Novo Nordisk shares plunge 27% after trial results

Danish pharmaceutical giant Novo Nordisk experienced a significant market setback, as its shares plunged up to 27%, resulting in a staggering $125 billion reduction in market value. The sharp decline followed the announcement of disappointing results from a late-stage trial of their experimental weight loss drug CagriSema.

The drug achieved a 22.7% weight reduction in patients, falling short of the anticipated 25% target. This underperformance dealt a blow to Novo's strategic positioning in the competitive anti-obesity market, where the company has been leading with its successful Wegovy treatment.

While Novo Nordisk executives expressed encouragement about the results and announced plans to explore CagriSema's additional weight loss potential through new trials in 2024, investors responded negatively to the news. The company, which had become Europe's largest by market capitalization, valued at over $460 billion, saw its shares hit their lowest point since August 2023.

The trial, involving approximately 3,400 participants over 68 weeks, revealed that only 57.3% of patients reached the highest dose under the flexible dosing protocol. Novo plans to present complete results next year and aims for regulatory submission by the end of 2025.

Meanwhile, US competitor Eli Lilly benefited from Novo's setback, with its shares rising more than 7% in pre-market trading. This shift in market dynamics follows recent challenges for Novo, including a head-to-head trial where Eli Lilly's Zepbound demonstrated superior weight loss results compared to Wegovy.

Despite the setback, analysts note that the obesity drug market may evolve toward a portfolio approach, catering to diverse patient needs rather than focusing solely on maximum weight reduction.