The Failure
Novo Nordisk's closely watched Alzheimer's trials failed. The company tested an older oral version of semaglutide to see if it could slow cognitive decline.
It couldn't.
The trials were discontinued after two years despite plans for a third year. That suggests the drug offers virtually no benefit in slowing Alzheimer's progression.
Novo had previously called the trials a "lottery ticket" to underline their highly uncertain outcome.
The Market Impact
Novo shares fell more than 12% on the news. They traded down 8.4% at their lowest level since July 2021, a month after the company launched Wegovy.
The setback scuppers hopes that Alzheimer's could open a major new market for GLP-1 medicines. Novo faces rising competition in its core areas of obesity and diabetes.
Biogen shares jumped about 5% premarket following the news. Biogen and partner Eisai's Leqembi and rival Eli Lilly's Kisunla are the only approved Alzheimer's treatments in the U.S.
The Overreaction
Several analysts called the share price drop an overreaction.
"The share's reaction is probably more due to the bad sentiment around the Novo Nordisk shares and the negative news flow over the past year," said Sydbank analyst Soren Lontoft Hansen. "Perhaps there was hope for a little tailwind from this study."
UBS had estimated just a 10% probability of success. Analyst skepticism about Novo's Alzheimer's ambitions was already high.
The Trials
The trials tested Rybelsus, a pill approved only for type 2 diabetes. Like Ozempic and Wegovy, it contains semaglutide.
EVOKE and EVOKE+ covered a combined 3,808 patients with early stage Alzheimer's. They were the first large trials for patients at this stage.
The trials used a ratings system to assess clinical changes in memory and daily functioning over two years. The studies aimed for a 20% slowing of cognitive decline.
The Context
Alzheimer's disease and other dementias affect more than 55 million people globally. There is no cure.
For decades, researchers have searched for treatments. Most have resulted in failures.
Biogen and Eli Lilly's approved drugs require infusions or injections and can cause significant side effects. Eli Lilly, the other big obesity drug player, has not tested its GLP-1 drug for Alzheimer's.
The CEO Response
"Today we announced that our efforts to slow down the progression of Alzheimer's disease have come to an end," CEO Mike Doustdar said in a LinkedIn video.
"We always knew that there would be a low likelihood of success, but it was important to determine if semaglutide could take one of the medicine's most challenging frontiers."
Novo will publish headline numbers next week. Full data comes in March next year.
The Bottom Line
Novo's failed Alzheimer's bet sent shares tumbling to 2021 lows, adding to pressure on the Danish drugmaker already facing slowing sales growth and rising competition in its core obesity and diabetes markets.