• Shares of Novo Nordisk plummeted roughly 20% on Friday.
• The fall comes after the Danish pharmaceutical giant reported results in a late-stage trial for its experimental CagriSema weight loss drug that missed expectations.
• In comments to CNBC, however, Novo said that CagriSema had outperformed Wegovy in weight reduction and that its performance was "on par with best-in-class treatments."

Shares of Danish pharmaceutical giant Novo Nordisk plummeted roughly 20% on Friday after reporting results in a late-stage trial for its experimental CagriSema weight loss drug that missed expectations.

The maker of the wildly popular Wegovy obesity drug said its new drug candidate helped patients reduce their weight by 22.7%, below the 25% it told CNBC it had previously forecast.

Shares of rival obesity drug maker Eli Lilly jumped more than 5% in early trading.

The trial results deal a blow to expectations that CagriSema could become a next-generation obesity drug. The two-drug injectable treatment combines semaglutide, the active ingredient in Wegovy, along with amylin analog Cagrilintide, a nascent form of weight loss treatment.

In comments to CNBC, however, Novo said that CagriSema had outperformed Wegovy in weight reduction and that its performance was "on par with best-in-class treatments."

"We are encouraged by the weight loss profile of CagriSema demonstrating superiority over both semaglutide and cagrilintide in monotherapy in the REDEFINE 1 trial. This was achieved even though only 57% of patients reached the highest CagriSema dose," Martin Holst Lange, executive vice president for Development at Novo Nordisk, said in a separate press release.

"With the insights obtained from the REDEFINE 1 trial, we plan to further explore the additional weight loss potential of CagriSema," he added.

The phase three trial was based on around 3,400 people with obesity, or who were overweight with one or more comorbidities, and took place over 68 weeks. It followed a flexible protocol, meaning patients could modify their dosage throughout the trial. By the end, just 57.3% of patients treated with CagriSema were on the highest dose.

Novo said that topline and full results will be presented next year and that it expects regulatory submission of the drug by the end of 2025. Results from a second phase 3 trial, REDEFINE 2, based on adults with type 2 diabetes who are either obese or overweight, are also expected during the first half of next year.

'Efficacy in line with expectations'

Soren Lontoft, pharma equity analyst at Sydbank, told CNBC that the share reaction on Friday was warranted for those who see the future of the market defined solely by total weight reduction.

However, he pointed to growing segmentation within the market — including among those who cannot tolerate traditional GLP-1s and those who prefer lesser weight loss — with some people more drawn to alternative options.

"If you think the obesity market will be defined by a portfolio of medications going forward to address different needs then you shouldn't be downbeat about these data," he said over the phone.

In a note Friday, J.P. Morgan acknowledged that while the results were disappointing, it continued to see strong potential for the nascent amylin analog drug group to emerge as the next phase of obesity treatment.

"Though the headline weight loss for CagriSema combo was below expectations, potentially due to patients modifying their dose down for the combo, we believe the Amylin mono headline data shows efficacy in line with expectations and good tolerability, which provide validation of Amylin mono as a treatment approach," the analysts wrote.

They added that the findings provide support for similar amylin analog drugs from competitor Zealand Pharma, whose treatment they described as potentially more efficacious than CagriSema. Zealand's CEO Adam Steensberg told CNBC in October that its Petrilintide drug was its "crown jewel" and that it was seeking a partner to bring it to market.

J.P. Morgan said it now expects a Zealand Pharma partnership as soon as next year.

It comes as competition continues to heat up in the weight loss drug market, with more players joining the fray amid surging demand.

Earlier this month, Novo faced another setback when a head-to-head clinical trial showed Eli Lilly's Zepbound resulted in superior weight loss compared with Wegovy.

The trial, sponsored by Lilly, showed Zepbound helped patients shed 20.2%, or roughly 50 pounds, on average after 72 weeks, while Wegovy helped them lose a lesser 13.7% on average over the same period. Novo said at the time that it was awaiting the complete data.