Novo Nordisk's Latest Data Causes Decline, While Lilly Soars

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Novo Nordisk's Latest Data Causes Decline, While Lilly Soars

Novo Nordisk A/S, a Danish pharmaceutical company, experienced a significant decline in its stock after the results from its experimental obesity drug CagriSema fell short of expectations. The drug was anticipated to help patients lose 25% of their weight, but this target was not met in the study.

Patients who regularly used CagriSema for 68 weeks lost an average of 22.7% of their weight. However, when the sample was expanded to include those who discontinued the drug, the average weight loss dropped to 20.4%. Both results were below the expected 25% weight loss.

The lower-than-expected results led to an approximate 28% drop in Novo's shares. Following a previous rise due to the success of Novo's Wegovy weight loss treatment, the company's stocks have decreased by 17% this year. The drop in stock price briefly wiped out over $120 billion from Novo's market value.

In contrast, shares of competitor Eli Lilly, the manufacturer of rival weight loss drug Zepbound, saw a 10% increase following this update.

CagriSema's trial had been one of the most anticipated studies in the pharmaceutical industry this year. Novo Nordisk was relying on the success of CagriSema to maintain its competitive advantage in the rapidly growing weight loss market, expected to reach approximately $130 billion by 2030.

Novo's current blockbuster drugs mimic the gut hormone GLP-1, and CagriSema introduces a second mechanism of action. The additional component, cagrilintide, functions similarly to another gut hormone, amylin. Both the existing and new drugs suppress appetite, with amylin providing a smoother experience compared to GLP-1 medications, helping individuals feel full longer.

The study involved approximately 3,400 participants and compared the effects of CagriSema against a placebo and Novo's highly successful drug semaglutide, sold under the Wegovy and Ozempic brands for weight loss and diabetes treatment, respectively. Individuals receiving semaglutide lost an average of 16.1% of their weight.