Key Morningstar Metrics for Novo Nordisk
- Fair Value Estimate: DKK 343
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: High
Novo Nordisk NOVO B announced that obesity drug candidate cagrisema led to 23% weight loss after 84 weeks in the phase 3 Redefine 4 study, which was not enough to show noninferiority to 25.5% weight loss with comparator tirzepatide (Eli Lilly’s LLY Zepbound). Shares fell 15% in intraday trading on Feb. 23.
Why it matters: Novo’s near-term results are already under pressure from lower US pricing for its core approved GLP-1 therapy semaglutide and continued market share loss to tirzepatide, and the firm needs its pipeline to produce differentiated therapies that can help extend its position in the market.
- While cagrisema’s 22.7% weight loss at 68 weeks in the Redefine 1 study (used for regulatory filings) was disappointing compared with management’s 25% expectation, this was still similar to Lilly’s tirzepatide in the Surmount-1 study (22.5% at 72 weeks).
- We had expected cagrisema to achieve noninferiority to tirzepatide in the Redefine 4 trial, and while we still assume cagrisema will reach the market, we think the failure of the Redefine 4 study is likely to affect physician and patient perception of the drug, adding to launch headwinds.
The bottom line: We’re lowering our fair value estimate for wide-moat Novo Nordisk to DKK 343 per share from DKK 372 after reducing our cagrisema sales forecast from DKK 85 billion in 2035 to DKK 50 billion. We’re more bullish on zenagamtide, despite its earlier stage.
- Novo thinks that bias and dose flexibility limited its ability to optimize cagrisema’s results in Redefine 4, and we think the answer will come with data from Redefine 11 (which maximizes patients reaching the highest doses) in the first half of 2027 and a new high-dose cagrisema trial.
- Shares look undervalued, as we think the market underestimates Novo’s long-term competitiveness in the GLP-1 market. Near-term catalysts look limited, but include oral semaglutide’s US launch trajectory and potential midstage pipeline progress or acquisitions.
