Novo Nordisk (NVO) Stock Plunges as Alzheimer’s Drug Trial Fails to Show Results

TLDR

• Novo Nordisk’s oral semaglutide drug Rybelsus failed to meet its primary goal in late-stage Alzheimer’s trials involving 3,808 patients
• The company’s shares dropped 10-12% following the announcement of the failed trial results
• The trials tested whether the GLP-1 drug could slow cognitive decline in early-stage Alzheimer’s patients over a two-year period
• Analysts had given the trial only a 10% probability of success, with executives previously calling it a “lottery ticket”
• The setback comes as Novo faces rising competition in its core obesity and diabetes markets from competitors like Eli Lilly

Novo Nordisk shares tumbled Monday after the Danish drugmaker revealed its oral semaglutide drug failed to slow cognitive decline in Alzheimer’s patients. The stock fell more than 10%, closing at $42.64 per share in U.S. trading.

Novo Nordisk A/S, NVO

The company tested Rybelsus, a pill currently approved only for type 2 diabetes, in two late-stage trials called EVOKE and EVOKE+. The studies included 3,808 patients with early-stage Alzheimer’s disease.

Rybelsus contains the same active ingredient as Novo’s blockbuster drugs Ozempic and Wegovy. The trials aimed to determine whether GLP-1 medicines, already used by millions for diabetes and weight loss, could help Alzheimer’s patients.

The drug did not demonstrate a “statistically significant” effect in reducing disease progression. Participants ranged from 55 to 85 years old and were monitored over a two-year period.

Researchers used a ratings system to assess clinical changes in memory and patients’ ability to care for themselves. The studies targeted a 20% slowing of cognitive decline but failed to reach that goal.

Another Blow for the Company

The failure marks another setback for Novo and its new CEO Mike Doustdar, who took over in August. The company had experienced booming success with Ozempic and Wegovy before facing slowing sales growth and a tumbling share price.

Doustdar is now restructuring the company to better compete with rival Eli Lilly. The company has also implemented mass layoffs as part of its reorganization.

Ludovic Helfgott, Novo’s Executive Vice President for Product and Portfolio Strategy, had called the Alzheimer’s trials a “lottery ticket” in September. The comment reflected the uncertain prospects but huge potential of the program.

Wall Street analysts viewed the trials as high-risk, high-reward ventures. UBS had estimated just a 10% probability of success before the results were announced.

Limited Options for Patients

Alzheimer’s disease and other dementias affect more than 55 million people globally. There is no cure for the condition.

Current treatment options for Alzheimer’s patients remain limited. Recent drugs from Eli Lilly and an Eisai-Biogen partnership are the first to show they can slow cognitive decline.

However, these treatments require infusions or injections and can cause serious side effects. Novo’s oral drug would have offered a more convenient alternative if successful.

Chief Scientific Officer Martin Holst Lange said the extensive evidence supporting semaglutide continues to provide benefits for individuals with type 2 diabetes and obesity. The drug remains effective for its approved uses.

The failed trial reinforces analyst skepticism about Novo’s ability to expand beyond its core markets. The company faces growing competition in obesity and diabetes treatments.

Novo felt obligated to explore semaglutide’s potential for Alzheimer’s despite the low likelihood of success. The decision reflected the unmet need in treating the disease.

The Danish pharmaceutical company’s American-listed stock dropped 10.48% in early trading. The Copenhagen-listed shares fell 12.19% to 267.50 Danish kroner.

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