$Novo-Nordisk A/S (NVO.US)$ The appetite suppressant semaglutide (branded as Ozempic and Wegovy) is expected to become the best-selling drug globally next year, with a potential market size reaching $130 billion by 2030, potentially surpassing the cultural impact of any new drug since Viagra. However, facing strong competition from Eli Lilly and Co (LLY.US) Zepbound (also known as Mounjaro) and the pressure of expiring patents, Novo-Nordisk is eager to demonstrate the superiority of its new product Carliglutide over semaglutide with a mixture called CagriSema before December to maintain its leading position in the obesity treatment field.

It is known that semaglutide works by mimicking the GLP-1 hormone to slow down the movement of food in the digestive system, with broad market prospects but facing multi-faceted competition. Eli Lilly and Co's Zepbound has shown weight loss effects even surpassing Wegovy, while other companies are actively developing new generation drugs, including potentially more effective injections and easier-to-take pills. In addition, semaglutide is facing price negotiations in the USA, and its patents in Europe and China are set to expire in the coming years, with potential competition from generic drugs already emerging.

To address these challenges, Novo-Nordisk is researching a mixture of Carliglutide and semaglutide called CagriSema. This combination harnesses the actions of two intestinal hormones, expected to help patients lose at least 25% of their weight, potentially without causing more side effects than using Wegovy alone. Additionally, this combination may also help prevent the "yo-yo effect" after patients stop medication and is exploring its potential as a treatment for type 2 diabetes.

Despite the promising prospects, investor expectations for CagriSema have also brought pressure. Concerns about lower-than-expected prescriptions for Wegovy and worries that a large study on CagriSema could have negative impacts have led to Novo-Nordisk's stock price dropping by about 25% since its peak in June.

In this regard, UBS Group analyst Jo Walton reminded investors at the beginning of October that while the market is generally anticipating Novo-Nordisk's success, this success may only marginally increase the company's market cap by a few percentage points. She further pointed out that if the company fails to surpass existing competitors in the competition and the side effects of the new drug are significantly higher than Wegovy, the company's market cap may face up to a 10% decline.

Nevertheless, Novo-Nordisk remains confident and declined interview requests on this matter, citing the quiet period before the third-quarter performance announcement.

CagriSema could become Novo-Nordisk's new weapon in obesity treatment.

If CagriSema can reach novo-nordisk's self-set 25% weight loss standard, this Danish pharmaceutical company will have a significant advantage in a key area of the obesity treatment market. In contrast, eli lilly and co's Zepbound (marketed as Mounjaro for obesity treatment in europe and for diabetes treatment in the usa) shows a weight loss of about 21% at maximum dose, while novo-nordisk's Wegovy is about 15%.

Matthias Tschöp, chief executive officer of Helmholtz Munich Research Institute, pointed out: "Novo-nordisk is under pressure to maintain its relevance" because the obesity treatment field is increasingly dominated by drugs that can mimic various intestinal hormones.

Tschöp is one of the scientists who laid the foundation for multi-receptor therapy, and eli lilly and co's Zepbound is one of the representatives in this field. "CagriSema may have this potential," he emphasized.

Wegovy works by mimicking the GLP-1 hormone naturally produced by the human body after eating. Zepbound also targets GLP-1, but it adds a second hormone called GIP as well. Tschöp stated that patients taking this dual-action drug typically lose more weight than those taking GLP-1 alone, with similar side effects. The face-to-face trial results between Zepbound and Wegovy expected to be announced by the end of this year may further confirm this point.

Eli lilly and co has gone further by introducing the triple combination drug tirzepatide, which adds a third hormone, amylin. A study last year involving 338 people showed that patients lost approximately 24% of their weight after taking higher doses of tirzepatide. However, this american pharmaceutical company has refused to comment on this.

Although Wegovy and Zepbound have been able to significantly help patients lose weight, some people still question why more of these drugs are needed. However, each patient's experience may be different. Tschöp explained that for diabetes patients, the weight loss may be less noticeable with Wegovy, and for patients with the highest body mass index, even with a 15% to 20% weight loss, they may still be in an obese state.

In addition, the numbers on the scale are not the only consideration. GLP-1 drugs are known to cause unpleasant gastrointestinal side effects such as nausea, vomiting, diarrhea, and others. Pharmaceutical companies are eager to develop a more tolerable alternative that may lead to fewer complications, such as muscle loss and weight rebound.

This is why CagriSema's performance this year may have a more widespread impact.

It is reported that CagriSema contains two components: one is the long-acting GLP-1 (glucagon-like peptide-1) receptor agonist semaglutide, and the other is the long-acting Amylin analog cagrilintide. Amylin is a hormone related to hunger and satiety. By combining these two components, CagriSema aims to provide better weight loss and blood sugar lowering effects.

Amylin: an emerging target in the field of weight loss.

