Buy the Novo Nordisk Plunge as Next‑Gen Obesity Drug Disappoints?

Shares of Danish pharmaceutical giant Novo Nordisk  (NVO)  tumbled badly after the company's next-generation obesity drug CagriSema underperformed archrival Eli Lilly's  (LLY)  competing therapeutic in a late-stage Phase 3 trial. The trial involved 809 randomized individuals considered to be obese with a mean baseline body weight of 114.2 kg. That's 251.8 pounds for those of you who never transitioned to the metric system. 

Patients taking what was considered to be a standard dose of CagriSema lost 20.2% of their overall body weight after 84 weeks. That compares poorly to Lilly's Terzepatide, where in a similar trial, patients taking a standard dose over a similar timeline lost 23.6% of their body weight. Therefore, CagriSema did not demonstrate "non-inferiority" in comparison and according to Novo Nordisk, "did not achieve its primary endpoint." 

CagriSema had been submitted to the FDA in December for trials. A decision would be expected by late 2026.

Monday Morning 

Novo Nordisk held a press conference on Monday morning. Keep in mind that the company had recently projected a 5% to 13% year-over-year sales decline for the full year 2026 citing pricing headwinds in the U.S. It also announced a major restructuring that would involve a reduction of roughly 9,000 employees. 

At the press conference, CEO Maziar Doustdar sounded confident:

"CagriSema and obesity will allow us to further build upon the Wegovy brand, where we aim to provide patients with multiple treatment options to fit their weight loss and lifestyle needs. Not only does CagriSema provide patients the efficacy, safety and health benefits clinically proven by Semaglutide, including established evidence-based risk reductions across certain cardiovascular, renal and liver diseases but it also improves weight loss with the added benefits of Amylin." 

Doustdar added:

"We continue to push the innovation bar with the ongoing and planned Phase III trials for CagriSema and CagriSema High Dose. CagriSema, importantly, built upon our current offerings within the Semaglutide family now with more choices for patients seeking weight loss therapy."

Apparently, there is more than one next-generation option moving forward:

"Novo Nordisk continues to drive next-generation obesity innovation in our pipeline. Charging ahead on the next-generation GLP-1 Amylin, Zenagamtide, where we saw up to 24% weight loss after just 36 weeks in Phase II. This product will be available to patients both in forms of injection as well as oral offering."

Buy This Dip? 

NVO is now trading at 2021 levels. The stock has more or less, with the exception of a couple of brief rallies, been in decline since June 2024. Clearly, there is a huge gap in performance between this stock and the shares of LLY that are up roughly 25% over that same period. ​

​The chart does not leave a lot to the imagination. The stock sold off coming out of a head-and-shoulders pattern of ​bearish reversal this past autumn. Then, there was the late-autumn rally into 2026 that is illustrated here by the Raff Regression model. After that, there is the sharp selloff and Monday morning's gap lower open was too deep to set up what might have been a double-bottom pattern of bullish reversal.

That's all negative. In addition to trading at a significant discount to all three of the stock's key moving averages, Relative Strength is mired in a technically oversold condition, while the daily MACD (moving average convergence divergence) is postured in an overtly bearish fashion.

The short answer is "no" I would not buy this dip. The slightly longer answer is that I might write $40 May 16 puts for close to $4 a contract if I can sell the May 16 $35 puts for close to $2. That makes sense to me — risking $2 to try to pick up a troubled name trading at discount. In no uncertain terms do I take on any risk in this name without an exit plan.

At the time of publication, Guilfoyle had no positions in any securities mentioned.