Novo’s Next-gen Obesity Drug Candidate Trial Disappoints

LONDON (Reuters) -Novo Nordisk said on Friday its experimental next-generation obesity drug CagriSema helped overweight patients cut their weight by 22.7% in a late-stage trial, below the 25% it had expected, wiping as much as $125 billion off the company’s value.

Here are some reactions from investors and analysts:

MARKUS MANNS, A PORTFOLIO MANAGER AT MUTUAL FUNDS FIRM UNION INVESTMENT, A NOVO NORDISK AND ELI LILLY SHAREHOLDER:

“The results are a worst-case scenario for Novo. Cagrisema is only as good as Zepbound, but more complex to manufacture.”

JEFFERIES ANALYSTS:

“First headline Phase III CagriSema obesity data disappoint with 20.4% absolute weight loss and patient adherence likely suggesting tolerability concerns, in our view.

“Our buyside survey suggested most anticipated 25%-27% absolute weight loss with GI tolerability to be broadly similar to Wegovy.”

SIMON BAKER, HEAD OF GLOBAL BIOPHARMA RESEARCH AT REDBURN ATLANTIC IN LONDON:

“(The weight loss) is considerably lower than the 25% most were expecting, based on the company’s modelling commentary.

“(…) around 23% is probably commercially sufficient longer term, but inadequate on the day, hence the very sharp drop in the stock.

“Also of note is that only 57% reached the highest dose, which will lead to speculation about tolerability despite the benign language in the press release. The 27% drop (in the share price) is completely out of proportion fundamentally, but positioning around this event was huge and it will take a while for this to stabilise.”

DNB ANALYST RUNE MAJLUND DAHL:

“We expect Novo to file on the current data and to run a new trial (starting 2025) without the flexible protocol to show improved efficacy. CagriSema is not dead and the share price reaction overdone.”

ALEXANDER JENKE, A PORTFOLIO MANAGER AT MEDICAL STRATEGY IN MUNICH, AND A NOVO SHAREHOLDER:

“The fact that after 68 weeks, only 57.3% of patients treated with CagriSema were on the highest dose (…) indicates that there are critical issues regarding tolerability.

“These results will pose a severe burden on the investment story of Novo Nordisk as CagriSema was supposed to become the successor of Semaglutide (Wegovy/ Ozempic).”

KEVIN GADE, PORTFOLIO MANAGER AT BAHL & GAYNOR, WHICH OWNS LILLY SHARES:

“Not only is efficacy just in line with Lilly’s first-generation Mounjaro, but you begin to wonder if Novo is willing to invest in very complex, dual chamber pen manufacturing in order to introduce this structure to the market.”

BERENBERG ANALYSTS:

“This disappointing result will increase investor concern on the durability of the Novo obesity portfolio beyond semaglutide, which faces patent expiry at the beginning of the next decade.”

NORDEA ANALYST MICHAEL NOVOD:

“While missing the 25%/25%+ weight loss expectations, we believe the severe share price reaction is overdone.”

“Despite the disappointing results, CagriSema is still the best weight loss reported in a Phase 3 trial, while the tolerability profile was in line with stand-alone GLP-1 and slightly better than what was seen with Wegovy.

“Hence, that only 57% of patients got to the highest dose of Cagrisema was likely not due to tolerability issues (one can then speculate why, but it may have been driven by patients simply stopping when getting to a satisfactory weight loss).

“With this in mind, we are confident that Novo can also deliver higher weight loss with Cagrisema in such a trial.”

(Reporting by Maggie Fick in London, Jacob Gronholt-Pedersen in Copenhagen and Mariam Sunny in BengaluruCompiled by Josephine MasonEditing by Tomasz Janowski)