Shareholders are suing Novo Nordisk over how the company talked up its next-generation obesity drug CagriSema. The core of the argument is that Novo gave investors one impression of the clinical trial - and the final results told a different story.
In the REDEFINE-1 study, patients who got CagriSema lost an average of 20.4% of their body weight. That sounds strong, but the market had been expecting closer to 25%. The gap matters because obesity drugs are a massive opportunity, and any sign of a competitor slipping sends shockwaves through the stock.
At the heart of the suit is the trial's design. Novo allowed participants to adjust their own doses, rather than forcing everyone to the highest dose. Only 57% of participants reached the highest dose. Shareholders claim the company made it sound like everyone would be pushed to the maximum, which would have made the drug look more powerful and easier to tolerate. Judge Robert Kirsch wrote that "clinical trials are complicated and nuanced, and investor calls are not scientific conferences."
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Investors argue that Novo Nordisk's earlier communications glossed over this design feature, creating an expectation that nearly all participants would reach the highest dose and thus achieve maximum weight loss. The lawsuit's main focus is the difference between what Novo Nordisk communicated and the actual trial outcome, which already caused a significant stock selloff.
When the CagriSema results came out, the selloff was brutal. According to the court document, the company's US-listed shares dropped by $18.15 each, a one-day decline of 17.83%, with over 53 million units changing hands. The stock listed in Copenhagen dropped 20.7% on the same news.
Earlier this year, Chief Executive Mike Doustdar remarked to CNBC that investors had "penalized" the data harshly.
CagriSema combines two drugs, cagrilintide and semaglutide, and is seen as a potential successor to Novo's popular Wegovy. The obesity drug market is projected to reach $100 billion by the end of the decade, making any trial miss particularly consequential for investors. Novo Nordisk is also developing other candidates like amycretin, but CagriSema's performance is critical to maintaining its competitive edge against rivals such as Eli Lilly.
The steep stock decline wiped out billions in market value, underscoring how closely investors track every data point in the race for next-generation obesity treatments. With Eli Lilly's similar drug tirzepatide already approved for weight loss, Novo faces pressure to prove CagriSema can deliver results that justify its high expectations.
The lawsuit now moves into the discovery phase. That is the stage where shareholders can dig through Novo's internal communications, emails, and presentations to find evidence backing up their claims. Novo Nordisk has denied wrongdoing, and a spokesperson said, "the company believes that the allegations against it are meritless."
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