Novo Nordisk’s most recent trial of CagriSema, its next-generation obesity drug, has proven to be disappointing, causing investor confidence to plummet. The Phase 3 results released on Friday showed CagriSema resulted in only 22.7% weight loss over 68 weeks, falling short of the company's expectations of 25%. This misstep has triggered one of the most substantial drops in stock prices seen by the company, with shares shedding nearly 20% early on Friday, reflecting investor concerns about Novo's future prospects.
CagriSema is developed as a combination therapy of semaglutide – found in its widely-used products Ozempic and Wegovy – and cagrilintide, which activates amylin receptors. These receptors play roles in regulating appetite and glucose levels, aiming to provide enhanced effectiveness over existing treatments. The trial enrolled 3,417 participants, all with obesity (BMI over 30) or being overweight with at least one weight-related comorbidity. Despite the overall weight loss being substantial, it was not quite enough to satisfy expectations set by both company executives and industry analysts.
Before the results were announced, executives at Novo Nordisk had voiced optimistic predictions throughout 2023, stating they anticipated CagriSema could achieve the coveted 25% weight loss. This led analysts, including Peter Welford from Jefferies, to forecast even higher projections, with expectations of 27% weight loss. The 22.7% average weight loss documented from the trial did, nevertheless, outpace the results seen with placebo treatments, where participants lost around 2.3%, and with cagrilintide and semaglutide as standalone treatments, which resulted in weight losses of 12% and 16% respectively. Yet, for Wall Street, the results were perceived as underwhelming, resulting in Novo Nordisk experiencing one of the largest drops recorded for European companies due to market trading.
Matters were not helped by the fact only about 57% of patients reached the highest dosage of CagriSema by the study's end. This was considerably lower than the uptake rates for those receiving Wegovy or just cagrilintide alone, which were around 70% and 83%, respectively. This discrepancy has led some analysts to speculate about potential tolerability issues with CagriSema, which might hinder its performance compared to its competition.
Despite these setbacks, Martin Holst Lange, Novo Nordisk's executive vice president, has expressed some encouragement from the trial's data and reaffirmed the company's commitment to continuing research with CagriSema. "We are encouraged by the weight loss profile of CagriSema demonstrating superiority over both semaglutide and cagrilintide in monotherapy," said Lange, indicating the company will explore greater weight loss potential going forward.
The disappointment surrounding CagriSema's trial intensifies the competitive pressure facing Novo. Eli Lilly's Zepbound has emerged as a direct competitor, having shown promising results with approximately 21% weight loss after 72 weeks of treatment, which brings Zepbound onto par with CagriSema, but also signifies no clear advantage for Novo at this stage. The rivalry between these pharmaceutical giants has heightened as they push against each other to release more effective treatments for obesity and diabetes, as indicated by Dr. Daniel Skovronsky of Eli Lilly, who described the competition as being beneficial for patients through the advancement of increasingly effective treatments.
The market for obesity drugs is projected to surpass $100 billion annually within the decade, making it pivotal for companies like Novo Nordisk to maintain their edge. Losing market share to competitors like Eli Lilly and other companies developing similar treatments could compromise Novo's lucrative history within this domain. The company is also expecting results from another Phase 3 trial called Redefine 2, set to evaluate CagriSema's efficacy within pipelines aimed at treating people with type 2 diabetes. These results are anticipated to arrive during the first half of 2025, providing Novo with another opportunity to bolster its standing amid scrutiny.
A separate review by healthcare experts has highlighted the increasing expectation levels for obesity drug treatments, with 25% weight loss viewed as the new 'gold standard.' Even though 40% of participants achieved this level of weight loss, the average draw of the trial did not rise sufficiently to portray CagriSema as revolutionary. The importance of achieving sustainable and clinically significant weight loss remains fundamental for market viability, especially as alternative therapies continue to progress through development stages.
With experts claiming this development is shifting the industry focus, analysts caution Novo may need to rethink its strategic positioning and address concerns over regulating weight loss expectations. Recent results indicate not only the challenges posed by existing therapies on the market but also underline the necessity for Novo to execute phase trials with clearer benchmarks to meet research ambitions effectively. Whether the adjustments to its strategy can lead to greater success will be closely monitored within the industry as future results emerge.
For Novo Nordisk, the CagriSema trial marks not so much the end, but rather another hurdle to navigate in the grueling race to dominate the burgeoning obesity drug market.
