Novo Nordisk released results of a late-stage trial of CagriSema, a weekly injection combining cagrilintide and semaglutide (the active ingredient in Wegovy).
The combination showed superior weight loss to the use of semaglutide alone. However, the trial failed to meet the target of demonstrating equal or superior weight loss to the maximum dose of Eli Lilly’s tirzepatide.
A more strictly controlled clinical study is still underway, and a higher dose trial is due to start later in the year. An application for medical approval of CagriSema remains with the US authorities, with a decision expected in the second half of 2026.
The shares fell 14.0% following the announcement.
Our view
Novo Nordisk’s latest clinical readout for its next-generation weight loss drug CagriSema was weaker than hoped for. With good news in short supply, the announcement sent investors running for cover. The company’s still targeting a launch in 2027, and remains confident that it will have the most compelling weight-loss profile of any medicine on the market at that time.
While regulatory approval can’t be guaranteed, CagriSema is only one part of the push to raise the bar higher in anti-obesity medicine, and we see some exciting opportunities within the pipeline.
However, this year’s financial outcome still hinges on the recent decision to compete more aggressively on price, with the aim of widening access to a larger population group in what remains a huge and still under-penetrated market. We think this strategy has merit, but it adds pressure on Novo to start stabilising market share and delivering meaningful volume growth in the key US market.
The expected addition of obesity medications to Federal health insurance plans later this year could help in this regard. But Novo needs to put boots on the ground in order to build strong relationships with prescribers. Even then, the benefits may take time to make a difference.
One catalyst that could see quicker results is tougher enforcement by the US authorities on unregulated alternatives to Novo’s anti-obesity medicines. It’s not something the company has full control over, but we’re encouraged by recent progress.
With 35 new country launches made for Wegovy in 2025, overseas progress is something to watch, although that’s tempered by forthcoming patent expirations in China and India.
The strong start in oral Wegovy prescriptions is another opportunity to claw back some ground. So far, we’re impressed, but with Eli Lilly expected to field a competitor later this year, a bold marketing push will be vital.
With the valuation under pressure, Novo’s dividend yield looks more meaningful than it has for a while. Share buybacks are back on the table too, but there are no guarantees.
A combination of financial and clinical disappointments has taken its toll on investor confidence. With revenue now set to decline for the first time since 2017, the shift in sentiment is understandable, but we think it’s gone a little too far.
Management’s taking some decisive steps to rebuild the company’s competitive position. If it’s successful, we see scope for significant upside. However, fierce competition and the risks inherent with investing in the sector continue to present a challenging backdrop, so patience is needed.
Environmental, social and governance (ESG) risk
The pharmaceuticals sector is relatively high-risk in terms of ESG. Product governance, particularly with safety and marketing, and affordable access to treatment are the key risk drivers. Labour relations, business ethics and bribery and corruption are also contributors to ESG risk.
According to Sustainalytics, Novo Nordisk's management of ESG risks is strong. Executive pay is linked to both financial and non-financial targets, including sustainability targets, though it's unclear exactly how the two are linked. Novo Nordisk's product quality and safety programmes are adequate. The company also addresses pricing and access to medicine in emerging markets and the US. In general, Novo Nordisk has strong policies and programmes to address business ethics issues, but fails to address anti-competitive practices and has been implicated in alleged price fixing and questionable promotional activity controversies.
Novo Nordisk key facts
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