The key to determining Novo Nordisk's stock price: data on the next-generation weight loss drug will be released next month

Can Novo Nordisk, which has fallen over 20% in six months, turn around with the help of "next-generation" weight loss drugs?

On November 17, the Financial Times reported that one of the "weight loss duos," Danish pharmaceutical company Novo Nordisk is preparing to release the final clinical trial data for its "next-generation" weight loss drug CagriSema next month, and Novo Nordisk expects the trial results to show that CagriSema can reduce users' weight by 25% over more than a year.

CagriSema combines the active ingredients of Novo Nordisk's existing weight loss drugs Ozempic and Wegovy—semaglutide, which mimics the gut hormone GLP-1, and cagrilintide, a compound based on the pancreatic hormone amylin, administered once a week.

Compared to Novo Nordisk's existing blockbuster treatment Wegovy (which can reduce weight by up to 16%) and another competing drug Mounjaro from Eli Lilly (which can reduce weight by up to 22.5%), CagriSema shows more significant weight loss effects and is expected to take the lead in GLP-1 class weight loss drugs.

Novo Nordisk CEO Lars Fruergaard Jørgensen stated during the company's third-quarter earnings report:

"CagriSema is very important to us; it is a next-generation product with the potential to become the industry benchmark."

Crucial CagriSema

Recently, Novo Nordisk's stock price has not kept pace with its biggest competitor Eli Lilly's stock price. Over the past six months, Novo Nordisk's stock price has fallen over 22%, currently at $101.74 per share.

Investors have raised doubts about Novo Nordisk's ability to meet product demand, and in September, the trial results of one of Novo Nordisk's weight loss drugs were disappointing.

However, Jørgensen pointed out that Wegovy has recently been removed from the U.S. shortage list, indicating that Novo Nordisk has the capacity to meet market demand. The fluctuations in the company's stock price suggest that "the hype around obesity treatment may have led to some misunderstandings about the company's business situation."

If CagriSema's trial data fails to meet expectations, investors may reconsider Novo Nordisk's leadership position in the weight loss field. Barclays analyst Emily Field stated:

"This is the most important data point for the entire pharmaceutical industry this year; either Novo Nordisk finds a path to the next decade, or it does not."

It is worth noting that the "next-generation" weight loss drugs are not only significant for Novo Nordisk but also crucial for the entire industry.

The results of CagriSema will be the first advanced data regarding insulin-like drugs, and currently, many pharmaceutical companies are developing insulin-based treatments. The success of CagriSema could boost investor confidence in some pharmaceutical companies Nordea Bank analyst Michael Novod stated:

"This is a key moment for Novo Nordisk to demonstrate its innovative capabilities and to set new goals for other drugs."