Novo Nordisk’s Alzheimer’s Drug Trials Fail, Shares Plummet

Novo Nordisk announced on March 4, 2024, that its clinical trials for an oral version of the Alzheimer’s drug semaglutide did not succeed in slowing the progression of the disease. This disappointing outcome has led to a significant drop in the company’s stock value, highlighting the challenges facing the Danish pharmaceutical giant as it navigates increasing competition in the obesity and diabetes markets.

Trial Outcomes and Market Impact

The trials, referred to as EVOKE and EVOKE+, were intended to evaluate whether semaglutide could effectively slow cognitive decline in patients with early-stage Alzheimer’s. Despite initial optimism, the results indicated that the drug did not provide substantial benefits. The trials, which included a total of 3,808 participants aged 55 to 85, aimed for a 20 percent reduction in cognitive decline over a two-year period.

Following the announcement, Novo Nordisk’s shares fell by approximately 10 percent, reflecting investor disappointment and skepticism about the company’s future in the Alzheimer’s market. Erik Berg-Johnsen, a portfolio manager at Storebrand Asset Management, characterized the trial failure as “a nail in the coffin” for the use of Novo’s products in treating Alzheimer’s. This sentiment echoes broader analyst concerns, with UBS estimating only a 10 percent chance of success for Novo’s Alzheimer’s initiatives.

Challenges for Novo Nordisk

This setback follows a tumultuous period for Novo Nordisk, which has seen a decline in sales growth for its flagship weight-loss medications, Ozempic and Wegovy. New CEO Mike Doustdar faces mounting pressure to revitalize the company’s performance amid rising competition, particularly from U.S. rival Eli Lilly.

The disappointment over the Alzheimer’s trials is compounded by a management overhaul and mass layoffs recently announced by the company. Analysts suggest that the market reaction may be influenced by negative sentiment surrounding Novo Nordisk’s shares, rather than solely the trial results. Soren Lontoft Hansen, an analyst at Sydbank, noted that while the trial outcome was not entirely unexpected, it might have provided a glimmer of hope for investors looking for positive news.

Martin Holst Lange, Chief Scientific Officer at Novo Nordisk, asserted that while the semaglutide trials did not yield the desired outcomes for Alzheimer’s treatment, the drug continues to show efficacy for conditions such as type 2 diabetes and obesity. “The extensive body of evidence supporting semaglutide continues to provide benefits for individuals with type 2 diabetes, obesity, and related comorbidities,” he stated.

Broader Implications for Alzheimer’s Treatments

The failure of Novo Nordisk’s trials has broader implications for the Alzheimer’s treatment landscape. Following the news, shares of Biogen rose by approximately 5 percent, as investors shifted focus to existing Alzheimer’s therapies. Currently, Biogen and its partner Eisai have approved treatments, such as Leqembi, while Eli Lilly offers Kisunla. Both alternatives require infusions or injections and can lead to significant side effects.

Some analysts had speculated that the introduction of semaglutide might hinder the market potential for existing Alzheimer’s drugs by delaying disease progression. The results from Novo’s trials, however, alleviate some concerns regarding competition in this area. Eric Schmidt, a Cantor analyst, noted that the trial’s failure could reduce competitive pressure on established Alzheimer’s treatments.

The outcome of these trials serves as a reminder of the complexities and uncertainties inherent in drug development, especially within the challenging realm of neurological diseases. As Novo Nordisk recalibrates its strategies, the focus will likely return to its core markets of diabetes and obesity, where it has historically found success.