Deutsche Bank expects Novo Nordisk's (NYSE:NVO) pending ZEUS trial to miss, but sees limited upside even if the drug proves successful, given the company's looming patent cliff.
The analyst has set a target of DKK290, just 3.6% above the last closing price of DKK280.10, and maintains a hold rating on the stock.
Novo faces a roughly $30 billion patent cliff in 2031 when key revenue-generating drugs lose patent protection, a challenge Deutsche views as unlikely to be meaningfully addressed by ziltivekimab, or zilte for short, the drug being tested in the ZEUS trial.
The analyst notes that market expectations for the trial outcome are already low, both explicitly in analyst forecasts and implicitly in the stock's pricing.
Deutsche expects the trial will miss, though the analyst expresses low confidence in that prediction, suggesting genuine uncertainty around the result.
Even in the upside scenario where the trial succeeds, Deutsche believes the magnitude of success would be unlikely to materially change the company's longer-term outlook.
The bank describes a "blue-sky" best-case scenario in which zilte, being developed to treat chronic inflammation, could help assuage some of the patent cliff impact, but views this as highly unlikely given current evidence.
Deutsche flags the trial as potentially a "sell the news" event, meaning investors may choose to sell into any positive announcement rather than viewing it as a genuine catalyst for share price appreciation.
The combination of low odds of success, limited near-term commercial potential even if the trial works, and the looming patent cliff suggests Novo's fundamental challenges extend well beyond the ZEUS outcome.
For investors, the trial result may therefore prove less important than the company's ability to develop new blockbuster drugs to offset the revenue loss from patent expiration in 2031.