Novo Nordisk, the maker of popular weight-loss drugs Ozempic and Wegovy, saw its stock price plummet over 20% after a clinical trial for its new obesity drug, CagriSema, yielded less impressive weight-loss results than anticipated. This significant drop marks the company’s largest single-day decline on record.
The disappointing results stem from a highly anticipated study of CagriSema, a combination of semaglutide (the active ingredient in Ozempic and Wegovy) and cagrilintide, an experimental drug targeting the gut hormone amylin. While the trial demonstrated an average weight loss of 22.7% among participants after a year, this fell short of the company’s projected 25% weight loss target.
Novo Nordisk stock chart showing a sharp decline.
Novo Nordisk had hoped that CagriSema would solidify its leading position in the increasingly competitive weight-loss drug market. The company aimed to surpass the efficacy of its existing blockbuster drugs, Ozempic and Wegovy, with this new combination therapy.
A person holding a syringe and a vial of medication.
However, the trial results suggest that CagriSema may not significantly outperform Eli Lilly’s competing drug, Zepbound (tirzepatide). Zepbound achieved nearly 23% average weight loss in clinical trials and boasts a simpler manufacturing process. Consequently, Eli Lilly’s stock surged over 5% following the news of Novo Nordisk’s setback.
Analysts, such as Geoff Meacham at Citi, view the outcome as favorable for Eli Lilly. Meacham suggests that Zepbound, marketed as Mounjaro for diabetes and Zepbound for weight loss, possesses substantial growth potential due to its high efficacy, low discontinuation rate, and ability to capture and expand market share. Citi maintains a price target of $1250 for Eli Lilly, indicating a significant potential upside.
A close-up of a scale with a measuring tape wrapped around it.
In conclusion, the underwhelming performance of CagriSema in clinical trials has dealt a significant blow to Novo Nordisk, triggering a record-breaking stock decline. Conversely, this development has bolstered Eli Lilly’s position in the weight-loss drug market, signifying a potential shift in the competitive landscape. The trial results underscore the intense competition and high stakes within this rapidly evolving sector.
