Novo Nordisk, Denmark’s (and Europe) largest pharmaceutical company, saw its share price drop significantly after announcing the latest results from its obesity drug trial, named Redefine 2. Although the drug, Cagrisema, demonstrated strong efficacy, investors reacted negatively, erasing over DKK 100 billion (approximately EUR 13.4 billion) from the company’s market value.
Study shows effective weight loss, investors skeptical
According to Novo Nordisk, the clinical trial involving 1,206 participants revealed a significant weight reduction. Patients using Cagrisema lost an average of 15.7% of their body weight over 68 weeks, compared to just 3.1% among those receiving a placebo.
“The Redefine 2 results confirm the superior efficacy of Cagrisema in overweight or severely obese individuals with type 2 diabetes,” said Martin Holst Lange, Executive Vice President for Development at Novo Nordisk, in a company press release.
Despite these encouraging outcomes, Novo Nordisk’s stock fell sharply, closing down 6.2% by early afternoon, marking the largest decline on Denmark’s benchmark C25 stock index.
Market reaction linked to Eli Lilly’s Zepbound
Analysts point to investor concern over Novo Nordisk’s ability to compete effectively with its main rival, Eli Lilly, whose obesity medication Zepbound is already available on the market. According to Søren Løntoft Hansen, equity analyst at Sydbank, despite different trial designs and patient demographics making direct comparisons difficult, the market perceives both drugs as similar in effectiveness.
“Investors are not convinced that Cagrisema can outperform Zepbound,” Hansen explained to DR News.
Previous disappointments weigh on current sentiment
This negative reaction follows a dramatic drop in Novo Nordisk’s share price last December when another trial, Redefine 1, produced results that fell short of investor expectations. With an average weight loss of 22.7% among participants, market expectations had been higher, prompting a dramatic 20.7% decline in the share price—the largest single-day percentage drop since 2002.
Currently, according to Euroinvestor, Novo Nordisk shares are trading 44.8% lower compared to their peak last summer, highlighting ongoing investor skepticism despite robust clinical data.
The market’s cautious stance appears to hinge primarily on comparative evaluations with Eli Lilly’s established product, signaling continued volatility for Novo Nordisk shares as investors await further developments.
