Novo Nordisk’s (NYSE:NVO)<\/a> last best hope for life after semaglutide has stumbled badly. The Danish drugmaker’s CagriSema combination jab failed on Monday to demonstrate non-inferior weight loss against Eli Lilly’s Zepbound in the REDEFINE-4 phase III trial, a result that has prompted two high-profile analyst downgrades and forced a broad reassessment of the company’s long-term earnings power.<\/p>\nDeutsche Bank, which has backed the stock since initiating at ‘buy’ in 2021, said the miss “disproves our optimism CagriSema could do much better and blows a sizeable hole in that thesis.”<\/p>\n
He cut his rating to ‘hold’ and slashed his price target 31%, from DKK400 to DKK275, based on 14x forward earnings.<\/p>\n
JPMorgan also moved to ‘neutral’, setting a new price target of DKK250, as both banks concluded that the drug’s commercial potential has been materially and perhaps permanently impaired.<\/p>\n
The REDEFINE-4 result was not a close call by conventional standards. Novo ran the trial for 84 weeks, longer than the 68-72 week duration used in most incretin pivotal studies, an extension widely read as an attempt to give CagriSema every possible advantage against Zepbound. It was not enough.<\/p>\n
Citi analysts pointed to the trial’s additional complexity as a further problem. CagriSema requires a dual-chamber delivery device that is more difficult to manufacture than Zepbound’s single-molecule formulation. With inferior weight loss data and a harder-to-produce product, Citi said the drug is “less likely to compete effectively” in a market already dominated by Lilly.<\/p>\n
JPMorgan’s team went further, noting that the readout was poor not just in obesity but also in blood glucose control. Two diabetes-focused studies, REIMAGINE 2 and 3, showed a “more limited effect” than Lilly’s rival, reducing CagriSema’s appeal across both of its intended therapeutic indications.<\/p>\n
The stakes here go beyond any single drug. Semaglutide, the active ingredient in Wegovy and Ozempic, loses patent exclusivity at the end of 2031. CagriSema was the designated successor, the product intended to maintain Novo’s grip on the obesity and diabetes markets once generics enter and pricing power erodes.<\/p>\n
Story Continues <\/p>\n
Citi calculates that CagriSema accounts for 18% of its Novo discounted cash flow model, with peak sales assumptions of $6.5 billion in obesity and $5.5 billion in diabetes. Halving those share assumptions would, by Citi’s reckoning, reduce Novo’s net present value by 9%. The bank cut its target price to DKK309 from DKK340, applying a lower earnings multiple to reflect what it described as a “more uncertain long-term outlook.”<\/p>\n
JPMorgan has taken a harder line on numbers. Having already trimmed CagriSema forecasts following earlier REDEFINE trials, the bank cut its estimates again by 40% to 63% through 2027 to 2030.<\/p>\n
Amycretin, Novo’s other pipeline asset, also took a trim, with JPMorgan lowering its forecasts by 1% to 23% through the same period to account for lower likely price points. The combined effect is a 2% to 17% cut to adjusted earnings per share across the five-year forecast window, leaving JPMorgan’s numbers 5% to 21% below Bloomberg consensus.<\/p>\n
Deutsche\u00a0framed the downgrade with unusual candour, acknowledging that after holding through what he called “a year of guided near-double-digit revenue decline,” the bull case had rested on two pillars: conservative guidance with upside surprise potential, and CagriSema delivering competitive data ahead of semaglutide’s loss of exclusivity. Monday’s readout removed the second pillar.<\/p>\n
JPMorgan’s valuation arithmetic tells a similar story. On revised forecasts, Novo’s earnings per share growth from 2027 to 2030 comes to roughly 6% annually, in line with the European large-cap pharma sector average. At a 15% discount to sector peers, that leaves limited reason to hold a premium position. Novo shares closed Monday at DKK251.40.<\/p>\n
Citi, the most cautious of the three banks in its response, stopped short of a downgrade but made clear that the strategic picture has darkened.<\/p>\n
With CagriSema compromised and semaglutide’s exclusivity window narrowing, the company enters a period in which its pipeline must deliver reliably and its existing franchise must hold. After Monday, both assumptions carry more risk than they did last week.<\/p>\n
The shares are down 21% over the past week, with a 15% drop on Monday alone, which tells the whole story.<\/p>\n","protected":false},"excerpt":{"rendered":"Novo Nordisk downgraded by leading banks as CagriSema trial flops against Zepbound Proactive uses images sourced from Shutterstock…\n","protected":false},"author":2,"featured_media":25844,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[271],"tags":[1893,276,15852,272,9909,15853,3084],"class_list":["post-25843","post","type-post","status-publish","format-standard","has-post-thumbnail","category-novo-nordisk","tag-citi","tag-eli-lilly","tag-jpmorgan","tag-novo-nordisk","tag-obesity-and-diabetes","tag-phase-iii-trial","tag-price-target"],"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/posts\/25843","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/comments?post=25843"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/posts\/25843\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/media\/25844"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/media?parent=25843"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/categories?post=25843"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/dk\/wp-json\/wp\/v2\/tags?post=25843"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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Novo Nordisk downgraded by leading banks as CagriSema trial flops against Zepbound Proactive uses images sourced from Shutterstock <\/p>\n