Ozempic is medicine for adults with type 2 diabetes that along with diet and exercise may improve blood sugar. (Photo by Steve Christo – Corbis/Corbis via Getty Images)
Steve Christo – Corbis | Corbis News | Getty Images
Novo Nordisk has had a difficult year: a tumbling stock price resulting in the biggest leadership shakeup in the company’s 100-year history as investors turned their back on the Danish drugmaker and its weight loss business.
It seemed investors had largely given up on Novo’s ability to translate its strides in pioneering GLP-1 drugs to financial gains as the lucrative market attracts new players. Scientists, however, say that the medicine still has potential.
What started with a focus on the drug’s ability to manage weight and blood sugar, and combat related conditions such as heart disease, is now expanding further with growing interest in how it might also impact the brain.
Semaglutide, or as it is better known, Ozempic and Wegovy, is a GLP-1 receptor agonist that was originally developed for diabetes patients to manage their blood sugar levels. However, it quickly became prescribed by doctors off-label en masse as its appetite surpressing and weight-loss properties became known. Today, it is approved for anti-obesity purposes and brings in billions annually for its maker, Novo Nordisk.
Now, the medical community is discovering a growing list of added benefits from these drugs.
“Wegovy promotes weight loss and potentially other mechanisms not fully understood,” the U.S. Food and Drug Administration wrote in a statement in August when it approved the drug for treating liver disease. Semaglutide is also cleared by regulators to reduce the risk of heart attacks and strokes in overweight people with cardiovascular disease, as well as to treat chronic kidney disease in diabetes patients.
Meanwhile, a rival drug by U.S. competitor Eli Lilly, tirzepatide (known as Mounjaro and Zepbound), which also targets the GLP-1 hormone as well as another gut hormone called GIP, is approved for treating moderate to severe obstructive sleep apnea in adults with obesity.
But the benefits may not end there. Amid increased competition, additional indications have become a new frontier for drug developers alongside new formats like pills.
GLP-1s and the brain
Observational studies have shown that GLP-1s appear to quiet cravings not just for food, but also for alcohol, tobacco, and recreational drugs, as they affect the brain’s reward pathway. By seemingly changing dopamine signals in the brain, these drugs could reduce cravings and allow the individual to be more rational when faced with tempting options.
“There is interest in understanding the potential of semaglutide on various brain functions,” Laura Nisenbaum, executive director at Alzheimer’s Drug Discovery Foundation (ADDF), told CNBC.
“Understanding that inflammation and energy usage in the brain is going to be so important for our normal cognitive function,” Nisenbaum said. Recognizing that link will be useful in many different neurological and neuropsychiatric indications where changes or damage to the brain impact mood, behavior or cognition, she added.
Evolving data suggest that semaglutide and rival drug tirzepatide made by Eli Lilly might be the first effective “anticonsumption” agents with the potential to treat excessive food cravings, obesity, alcohol consumption, nicotine addiction, recreational drug use, and even uncontrollable shopping behaviors, a study by researchers at Saint Luke’s Mid America Heart Institute and University of Missouri found.
Another small-scale randomized clinical trial found that low-dose semaglutide reduced alcohol consumption and significantly reduced cravings compared to placebo in patients with alcohol use disorder over nine weeks of treatment. The results justify larger clinical trials of incretin therapies for alcohol use disorder, the researchers concluded.
The Alzheimer’s disappointment that wasn’t
Another potential added benefit of this class of drugs could be how it interacts with the dementia process.
In November, Novo disappointed investors when it published data on a two-year-long clinical trial testing whether semaglutide could slow down cognitive decline in patients with Alzheimer’s disease.
Hopes had run high that the medicine might be able to help people suffering from the most common type of dementia, as it had been observed in real-world studies that diabetes patients taking semaglutide developed Alzheimer’s at a lower rate than those who didn’t.
But the late-stage trial failed to meet its main goal, showing that semaglutide didn’t significantly impact cognition in Alzheimer’s patients. Novo said it would discontinue a one-year extension of the trial due to the results.
