RESOLVING THE LEDGER
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Novo Nordisk shareholders are suing the drugmaker over its experimental obesity treatment CagriSema, alleging the company misled investors about a key clinical trial before releasing disappointing results that wiped billions of dollars off its market value.
A federal judge on Tuesday allowed parts of that lawsuit to move forward, finding that investors had plausibly alleged that some statements about CagriSema's tolerability and the design of the late-stage trial may have been misleading.
The ruling does not determine that Novo committed securities fraud. Instead, it means the case can proceed into the next stage, where investors can seek evidence supporting their claims.
A Novo Nordisk spokesperson said the company "believes that the allegations against it are meritless," and intends to vigorously defend against them.
It comes as Novo works to boost investor confidence in its obesity business amid mounting competition from Eli Lilly and as it bets heavily on its next generation of weight-loss treatments.
Here's what happened, what the lawsuit alleges, and why CagriSema has become so important to Novo's future.
The case centers on CagriSema, an experimental weekly injection that combines semaglutide — the active ingredient in Wegovy and Ozempic — with cagrilintide, which mimics the hormone amylin.
When Novo released CagriSema topline results in December 2024 , investors had widely expected the treatment to produce average weight loss of roughly 25%. Instead, the company reported average weight loss of about 20.4% in practice, sending the stock sharply lower.
Investors also allege that Novo gave the impression that the Phase 3 REDEFINE-1 trial would follow a dosing approach similar to earlier trials, including a fixed maintenance dose of 2.4 milligrams of semaglutide combined with 2.4 milligrams of cagrilintide.
Investors argue that the disclosure changed how the market understood the trial results, particularly around how well patients tolerated the treatment at the highest dose.
The distinction matters because the court noted that the extent to which patients can remain on a treatment at the intended dose, or drug tolerability, is a key issue for obesity medicines.
"Clinical trials are complicated and nuanced, and investor calls are not scientific conferences," Judge Robert Kirsch wrote in a 56-page opinion. But he added that pharmaceutical companies cannot mischaracterize or omit important aspects of clinical trials in a misleading way.
Following the December announcement, Novo's American depositary receipts fell $18.15 per share, or 17.83%, in a single day, with more than 53 million shares traded, according to the ruling. Copenhagen-listed shares dropped 20.7%.
The judge rejected most of the shareholders' allegations, finding that investors had not sufficiently shown that many of the company's statements about CagriSema's weight-loss potential, future trials or other issues were actionable under securities law.
But he allowed claims related to CagriSema's tolerability and REDEFINE-1's clinical protocols to continue.
The court found that investors had plausibly alleged that certain statements about the trial design could have been misleading. Those included statements describing REDEFINE-1 as using a fixed-dose combination and comments from Martin Holst Lange, Novo's former executive vice president of development and current chief scientific officer, about the drug's tolerability profile and dosing approach.
The judge also found that investors had sufficiently alleged the required level of intent for claims involving Lange.
The court pointed to allegations that Lange had been presented to investors as a key executive responsible for answering questions about Novo's clinical trial design and outcomes.
The ruling does not decide whether those allegations are true. It only determines that the claims meet the legal standard to move forward.
The lawsuit comes at a difficult time for Novo.
The company built the modern obesity drug market with Wegovy and Ozempic, but it has faced growing pressure from Eli Lilly's rival medicines, which have rapidly gained market share .
That competition has made Novo's pipeline increasingly important to investors. The company is counting on products including higher-dose Wegovy , oral versions of its medicines and CagriSema to help strengthen its position in the market.
Novo has viewed CagriSema as an important next step in its obesity pipeline, previously pointing investors toward the drug's potential to deliver greater weight loss with minimal side effects.
Novo has pushed back against the idea that CagriSema's initial trial results represented a failure. CEO Mike Doustdar told CNBC earlier this year that the market had "penalized" the data harshly and said further studies would provide a fuller picture of the drug's potential.
The shareholder lawsuit is unrelated to Novo's recent legal battle with Eli Lilly.
Last week, Novo sued Lilly , alleging that Lilly's advertisements unfairly compare its drugs with older, lower doses of Novo's treatments and do not reflect newer data on high-dose Wegovy.
Lilly has denied those allegations, saying its advertising is based on available clinical evidence.
That case is about how the companies market their competing medicines, whereas the shareholder lawsuit against Novo focuses on what the company told its own investors about CagriSema's clinical trial design and results.
For now, the shareholder case moves into discovery, where investors will attempt to prove that Novo violated securities laws. Novo will have the opportunity to continue defending itself before any trial on the merits.
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