Danish Drugmaker’s Weight-Loss Drug Falls Short Against Rival in Clinical Trial

Novo Nordisk's experimental weight-loss medication CagriSema performed worse than competitor Eli Lilly's Zepbound in a direct comparison study. The disappointing results represent another setback for the Danish pharmaceutical company as it struggles to maintain its position in the rapidly growing obesity treatment market.

A disappointing clinical trial outcome has delivered another blow to Danish pharmaceutical giant Novo Nordisk’s ambitions in the lucrative weight-loss drug sector. The company’s experimental medication CagriSema failed to outperform Eli Lilly’s competing product Zepbound when tested side-by-side, marking a significant setback in the fierce competition for obesity treatment dominance.

Financial analysts are weighing in on what this means for Novo Nordisk’s future strategy, with many suggesting the company may need to pivot toward major acquisitions to stay competitive.

Michael Leuchten from Jefferies expressed concern about the broader implications for Novo’s drug pipeline. “Where all of this is a headache is that Novo’s terminal value pivots around amycretin, which like CagriSema is a GLP-1/amylin combination (albeit in one molecule), so the failure of REDEFINE-4 and commercial uncertainty versus competition does little to calm long-term investor nerves,” Leuchten stated.

He added that attention will likely shift to the company’s merger and acquisition plans. “Investors’ focus will likely now turn to management’s M&A strategy, in our view, with our forecasts suggesting potential for up to $35 billion to be spent this year. Feedback suggests that investors wish to see this spend in adjacent therapy areas outside of obesity and diabetes, with our view that this should buy management time to reinvest its obesity portfolio,” Leuchten explained.

BMO Capital Markets analyst Evan David Seigerman delivered particularly harsh criticism of the trial results. “We struggle to identify a reason why a patient would be prescribed CagriSema vs. Tirzepatide if/when the Novo product is approved/available,” he said.

Seigerman didn’t mince words about the significance of the setback. “We see no way to spin this one as a win for Novo. It is striking to hear management concede that their competitor’s product outperformed in a trial they sponsored and designed. We believe Novo needs more than just the Wegovy pill to right this ship — a complete strategy overhaul is in order,” he stated.

J.P. Morgan’s Chris Schott believes the results solidify Eli Lilly’s market position. “We see this result confirming Zepbound as a clear market leader for now and positioning LLY for continued share gains for the drug over time. While CargiSema should bring a more competitive offering to market for Novo, we believe it will be difficult for Novo to dislodge market share from LLY,” Schott noted.

He predicted extended success for Lilly’s product. “As a result, we expect LLY will have a longer runway for share gains for Zepbound beyond 2026,” Schott added.

Truist Securities’ Srikripa Devarakonda acknowledged CagriSema’s potential while reinforcing Lilly’s current advantage. “Cagrisema is a potent drug and we continue to keep track of additional trial data, we believe these data maintain LLY’s dominance in obesity landscape at least for the near future,” Devarakonda said.

She emphasized multiple factors supporting Lilly’s market position. “Best-in-class profile coupled with improved access and supply, and increasing demand are expected to support LLY’s position in the landscape, in our view,” Devarakonda explained.

Regarding safety considerations, she noted: “While we await detailed data, we note that discontinuation rates with tirzepatide were lower vs. semaglutide; based on data so far, we believe Cagrisema is unlikely to see a safety benefit vs. tirzepatide.”

Bernstein analyst Courtney Breen highlighted the ongoing competitive challenges. “This trial now emphasizes that Novo’s challenges remain and Lilly continues to weather whatever Novo throws at them,” she said.

Breen had previously expressed doubts about CagriSema’s competitive potential, citing production difficulties and minimal advantages over existing treatments. She noted that Lilly’s upcoming next-generation medication retatrutide, which demonstrates superior effectiveness, will likely launch around the same timeframe, potentially further limiting Novo’s market opportunities.

Barclays analyst James Gordon offered a measured assessment of CagriSema’s commercial prospects. “While we continue to see CagriSema as approvable, today’s RD4 (trial) results will likely mean driving uptake is an uphill battle vs. a more effective and better tolerated incumbent, leaving Novo little to compete on apart from price,” Gordon concluded.