However, some scientists told CNBC it shouldn’t be seen as a failure. They say that even if the results were disappointing, it was a well-conducted trial that the science community was able to learn from.
“It just gave a negative result as far as the drug is concerned in that particular population,” said Ivan Koychev, associate professor in neuropsychiatry at Imperial College London.
Semaglutide however, affects Alzheimer’s disease proteins in the right direction, as seen in biomarker measures, Koychev said. “They’re impacting Alzheimer’s disease-linked proteins, they reduce their quantity in the cerebrospinal fluid, which suggests that it is interacting directly with the alternative pathology.”
There was also an observed reduction in systemic inflammation biomarkers, according to Novo. “The thinking is that it may be this anti-inflammatory effect that, if it is implemented early enough in the disease process, you can substantially modify the risk of dementia,” Koychev said.
“The signal was always in the prevention space rather than the treatment space,” he added.
Similarly, Nisenbaum said a next useful step would be to test semaglutide and other GLP-1s earlier in the course of the disease as a preventative therapy.
Novo Nordisk said it was reviewing all data from the trial, but that it was too early to speculate any further on the effect semaglutide might have on dementia patients.
The science versus the Street
Despite the fact that the innovations developed by Novo have the potential to significantly impact public health, many investors have turned their back on the company over the past 18 months as its growth prospects face challenges.
Novo shares are having their worst year on record since listing on Nasdaq Copenhagen over three decades ago. At its peak in mid-2024, the stock traded at above 1,000 Danish kroner. Today, it trades at around 320 kroner.
The stock’s year-to-date drop of 50% is being driven by increased competition from U.S. rival Eli Lilly and so-called compounding pharmacies making cheaper, copycat versions of semaglutide. A failure to convince investors that its pipeline will bring significant financial gains amid a flurry of hopeful market entrants also adds to the pressure.
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Novo Nordisk shares in the year-to-date
The Alzheimer’s trial data readout in November led shares to drop 5.8% on the day, despite analysts saying it was always a long shot and Novo management themselves called it a “lottery ticket,” — underlining its highly uncertain outcome.
The two Alzheimer’s drugs currently on the market, Eli Lilly’s Kisunla and Biogen/Eisai’s Leqembi have been shown to slow down the progression of Alzheimer’s disease by up to a third but come with the risk of severe side effects.
These medicines were studied 15 years ago, and there were many negative studies along the way, ADDF’s Nisenbaum said. “Each one, we learned something that then led to an improvement in understanding our patients in the clinical trials and then how to measure what’s happening in them.”
“It’s absolutely about the long game,” she added, hopeful that semaglutide or other novel drugs that target risk factors could be used in combination with Kisunla and Leqembi.
But the market doesn’t see it like that, and there are many reasons why.
First of all, investors’ time horizons are much shorter than the decades-long process it typically takes to bring a drug to market, meaning pharmaceutical development often clashes with the speedier pace of public markets. Adding new indicators for a drug also takes time, as they need to be backed up by often lengthy clinical trials.
Secondly, semaglutide is facing key patent expiries in 2031 and 2032, which will give the green light to others to make generic versions of semaglutide.
“We don’t see a good argument for a valuation floor,” Jefferies analysts said late November, noting that Novo now enters the 5-year patent expiry window with no real moat.
“Lower U.S. prices may stimulate additional volume demand and enhance patient retention, but we are not of the view that, at these prices, generics and compounders cannot compete,” they added, rating shares at Underperform.
Pressure from the Trump administration to lower drug prices for Americans, and the threat of high import taxes, have served as additional headwinds for Novo, as well as for many of its pharma peers over the past year.
Goldman Sachs analysts, led by James Quigley, are slightly more optimistic. “We remain Buy-rated on Novo Nordisk, as while expectations have reset sharply downwards for near/medium-term estimates, we continue to believe there could be some volume opportunity for Novo as the obesity market evolves,” they wrote in a note late November.
“While Novo are unlikely to take a leading share, we still see opportunities for Wegovy, CagriSema and oral Wegovy to drive value in excess of what the market currently believes, although we acknowledge that this will likely take time and evidence of an uptick in scripts before investors give credit,” they added.
