Novo Nordisk's New Diabetes Drug Outshines Ozempic: Is The Stock a Buy?

Ozempic has been one of Novo Nordisk's (NYSE: NVO) main growth drivers for several years now and has practically become a household name. However, the Denmark-based drugmaker has lost ground to its biggest competitor, Eli Lilly (NYSE: LLY), in the GLP-1 market.

Can Novo Nordisk turn things around and increase its market share? That will largely depend on its next-generation therapies, since its current lineup will lead to declining sales this year, according to the company's guidance.

One of Novo Nordisk's promising candidates is called CagriSema. This investigational medicine recently made more headlines. Let's consider whether CagriSema's progress is a good reason to invest in Novo Nordisk's stock.

Image source: Getty Images.

Another phase 3 win

CagriSema is a dual agonist, meaning it mimics the actions of two different gut hormones: GLP-1 and amylin, both of which help regulate blood sugar and satiety. In late 2024, Novo Nordisk announced that CagriSema performed better than semaglutide (the active ingredient in the brands Wegovy for weight loss and Ozempic for diabetes) in a phase 3 weight-loss clinical trial in patients who were overweight or obese but who didn't have type 2 diabetes. The next-gen GLP-1 therapy led to a mean weight reduction of 22.7% after 68 weeks, compared with 16.1% with Wegovy.

The pharmaceutical giant recently shared data from another late-stage study with CagriSema, in which it went head-to-head against Ozempic in type 2 diabetes patients who were also overweight or obese. In the trial, CagriSema led to an average 1.91% reduction in blood sugar from a baseline of 8.2%. It also led to an average weight loss of 14.2% (diabetes patients have a harder time dropping pounds). CagriSema beat Ozempic in this study.

What's next for Novo Nordisk?

Novo Nordisk has already submitted regulatory applications for CagriSema as a weight loss treatment. It will seek regulatory approval for the diabetes medicine after completing two other phase 3 studies, including one focused on cardiovascular outcomes.

Despite CagriSema's strong performance, it will be more complex to manufacture (and more expensive) than semaglutide, which has run into supply constraints several times. Also, CagriSema still doesn't seem to match the efficacy of Eli Lilly's retatrutide, which posted an outrageous mean weight loss of up to 28.7% in a phase 3 study.

It's always hard to compare across clinical trials, but with Zepbound currently dominating the market and promising medicines in development like retatrutide, Eli Lilly should remain the leader. Still, CagriSema's superiority to Wegovy and Ozempic should help Novo Nordisk perform better, especially as the company has been expanding its manufacturing capacity. Further, Novo Nordisk has several promising diabetes and weight products in development, including Amycretin, in both oral and subcutaneous formulations.

Finally, Wegovy has recently earned important label expansions, including for the treatment of metabolic dysfunction-associated steatohepatitis (MASH), which will help boost its sales. The company's revenue could start moving in the right direction again with new approvals and label expansions.

For all those reasons, Novo Nordisk is worth considering.

Prosper Junior Bakiny has positions in Eli Lilly and Novo Nordisk. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.