Novo Nordisk's Stock Rebounds 5.8% After a 17.8% Decline; Eli Lilly Continues to Jump 2%

Novo Nordisk's shares recovered some ground on Monday after a 17.8% slump on Friday in response to an underwhelming set of results from a Phase III trial of its new weight-loss drug CagriSema, but analysts at Intron Health say markets may have overreacted.

Novo's share price rebounded 5.86% in premarket trading. While its rival Eli Lilly continued to jump 2%.

The Danish pharmaceutical giant saw EUR90 billion knocked off its market capitalization on Friday as the REDEFINE 1 study showed CagriSema provided similar weight-loss benefits to Eli Lilly's Zepbound with worse tolerability.

The REDEFINE-1 trial of Novo Nordisk's new drug showed patients who took CagriSema experienced 22.7% average weight loss after taking the combination of semaglutide and cagrilintide over 68 weeks, compared to 2.3% weight-loss for those who took placebos.

Intron Health's analysts, led by Naresh Chouhan, said Friday's sell-off was likely too sharp, particularly considering ongoing trials of CagriSema and Semaglutide could give investors reasons to be optimistic in the near future.

In the worst case scenario, Novo Nordisk is still likely to generate $8 billion in peak sales of CagriSema, which is the same amount that Wegovy sold in its first full-year despite severe capacity restraints, the analysts said.

Intron Health's analysts said sales worth $8 billion would result in an 8% downgrade to Novo Nordisk's earnings before interest and tax (EBIT) by 2030.

Trials currently being undertaken of CagriSema in obese patients with diabetes and of Semaglutide in patients with Alzheimer's could further boost Novo Nordisk's prospects going forwards, Intron Health's analysts said.

The analysts noted CagriSema still achieved high levels of weight loss in overweight patients and patients with obesity, as they suggested further analysis of the results which is scheduled to be published in June is likely to show outperformance versus other drugs in certain subsets of patients.

"This will likely slim down the size of the market, but make Cagrisema's differentiation much clearer," Intron Health's analysts said.

The REDEFINE-1 trial of Novo Nordisk's new drug showed patients who took CagriSema experienced 22.7% average weight loss after taking the combination of semaglutide and cagrilintide over 68 weeks, compared to 2.3% weight-loss for those who took placebos.