Novo Nordisk’s shares plunged after it announced it had officially stopped the clinical trials they were conducting on Alzheimer’s treatment.
The firm, best known for its Wegovy and Ozempic drugs — the latter of which was originally developed to treat diabetes — had been testing whether semaglutide, a key ingredient in the drugs, could slow the progression of Alzheimer’s.
There is no cure for Alzheimer’s right now, a disease that affects more than 55 million people globally. It is a progressive brain disorder caused by abnormal protein deposits in the brain.
It slowly destroys memory, thinking skills, and eventually the ability to carry out basic tasks.
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Novo Nordisk began trials two years ago into whether semaglutide could help in treating Alzheimer's. If successful, the trial could have had a huge impact, especially as earnings from its core diabetes and weight-loss business face intense competition.
The drug tested was Rybelsus, a pill approved only for type 2 diabetes, which contains semaglutide. This is the same ingredient in both Wegovy and Ozempic.
When Novo Nordisk revealed in summer 2021 that the Alzheimer’s trial would not proceed into a third year, shares initially fell more than 12% in Copenhagen.
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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.
"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 explained.
Medications to treat Alzheimer’s exist, but they only manage symptoms or temporarily slow progression.
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Scientists are investigating many approaches in the search of a cure, and semaglutide was investigated. However, the research has ‘shown that semaglutide does not slow cognitive decline in mild cognitive impairment or early-stage Alzheimer’s disease’, Alzheimer’s UK reports.
Novo Nordisk’s shares closed the day of the disappointing announcement down roughly 9%, adding to losses for the year that have now surpassed 55%.
The market reaction suggests that some investors believed there would be at least partial success from Novo’s Alzheimer’s trials.
Several analysts described Monday’s drop in the share price as shocking.
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Sydbank's Soren Lontoft commented via Reuters on 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."