Novo Next-Generation Obesity Shot Falls Short of Lilly Rival

Novo Nordisk’s next-generation obesity shot delivered less weight loss than Eli Lilly rival blockbuster in yet another blow to the Danish company’s attempts to regain lost ground in the weight-loss market.

People treated with a standard dose of Novo’s CagriSema in a trial achieved 20.2% weight loss after 84 weeks, compared with 23.6% for Lilly’s tirzepatide. Sam Fazeli of Bloomberg Intelligence joins to discuss. He also breaks down how Merck is splitting its main pharmaceutical unit in two in an effort to better highlight the parts of the business that are growing, as it stares down a patent cliff for its best-selling cancer drug Keytruda.  Novo Nordisk A/S’s next-generation weight-loss drug CagriSema isn’t even on the market yet, but the company’s chief executive officer is already batting back suggestions that the drug is obsolete following the release of disappointing trial results on Monday. Among investors, news of CagriSema’s poor showing against Eli Lilly & Co.’s Zepbound sparked calls for a radical shift.

Novo shares plummeted 16.5% in the latest dramatic fall for a stock that is down about 61% in the past year. Some investors are now leaning on Novo CEO Mike Doustdar to diversify away from diabetes and obesity, the twin fields that have defined the Danish drugmaker for the past 30 years.

“They just need another leg,” said Markus Manns, portfolio manager at Frankfurt-based Union Investment and a Novo investor. “Obesity and diabetes — it’s too risky to bet the entire company on these two franchises.”

Watch More: Novo New Obesity Shot Falls Short of Lilly Rival

Expanding its repertoire would reduce Novo’s risk as its blockbuster drugs Ozempic and Wegovy brace for generic competition in the US market early next decade, according to analysts and investors. Still, such a pivot would be a significant move for Novo, which established the modern obesity market and has been a leader in diabetes me “We want to retain and sustain and grow our leadership in diabetes and obesity and be the best in world within those two areas,” Doustdar said earlier this month at a presentation of the company’s full-year results.

Although Novo’s Wegovy was first to market among the current generation of powerful weight-loss drugs, it has struggled to keep up with Zepbound. By the time that drug beat Wegovy in a head-to-head obesity study last year, Novo had already pinned its hopes on CagriSema as the next-generation medicine that would cement its dominance. But the study published today showed that CagriSema’s 20.2% weight-loss for people treated with a standard dose failed to match the 23.6% weight loss triggered by Zepbound.

Read More: Novo Nordisk Trial Flop Ripples Through Denmark’s Stock Market

“The trial has backfired,” said Michael Shah, a Bloomberg Intelligence analyst, adding that “the base case” was CagriSema showing weight loss in line with Zepbound. Not even achieving that, he said, “was unexpected and extends Lilly’s advantage.”

BMO Capital Markets analyst Evan David Seigerman said that the findings made clear that “a complete strategy overhaul is in order,” adding, “it is striking to hear management concede that their competitor’s product outperformed in a trial they sponsored and designed.”

The results were the latest in a series of disappointments for CagriSema, which also underperformed in a diabetes trial. Analyst estimates for CagriSema sales have plummeted from 2024 heights, when it was thought revenue could reach as much as 116.8 billion Danish kroner ($18.4 billion) by 2030. The most recent estimates, according to analysts surveyed by Bloomberg earlier this month, put potential future revenue at closer to $6.9 billion.

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