Shares of Novo Nordisk NVO lost 5.5% on Friday after the company announced top-line data from a mid-stage study evaluating the safety and efficacy of its investigational candidate, monlunabant (formerly INV-202), to treat obesity. The stock price is likely to have declined as the efficacy and safety results failed to impress the investors.

Monlunabant, a small molecule oral cannabinoid receptor 1 (CB1) inverse agonist, was added to Novo Nordisk’s clinical pipeline following the acquisition of Inversago Pharmaceuticals in 2023. The phase IIa study enrolled 243 people with obesity and metabolic syndrome, who were equally randomized into four treatment arms, receiving either a 10 mg, 20 mg or 50 mg dose of monlunabant or placebo.

Results Reported From NVO’s Monlunabant Study

Per the data readout from the phase IIa obesity study, it was observed that all doses of monlunabant achieved a statistically significant weight loss from the baseline body weight of 110.1 kg compared to placebo. After 16 weeks of treatment, those taking a 10 mg daily dose lost 7.1 kg, while the placebo group lost only 0.7 kg. However, higher doses of monlunabant provided minimal additional weight loss.

In the study, the most frequent side effects were gastrointestinal (mostly mild to moderate) and linked to the dosage. Mild to moderate neuropsychiatric side effects, such as anxiety, irritability and sleep disturbances, were also reported more often with monlunabant than with the placebo, and these effects were also dose-dependent. This might have contributed to the decline of the stock price. However, no serious neuropsychiatric side effects were reported.

Year to date, shares of Novo Nordisk have gained 23.3% compared with the industry’s 23.5% growth.

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NVO’s Path Forward With Monlunabant for Obesity

Due to its unique mechanism of action, the candidate holds significant potential in the obesity treatment market, where there is a large unmet medical need. While the mid-stage study results showed monlunabant’s ability to reduce weight, management believes additional research is needed to determine the optimal dose that balances safety and effectiveness.

Based on the phase IIa study data, Novo Nordisk plans to launch a larger phase IIb study in obesity to further explore monlunabant's dosing and safety profile over a longer period in a global population. The phase IIb study is expected to begin in 2025.

Impact of NVO’s News on Other Obesity Drug Makers

Following the data readout from the phase IIa obesity study of monlunabant, shares of Corbus Pharmaceuticals CRBP plunged in reaction to the results announced. CRBP shares plunged 62.3% on Friday. Corbus is currently developing its investigational candidate, CRB-913, which is also a CB1 inverse agonist, in preclinical studies for obesity. Corbus plans to treat the first patient with CRB-913 in an early-stage study in the first quarter of 2025.

In contrast, the news of NVO caused a rise in the stock prices of other pharmaceutical companies on Friday, with Eli Lilly LLY and Viking Therapeutics VKTX increasing 0.7% and 3.4%, respectively. These two companies are also developing treatments for obesity.

The obesity market is currently dominated by Novo Nordisk and Lilly, which are the only two companies to market obesity drugs. Novo Nordisk markets its blockbuster chronic weight management drug, Wegovy (semaglutide), while Lilly’s obesity drug is called Zepbound (tirzepatide).

Both Wegovy and Zepbound have witnessed unparalleled success in this market space due to exceptionally strong demand. However, both NVO’s Wegovy and Lilly’s Zepbound are administered as weekly injections. Novo Nordisk, Lilly and some other drugmakers are making oral medicines with different mechanisms of action for obesity, which can improve patient convenience.

Viking Therapeutics is developing VK2735 as a subcutaneous injection, as well as an oral pill for treating obesity. VKTX plans to advance the subcutaneous formulation to late-stage development and start a mid-stage study on the oral formulation before 2024-end.

Novo Nordisk A/S Price and Consensus

Novo Nordisk A/S price-consensus-chart | Novo Nordisk A/S Quote

NVO’s Zacks Rank

Novo Nordisk currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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