Shares in Novo Nordisk, the Danish firm best known for its Wegovy and Ozempic weight loss drugs, have plunged after it called a halt to closely-watched trials on a treatment for Alzheimer’s disease.
The company had been testing whether a key ingredient in the drugs could slow progression of the brain disorder.
Novo Nordisk, which began the trials two years ago, had always treated the study as an outside bet but one which had the potential to land big rewards, if successful, as earnings from its core diabetes/weight loss space come under pressure from intense competition.
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The drug tested was Rybelsus, a pill approved only for type 2 diabetes, which contains semaglutide like Wegovy and Ozempic
But shares fell more than 12% initially in Copenhagen, to lows not seen since the summer of 2021, when Novo revealed that the planned expansion of the trial, into a third year, would not proceed.
Martin Holst Lange, chief scientific officer and executive vice president of research and development at Novo Nordisk, said: “Based on the significant unmet need in Alzheimer’s disease as well as a number of indicative data points, we felt we had a responsibility to explore semaglutide’s potential, despite a low likelihood of success.
Novo’s revenues are increasingly threatened by generic alternatives to Ozempic and Wegovy.
“While semaglutide did not demonstrate efficacy in slowing the progression of Alzheimer’s disease, the extensive body of evidence supporting semaglutide continues to provide benefits for individuals with type 2 diabetes, obesity, and related comorbidities,” he said.
Alzheimer’s disease and other dementias affect more than 55 million people globally. There is no cure.
Novo’s shares settled around 9% down on the day, building on losses over the year to date that have now extended beyond 55%.
The share price reaction would suggest that some investors had factored in a measure of success from Novo’s trials.
Some market analysts expressed horror over the scale of Monday’s share price decline.
Sydbank’s Soren Lontoft said of the trial’s end: “Based on the history of Alzheimer’s treatment, this doesn’t come as a big surprise to me.
“The share’s reaction is probably more due to the bad sentiment around the Novo Nordisk share and the negative news flow over the past year – perhaps there was hope for a little tailwind from this study.”
