Novo Nordisk scores another blow in a particularly difficult year for the company: the Danish drugmaker has reported that one of the oldest oral formulations of its semaglutide drug has failed to demonstrate efficacy in advanced trials investigating whether it could slow cognitive decline in people with Alzheimer’s disease.
The result represents a setback in one of the most ambitious lines of research for the company, which sought to open up a new therapeutic market beyond diabetes and obesity.
According to data published by CincoDías, the news resulted in a stock market decline of more than 12%, leaving Novo Nordisk at its lowest value in four years.
What is happening with the drug
According to the information published by the company, the patients who participated in the trial did not show a slower progression of the disease in the cognitive evaluations performed. In view of these data, the company has decided to cancel the planned extension of the study, which was to be extended for another year.
The drug analyzed is Rybelsus, the oral version of semaglutide currently authorized for type 2 diabetes: although it shares active ingredients with Ozempic and Wegovy, its use in Alzheimer’s was analyzed as a possible extension of the scope of GLP-1-based drugs, a segment in which Novo Nordisk has been a world leader until the recent aggressive irruption of its competitor Eli Lilly.
The company has remarked that, despite the failure in this indication, the accumulated scientific evidence confirms the benefits of semaglutide for the control of diabetes, obesity and other related pathologies, according to the group’s chief scientific officer, Martin Holst Lange.
Why this setback at Novo Nordisk?
The setback comes at a particularly delicate time for Novo Nordisk. Beyond the stock market pressure, the company is undergoing an internal restructuring that affects both its executive management and its board, in an attempt to stabilize the business after several months of operational difficulties.
The pharmaceutical company also recently competed with Pfizer in the purchase of the U.S. biotech company Metsera, which specializes in the development of new drugs for obesity. Although Novo submitted several bids, Pfizer finally won with a deal valued at more than 10 billion dollars, which has been interpreted as another strategic setback for the Danish company.
Analysts’ reaction: between expected risk and concern for the future
The negative outcome of the trials has not surprised everyone in the industry. BMO Capital Markets stressed that the project always involved a high level of risk due to the still limited knowledge about the causes of Alzheimer’s and the potential role of GLP-1 agonists in the disease.
Even so, they believe that this new failure could increase the pressure on Novo, adding to the failed acquisition of Metsera and downwardly revised financial forecasts.
In fact, in early November the company adjusted its operating profit growth forecast for the full year, reducing the estimated range from 4%-10% to 4%-7% in local currency terms.
For its part, Jefferies noted that, although optimism about the trial was not overwhelming, the possibility of a positive result kept some investors interested. In the wake of the data, they consider it unlikely that the market will return to Novo Nordisk in the short term.
Instead, JP Morgan called the immediate stock market reaction “excessive,” while Bloomberg Intelligence noted that the use of semaglutide for Alzheimer’s had always been seen as a “potential extra” rather than a key pillar of the company’s strategy.
