Shares in Danish pharmaceutical giant Novo Nordisk experienced a dramatic fall on Monday, dropping by more than 10%, after the company revealed that a pill version of its blockbuster drug Ozempic had failed to slow the progression of Alzheimer's disease in two extensive clinical studies.
Clinical Trial Setback for Semaglutide
The drugmaker announced that patients participating in the trials, which enrolled nearly 4,000 individuals, did not experience a slower progression of their disease. This outcome dashes hopes for expanding the use of the semaglutide-based medication beyond its current applications for type 2 diabetes and weight loss.
Martin Holst Lange, Novo Nordisk's chief scientific officer, stated that despite a 'low likelihood of success', the company felt a 'responsibility to explore semaglutide's potential' due to the significant unmet medical need in treating Alzheimer's. The progressive disease, which can lead to memory loss and personality changes, has been a notoriously difficult area for drug development.
Mounting Pressure in a Competitive Market
This clinical failure adds to the mounting challenges facing Novo Nordisk, which has seen its value plummet by more than half this year. The company, which became one of Europe's largest on the back of Ozempic and its weight-loss counterpart Wegovy, is now facing intense competition from US rival Eli Lilly.
Eli Lilly recently achieved a milestone by becoming the first US drugmaker to reach a $1 trillion market value, propelled by its own diabetes and obesity treatments, Mounjaro and Zepbound. The two pharmaceutical giants are now in a fierce race to develop the first anti-obesity pill, a product that would be easier to store, distribute, and administer than the current injectable versions.
Leadership and Strategic Shifts
The pressure to succeed is particularly acute for new chief executive Mike Doustdar, who was appointed this summer following the ousting of his predecessor, Lars Fruergaard Jørgensen. The leadership change was prompted by concerns that the company was losing its early dominance in the lucrative weight-loss drug market.
In a bid to cut costs, Doustdar announced in September that Novo Nordisk would cut 11% of its 78,400 global workforce. The company has also trimmed its sales forecast for the fourth time this year, citing lagging sales of both Wegovy and Ozempic.
Despite the recent setback, a separate smaller study presented last year suggested that liraglutide, the active component in another Novo Nordisk weight-loss treatment called Saxenda, may help slow the loss of brain volume in Alzheimer's patients, indicating that research into GLP-1 analogues for neurological conditions continues.
