Novo Nordisk, Europe’s largest company by market value, faced a stock market bloodbath on Friday after disappointing results from a new drug study caused investors to flee the drugmaker.
The Danish producer of Ozempic, Wegovy, and Semaglutide said clinical trials had demonstrated that overweight subjects using the weight-loss drug Cagrisema had lost an average of 22.7% of their weight over the 68-week trial, compared to 2.3% for those using a placebo.
The result fell short of the 25% Novo Nordisk had expected for the drug, sending shares down over 22% following the announcement.
The trial included 3,417 overweight or obese people with one or more comorbidities.
Martin Holst Lange, executive vice president for development at Novo Nordisk, said in a statement that the company was “encouraged” by the results.
He added that with the insights from the trial, “we plan to further explore the additional weight loss potential of Cagrisema.”
In November, the drugmaker posted a 21% rise in net profit to 27.3 billion kroner ($3.85 billion) for the July-to-September period, but lamented capacity limitations at its production sites.
Sales of Wegovy, which has been approved for use to treat obesity in Britain, Denmark, France, Germany, Norway, and the United States, rose by 42% in the first nine months of the year.
Sales of Ozempic—an injectable anti-diabetic treatment which has become popular for its slimming properties—soared by 54% in the same period.
Novo Nordisk has a hold on 74% of the market for weight-loss treatments.
The World Obesity Federation predicts that by 2035, over half of the world’s population will be overweight or obese and the global economic impact could then exceed $4 trillion a year.
In November, Novo Nordisk Foundation CEO, Mads Krogsgaard Thomsen, told Fortune that the number of untreated obese people globally represented a massive untapped market for the company.
“So you can multiply it by effect to 10, 15, 20, 30, the amount of volumes of these molecules needed to take down the obesity burden, the diabetes burden.”
Thomsen added that Novo Nordisk’s work in scaling up its operations would prove vital for competitiveness before its exclusivity over its GLP-1 patent expires.However, the drugmaker is facing competition from rival companies, namely Eli Lilly’s Zepbound. Results like Friday’s will do little to assuage Novo Nordisk’s doubters.
