A mega-cap company was suddenly hit by a massive sell-off.
On November 24th, Eastern Time, Danish pharmaceutical giant Novo Nordisk... Novo Nordisk's stock price suffered a sharp decline, plunging more than 9% at one point during the day. On the Copenhagen Stock Exchange in Denmark, its stock price plummeted by more than 12% at one point. In pre-market trading on Tuesday, Novo Nordisk's stock price weakened slightly again, currently down 0.36%. In terms of news, the company's latest clinical trial data showed that semaglutide treatment for early-stage Alzheimer's disease did not show significant efficacy, with no significant improvement observed in thousands of patients participating in the study.
Some analysts point out that the failure of the Alzheimer's trial represents another major setback for Novo Nordisk . This comes amidst concerns about the development of next-generation weight-loss drugs . Amid a series of negative news, including less-than-expected efficacy and competitors eroding its market share, its stock price has fallen by more than 46% this year. In contrast, Novo Nordisk's main competitor in the weight-loss drug field— Eli Lilly —is facing challenges. The company's stock price continued to rise, making it the first pharmaceutical company to surpass a market capitalization of $1 trillion.
Pharmaceutical giants plummet
Novo Nordisk's stock price fell to its lowest level since July 2021 after a failed trial of an Alzheimer's drug.
On November 24th local time, Novo Nordisk announced that its oral version of Ozempic failed to slow the progression of Alzheimer's disease in two large clinical trials, marking a failure of what was considered a long-term investment. Based on cognitive assessment results, patients taking the drug did not experience significant improvement.
Following the announcement, Novo Nordisk's stock price plummeted by more than 12% on Monday on the Copenhagen Stock Exchange in Denmark, hitting its lowest level since July 2021. After the US stock market opened that day, its stock price plunged by more than 9% at one point, closing down 5.58%, shrinking its total market capitalization to $199.6 billion.
The two trials reportedly enrolled nearly 4,000 patients. The drug being tested was Novo Nordisk's Rybelsus, an oral version of smegglutide, which is currently only approved for the treatment of type 2 diabetes.
Novo Nordisk has decided to terminate its planned one-year extension of the study. Previously, Novo Nordisk initiated a Phase III clinical trial in December 2020 for oral smegglutide for the treatment of Alzheimer's disease.
Morgan Stanley Analysts previously estimated that if the trial is successful, the drug could bring Novo Nordisk up to $5 billion in annual revenue growth.
Alzheimer's disease, characterized by severe cognitive decline, memory loss, and personality changes, is a recognized challenge in the field of drug development. Novo Nordisk has previously described these trials as high-risk projects.
"We feel it's our responsibility to explore the potential of semaglutide," said Martin Holst Lange, Novo Nordisk's Chief Scientific Officer, in a statement. Semaglutide is the generic name for Ozempic. While the treatment regimen showed improvements in some physiological indicators associated with Alzheimer's disease, it did not translate into a significant slowing of disease progression.
According to Morgan Stanley analysts, the success rate of this trial is about 25%, while the failure rate is as high as 75%.
This trial result is a blow to Novo Nordisk's efforts to regain market leadership in obesity treatments. If Wegovy were effective against the most common forms of dementia, it could have given the company an edge over its U.S. rival , Eli Lilly 's Zepbound.
The two trials tracked the disease progression in more than 3,500 patients with mild Alzheimer's. "It's like a lottery ticket that could have been incredibly valuable," said Per Hansen, an investment economist at Nordnet AB. "Investors hadn't previously assigned it any real value, but there was still hope."
Novo Nordisk's stock price has fallen nearly 70% from its 2024 peak, reflecting growing investor concerns about the company's long-term competitive position in the obesity treatment market it helped create.
The outcome of the " diet pill war" is already decided.
In stark contrast to the sharp drop in Novo Nordisk's stock price, its competitor Eli Lilly's stock price continued to rise, constantly breaking historical records, and its total market value once exceeded the $1 trillion mark, becoming the first pharmaceutical company with a market value of $1 trillion.
Some analysts point out that, driven by strong demand for weight loss and diabetes drugs, Eli Lilly became the world's first pharmaceutical company to join the trillion-dollar club.
Although Eli Lilly's weight loss drug Zepbound was only launched at the end of 2023, it has already surpassed Novo Nordisk's Wegovy and captured the vast majority of new obesity drug prescriptions as production capacity has increased and new clinical data has emerged.
In the third quarter of this year, Eli Lilly's sales of weight-loss drugs more than doubled year-over-year, thanks to the company's expansion into new markets. Mounjaro, used to treat diabetes, and Zepbound, used for weight loss, contributed a combined $10.1 billion in revenue during the quarter.
Goldman Sachs They believe that Eli Lilly's oral weight-loss drug candidate, orforglipron, represents "one of the most important new product cycles across the entire biopharmaceutical portfolio."
Eli Lilly's management revealed that global regulatory filings are about to begin, and the company expects to launch its obesity treatment drug in the US market next year.
More notably, the drug meets four of the three requirements for the FDA’s National Priority Certificate program, paving the way for accelerated approval.
In terms of pricing strategy, Eli Lilly views orforglipron as a sales model similar to Zepbound, focusing on direct-to-consumer access through LillyDirect. Management emphasizes that the convenience of oral formulations will significantly expand the global target market size.
Furthermore, Eli Lilly has also shown promising results in next-generation obesity compounds. Phase II data for the selective amylin agonist eloralintide showed a weight loss of 20.1%, and it will soon begin later-stage clinical trials.
Kenneth Custer, president of Eli Lilly’s Cardiometabolic Health division, said that data show eloralintide has strong efficacy and better tolerability, making it a viable alternative to incretin therapy.
(Source: Securities Times)
