"Miracle weight-loss drug" crossover dream shattered! Oral Ozempic fails in Alzheimer's treatment, Novo Nordisk plunges 12%

Novo Nordisk's Alzheimer’s drug trial fails, stock price plunges to lowest since 2021.

On Monday local time, Novo Nordisk announced that the oral version of its drug Ozempic failed to slow the progression of Alzheimer’s disease in two large clinical trials, marking the failure of a long-term investment attempt. Based on cognitive assessments, patients taking the drug did not show significant improvement.

After the announcement, Novo Nordisk’s stock price plummeted by as much as 12.4% in Copenhagen trading, hitting its lowest level since July 2021. The company has decided to terminate the originally planned one-year research extension. So far this year, the stock has dropped by over half, and investors are worried about Novo Nordisk’s long-term competitiveness in the booming obesity treatment market.

Shares of competitor Eli Lilly also fell in U.S. pre-market trading, while Biogen, which focuses on developing Alzheimer’s drugs, rose 6.7%. According to Morgan Stanley analysts, if the trial had succeeded, the drug might have brought up to $5 billion in annual revenue growth for Novo Nordisk.

High-risk trial ends in failure

Alzheimer’s disease, characterized by severe cognitive decline, memory loss, and personality changes, is a well-known challenge in drug development. Novo Nordisk had previously described these trials as high-risk projects.

Novo Nordisk Chief Scientific Officer Martin Holst Lange stated in a press release: "We believe it is our responsibility to explore the potential of semaglutide." Semaglutide is the generic name for Ozempic. Although the treatment showed improvements in some physiological indicators related to Alzheimer’s disease, it did not translate into a significant slowdown in disease progression.

According to Morgan Stanley analysts, the probability of success for this trial was estimated at about 25%, with a 75% chance of failure. In September, the company told analysts that the Alzheimer’s research could at best detect only a low double-digit percentage difference in the progression of cognitive decline.

The result of this trial is a setback for Novo Nordisk’s efforts to regain leadership in the obesity treatment market. If Wegovy were effective for the most common form of dementia, it could have given the company an advantage over its American competitor Eli Lilly’s Zepbound.

The two trials tracked changes in the condition of more than 3,500 patients with mild Alzheimer’s disease. Nordnet AB investment economist Per Hansen said: "It’s like a lottery ticket that could have had huge value. Investors previously didn’t assign it any real value, but the hope still existed."

Novo Nordisk’s stock price has dropped 73% from its 2024 peak, reflecting growing anxiety among investors about the company’s long-term market position in the obesity treatment sector that it helped create.

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