Shares of Novo Nordisk experienced a decline of up to 3.5% on Monday following the release of detailed trial data for its experimental obesity drug, CagriSema. The data, which stemmed from two late-stage trials in individuals with obesity or overweight and those with type 2 diabetes, showed primarily mild-to-moderate side effects as well as positive outcomes related to blood sugar levels. However, investor skepticism remained evident.
Analysts at Jefferies noted that the updates were “incremental” and raised concerns regarding tolerability, as CagriSema was found to cause slightly higher rates of nausea compared to both Novo’s successful obesity medication, Wegovy, and Eli Lilly’s competing therapy, Zepbound. Additionally, with the expected launch of CagriSema not anticipated until early 2027, investors expressed concerns about the long wait.
Investor sentiment towards Eli Lilly has been bolstered by positive data presented at the American Diabetes Association’s annual meeting that highlighted no safety issues for its oral weight-loss candidate, orforglipron. Analysts are predicting late-stage data for orforglipron to be available in the coming months.
Observations from Markus Manns, an investor in both companies, reflected a significant shift in market positioning. He commented that Novo’s position has transitioned from being a leader in the obesity sector to a “fast follower,” especially considering that the competitive obesity market could potentially exceed $150 billion annually by 2030.
CagriSema was originally promoted by Novo Nordisk as a more effective successor to Wegovy. However, trial results released in December 2024 fell short of expectations, reporting an average weight loss of 22.7% over 68 weeks, lower than the targeted 25%. This disappointment led to a substantial drop in share value, wiping out as much as $125 billion from Novo’s market capitalization.
In light of these developments, Novo Nordisk recently removed its CEO Lars Fruergaard Jorgensen, a decision linked to the company’s challenges in maintaining its first-mover advantage in the obesity medication market. Despite a significant slump of about 55% in shares since a peak in June 2024, there has been an approximate 8% increase in shares since Jorgensen’s departure was announced on May 16.
Overall, while Novo Nordisk faces substantial challenges in the competitive landscape for obesity treatments, there is still potential for recovery and growth as further data emerges and strategies are reassessed.