Novo Nordisk Stock Plunges After Disappointing Obesity Drug Data

Shares in Danish drugmaker Novo Nordisk NVO, known for its blockbuster drugs Ozempic and Wegovy, fell roughly 18% on Friday after the firm released the results of a clinical trial for the experimental obesity drug CagriSema.

CagriSema helped patients lose an average of 22.7% of their body weight in a late-stage trial, missing the goal of 25.0%. The result was only marginally better than the average weight loss of 20.2% of Zepbound, a rival treatment from Eli Lilly LLY. Lilly stock rose following the news.

“The balance of power between Novo and Lilly in obesity will likely continue to bounce back and forth, based on significant pipeline data from both firms expected in 2025,” says Karen Andersen, director of equity research, healthcare at Morningstar.

The phase 3 study included around 3,400 people with a BMI above 30 or a BMI above 27 combined with some weight-related morbidity.

“The unique design of the Redefine 1 study allowed patients to lower their doses if they encountered tolerability issues, which likely drove CagriSema’s top-line efficacy numbers below Novo’s expectations,” Andersen says. “For Novo, we expect phase 3 CagriSema data in patients with both obesity and Type 2 diabetes, as well as a head-to-head study against Zepbound, could help support future uptake. Promising combination drug amycretin will also have subcutaneous data and could move to pivotal studies.”

Novo Nordisk Valuation

“We’re maintaining our $86 fair value estimate for Novo Nordisk, and we continue to think the firm’s history of reliable innovation and solid pipeline in cardiometabolic diseases support a wide moat,” says Andersen. “Following today’s decline, we think the shares look fairly valued.”