Novo Nordisk (NVO, Financial), the titan of weight-loss treatments and maker of Wegovy and Ozempic, took a brutal hit on Friday. The company's shares nosedived 29%—one of the largest single-day sell-offs in European market history—after its highly anticipated weight-loss drug, CagriSema, failed to meet expectations in a key trial. Patients in the study lost an average of 22.7% of their body weight, falling short of the company's projected 25%. Investors, already jittery about rising competition from Eli Lilly's (LLY, Financial) Zepbound, were clearly unimpressed, with Novo losing over $125 billion in market value at its lowest point before clawing back to a 20% decline.
So, what went wrong? CagriSema combines semaglutide, the powerhouse behind Wegovy, with cagrilintide, a new molecule meant to turbocharge weight loss. But with results barely edging out Lilly's Zepbound—and the added complexity of producing a dual-chamber injection device—analysts are now questioning Novo's ability to stay ahead in the $150 billion weight-loss drug market. Expectations had been sky-high, with some projecting annual sales north of $20 billion. Now? The outlook is murkier. Peter Welford of Jefferies called the results a “festive shock” and warned that market forecasts might have been way too optimistic.
Still, Novo isn't backing down. Martin Holst Lange, their executive VP of development, struck a confident tone, pointing to plans for further trials to refine dosages and streamline production. The company is betting big on capturing more of the booming obesity-treatment market, as demand surges and the competition heats up. But with Eli Lilly already gaining momentum and developing even more innovative treatments, Novo faces an uphill battle to prove it can not only match its rivals but maintain its dominance in a rapidly evolving industry. Investors? They'll need to buckle up for a wild ride.