Henrik Sillesen, Chief Medical Officer of the health analytics company Airfinity Ltd., pointed out that following GLP-1, GIP, and glucagon, Amylin has become the next important target actively explored in the field of weight loss. He emphasized that positive research results will further solidify Amylin's position as a viable target for anti-obesity treatment.

Adam Steensberg, CEO of Zealand, shared the gentle characteristics of Amylin compared to GLP-1 drugs. He stated that GLP-1 drugs may suppress appetite, while Amylin can help people maintain satiety for a longer period.

Steensberg predicted that the upcoming data will undoubtedly be favorable for Novo Nordisk, and specifically mentioned whether Novo Nordisk will provide data on muscle preservation, as only preclinical data points have been seen so far.

Professor Thomas Lutz of the University of Zurich has long been devoted to research on pancreatic amylin in mice and rats. He mentioned that as early as 1991, scientists first demonstrated the ability of pancreatic amylin to reduce food intake.

Lutz explained that when we eat, we feel full and happy, but eating too much can also cause discomfort. He further pointed out that studies to date suggest that pancreatic amylin and GLP-1 may act on different main targets in the brain, which means that pancreatic amylin may induce less nausea.

Although the first pancreatic amylin analog was launched 20 years ago, due to its complex administration and lack of widespread attention, it has not surpassed the status of GLP-1 in the academic community. However, there is now increasing interest in Amylin.

Barclays analyst Emily Field, at a diabetes conference in Madrid in September, saw new research on this compound and said that insulin can almost combine with any drug, creating the potential for one plus one to equal three, which looks quite exciting. She predicts that if the trial is successful, CagriSema is expected to enter the market at some point in 2026.

At the conference, Novo Nordisk also stated that insulin combinations may lead to longer-lasting weight loss effects, which is a dream in the field. After administering CagriSema to mice, it counteracted the slowing metabolism usually associated with calorie restriction. The company's scientists believe this may increase the success rate of long-term weight loss.

CagriSema faces manufacturing challenges.

Although CagriSema performed well in rat experiments, the transition of drug effectiveness from animal experiments to human trials often involves uncertainty. Even if CagriSema successfully passes human trials, Novo Nordisk still needs to overcome another major obstacle: drug manufacturing. Currently, this Danish pharmaceutical company is finding it difficult to meet the global demand for Wegovy and Ozempic, the latter being a diabetes drug commonly used as a weight loss medication. While the shortage of Wegovy in the US has been resolved, in Denmark, some doses of the drug are still temporarily out of stock.

Facing this challenge, a Novo spokesperson said: 'From a global perspective, the demand for most of our product portfolio exceeds expectations. Therefore, we are aggressively investing to expand the capacity of all relevant production facilities.'

The production process of CagriSema is more complex compared to Novo Nordisk's other heavyweight drugs. It not only requires two different drug components, but also the design of a new type of injection pen and the provision of a unique dual-chamber system to ensure that Semaglutide and Cagrilintide remain separated before injection. Currently, Novo Nordisk is developing a version of CagriSema that allows these two drug components to be mixed in one injector. However, Chief Financial Officer Karsten Munk Knudsen revealed to investors in August that this project carries a certain level of risk.

Jefferies Financial analyst Peter Welford, at a manufacturing workshop co-hosted with a former factory manager of Novo Nordisk in September, pointed out that the dual-chamber injector is 'extremely complex.' He emphasized that this equipment has never been scaled up for commercial production before, so Novo Nordisk may not be able to rapidly increase the production of dual-chamber injectors as with simpler drug bottles.

In the fiercely competitive and ever-evolving weight loss market, CagriSema faces multiple challenges. Any misstep along the way could lead Novo Nordisk to lose its leading position. However, Goldman Sachs analyst James Quigley stated last month that considering the recent decline in Novo Nordisk's stock price, the risk-reward ratio is starting to become more favorable. He noted that even if CagriSema fails, Novo Nordisk's early results on the experimental drug combining GLP-1 and insulin into a pill show the potential for success multiple times.

Meanwhile, Gareth Powell, medical care director at Polar Capital, said: "Next year, the market's focus will shift to oral medications." His team manages assets worth 3.6 billion British pounds (about 4.7 billion US dollars) and holds shares in multiple companies including Zealand, novo-nordisk, eli lilly, and amgen. Following CagriSema's research, Powell believes that investors' attention will shift to data on a weight loss drug being developed by eli lilly. The performance of an early drug this autumn left analysts disappointed, making novo-nordisk's drug options more limited. However, Powell points out that compounds similar to CagriSema's insulin plus GLP-1 require a large amount of drug ingredients to produce, making them less attractive.

Nevertheless, Powell still believes novo-nordisk has other options. "They are really smart," he says, "even though people are not very bullish on this company, their performance is outstanding."