined by a portfolio of drugs that address different needs, then you shouldn’t be surprised by this data,” he said by phone.

In a statement Friday, JP Morgan acknowledged that while the results were disappointing, the company continued to see great potential for the emerging amylin analogue drug group as the next phase of obesity treatment.

“Although overall weight loss for the CagriSema combination fell short of expectations, which may be due to patients lowering their dose for the combination, we believe the key data from Amylin Mono show efficacy as expected and good tolerability represents a validation of Amylin Mono as a drug treatment approach,” the analysts wrote.

They added that the results supported similar amylin analogue drugs from competitor Zealand Pharma, whose treatment they described as potentially more effective than CagriSema. Zealand CEO Adam Steensberg told CNBC in October that its drug petrilintide was its “crown jewel” and that the company was looking for a partner to bring it to market.

JP Morgan said it now expects to partner with Zealand Pharma as early as next year.

This comes at a time when competition in the weight loss drugs market continues to intensify with more players joining the fray due to increasing demand.

Earlier this month, Novo suffered another setback when a head-to-head clinical trial showed that Eli Lilly’s Zepbound resulted in better weight loss compared to Wegovy.

The study, sponsored by Lilly, showed that Zepbound helped patients lose an average of 20.2%, or about 50 pounds, after 72 weeks, while Wegovy helped them lose an average of less than 13.7% over the same period. Novo said at the time that it was waiting for full data.