Novo's failure to test a weight loss drug has sparked a sell-off in the Danish market

The maker of weight loss drugs Ozempic and Wegovy - Danish company Novo Nordisk - has admitted that its next-generation weight-loss drug CagriSema has not confirmed benefits over a rival drug from Eli Lilly.

Amid the news, Novo's securities fell 16% in Copenhagen trading on Feb. 23 and were trading at their lowest levels since June 2021, when the company's blockbuster weight-loss product Wegovy was first launched. Depository receipts traded on the New York Stock Exchange also fell 16% on Feb. 23.

Novo Nordisk's CagriSema showed less weight-loss efficacy than Eli Lilly's tirzepatide after 84 weeks of use, Novo said in a statement released the morning of Feb. 23. Lilly's Mounjaro and Zepbound, whose active ingredient is tirzepatide, overtook Novo Nordisk's semaglutide (marketed as Ozempic and Wegovy) in the number of prescriptions in the U.S., CNBC reported.

Patients who took a 2.4 mg dose of CagriSema achieved a 23% weight loss over 84 weeks, which was worse compared to 25.5% with regular use of 15 mg of tirzepatide (the substance Lilly uses in its drugs), Novo Nordisk said.

The trial was open-label, meaning that participants knew exactly which drugs they were receiving and at what point, CNBC points out. This study format may create a bias in favor of a well-known remedy over an experimental therapy, Novo's chief scientific officer Martin Holst Lange told the channel, adding that he was "surprised" by the 25% weight loss rate in people taking tirzepatide. Eli Lilly's own studies in 2022 showed tirzepatide provided a 20.2% weight loss over 72 weeks in obese or overweight people, CNBC reported.

Despite disappointing trial results for a new weight-loss drug released Monday, Feb. 23, Novo CEO Mike Dustdar remained optimistic about CagriSema's potential. "We firmly believe that CagriSema already demonstrates the best weight loss efficacy of any drug on the market," he told CNBC, despite Novo's trial results.

The company is also exploring additional trials of CagriSema, including higher-dose combinations. Novo Nordisk submitted an application for approval of CagriSema to the U.S. Food and Drug Administration late last year, with a decision expected by the end of 2026.

Eli Lilly did not respond to CNBC's request for comment.

Amid the publication of disappointing research results, Novo Nordisk securities reached the lowest level since June 2021 in trading in Copenhagen, CNBC notes. The papers have already lost more than 50% for the year. Also the decline in Novo Nordisk securities caused a shock on the Danish stock market: the Danish blue-chip index OMX Copenhagen 25 Index on Monday, February 23, fell by 3.6%. The Danish krone also weakened on these news, which may indicate capital outflow from the country, Bloomberg notes.

Novo Nordisk was also among the outsiders of the pan-European index STOXX Europe 600. Shares of its Danish rival Zealand Pharma were down 6.7%. "The decline in Novo Nordisk shares has a negative effect on other Danish securities. Foreign investors are probably reducing positions in Danish companies in aggregate," said Nordnet investment economist Per Hansen (quoted by Bloomberg).

Novo Nordisk had a market value of more than $600 billion in 2024, but since then the company has lost about $400 billion in capitalization. As a result, its shares have returned to levels last seen before the weight-loss drug Wegovy turned Novo into the world's most expensive drugmaker, Reuters notes.

Eli Lilly shares added 3.2% in New York trading.

The failure of Novo's CagriSema to demonstrate as much efficacy as Eli Lilly's Zepbound adds to the uncertainty, and the commercial positioning of the drug is becoming less clear, Jefferies analyst Michael Leuchten said, CNBC writes. He said CagriSema could account for 15% to 25% of Novo's revenue by 2030, which "underscores the urgent need for M&A." Leuchten predicts Novo could spend up to $35 billion on such deals this year.

Analysts at JPMorgan said the failed trial results could be a significant blow to the company: it could limit demand for CagriSema, lower long-term sales expectations and make it harder for Novo Nordisk to regain market share in the fast-growing obesity drug market, Reuters wrote. "While CagriSema may be a new therapy option for patients, the loss of the drug to Zepbound means it is unlikely to help Novo regain market share in the obesity treatment market," they said.

Of the 23 analysts covering Novo Nordisk securities, 12 advise buying them, ten recommend holding them in a portfolio, and only one recommends selling them.

This article was AI-translated and verified by a human editor