Novo Nordisk under pressure as obesity drug disappoints in diabetes trial

Shares of Novo Nordisk (NVO) are sliding in Monday trading after the company announces results for its trial of weight-loss drug CagriSema. Following the news, Morgan Stanley noted that the weight loss and safety profile was similar to Eli Lilly’s (LLY) tirzepatide. Share price reaction reflects the removal of an upside risk, with some investors hoping that CagriSema would outperform in this pop due to the amylin mechanism, the firm added. In a separate research note, Morgan said it sees limited impact to Eli Lilly’s shares and that it believes the focus is on weekly scripts and Orfor Phase 3 in Q2.

REDEFINE 2 TRIAL OF CAGRISEMA: Novo Nordisk announced headline results from REDEFINE 2, a phase 3 trial in the global REDEFINE program. REDEFINE 2 is a 68-week efficacy and safety trial investigating once-weekly subcutaneous CagriSema, a fixed dose combination of cagrilintide 2.4 mg and semaglutide 2.4 mg, compared to placebo. The trial included 1,206 randomized people with obesity or overweight and type 2 diabetes and a mean baseline body weight of 102 kg. The trial achieved its primary endpoint by demonstrating a statistically significant and superior weight loss at week 68 with CagriSema versus placebo.

“The REDEFINE 2 trial was based on a flexible protocol, allowing patients to modify their dosing throughout the trial. After 68 weeks, 61.9% of patients treated with CagriSema were on the highest dose. When evaluating the effects of treatment, if all people adhered to treatment, people treated with CagriSema achieved a superior weight loss of 15.7% after 68 weeks compared to 3.1% with placebo. Weight loss of 5% or more after 68 weeks was a co-primary endpoint and was achieved by 89.7% of patients on CagriSema, compared to 30.3% by placebo. When applying the treatment policy estimand, people treated with CagriSema achieved a superior weight loss of 13.7% compared to 3.4% with placebo. In the trial, CagriSema appeared to have a safe and well-tolerated profile. The most common adverse events with CagriSema were gastrointestinal, and the vast majority were mild to moderate and diminished over time, consistent with the GLP-1 receptor agonist class,” the company stated.

MISSES OPPORTUNITY: Morgan Stanley notes Novo Nordisk disclosed headline data for CagriSema in REDEFINE-2, with a weight loss and safety profile similar to Eli Lilly’s tirzepatide. Share price reaction reflects the removal of an upside risk, with some investors hoping that CagriSema would outperform in this pop due to the amylin mechanism, the firm adds. Morgan Stanley argues that key debates from REDEFINE-1 remain, and says that the clinical profile similar to tirzepatide increases the importance of amycretin as a next-gen molecule to sustain the obesity franchise in the long-term.

The firm adds that filing in Q12026 was confirmed, and that it currently assumes about $10B global peak sales for CagriSema across diabetes and obesity. With REDEFINE-2 headlines showing limited differentiation for Novo’s CagriSema vs. Eli Lilly’s tirzepatide in obese patients with T2D, Morgan Stanley expects the mid-long term competitive positioning of Novo’s portfolio to remain a debate. The firm has an Equal Weight on Novo on short-term uncertainties in the U.S. obesity market and a challenging catalyst path.

In a separate note, Morgan Stanley said it sees limited impact to Eli Lilly shares and says the focus remains on weekly scripts and Orfor Phase 3 data due in Q2. The firm has an Overweight rating and $1,146 price target on Eli Lilly shares.

VIKING OBESITY POTENTIAL: H.C. Wainwright says Novo Nordisk’s REDEFINE-2 results reinforce Viking Therapeutics’ (VKTX) VK2735’s potential in obesity and beyond. Assuming full adherence, Novo’s CagriSema achieved 15.7% weight loss compared to 3.1% with placebo, the firm tells investors in a research note. H.C. Wainwright believes the data further reinforce the promise of Viking’s VK2735 as it advances toward Phase 3, particularly given its “strong performance in a more responsive patient population: people without type 2 diabetes.” Wainwright points out that in the Phase 2 VENTURE trial, weekly subcutaneous VK2735 achieved up to 14.7% weight loss in just 13 weeks in obese patients. It thinks Viking has an attractive alternative in the metabolic space and a potentially effective option for both individuals with obesity and those with obesity and type 2 diabetes. The firm keeps a Buy rating on the shares with a $102 price target.

PRICE ACTION: In Monday morning trading in New York, shares of Novo Nordisk have dropped about 9.5% to $78.94, while Eli Lilly’s stock has slipped 3.5% to $839.18.