Novo Nordisk's 'long game' on weight loss drugs sparks hope in science, but the Street is impatient

Novo Nordisk has had a hard year: a tumbling banal terms resulting successful the biggest leadership shakeup successful the company's 100-year past arsenic investors turned their backmost connected the Danish drugmaker and its value nonaccomplishment business.

It seemed investors had mostly fixed up connected Novo's quality to construe its strides successful pioneering GLP-1 drugs to fiscal gains arsenic the lucrative marketplace attracts caller players. Scientists, however, accidental that the medicine inactive has potential.

What started with a absorption connected the drug's quality to negociate value and humor sugar, and combat related conditions specified arsenic bosom disease, is present expanding further with increasing involvement successful however it mightiness besides interaction the brain.

Semaglutide, oregon arsenic it is amended known, Ozempic and Wegovy, is simply a GLP-1 receptor agonist that was primitively developed for diabetes patients to negociate their humor sweetener levels. However, it rapidly became prescribed by doctors off-label en masse arsenic its appetite surpressing and weight-loss properties became known. Today, it is approved for anti-obesity purposes and brings successful billions annually for its maker, Novo Nordisk.

Now, the aesculapian assemblage is discovering a increasing database of added benefits from these drugs.

"Wegovy promotes value nonaccomplishment and perchance different mechanisms not afloat understood," the U.S. Food and Drug Administration wrote successful a connection successful August erstwhile it approved the cause for treating liver disease. Semaglutide is besides cleared by regulators to trim the hazard of bosom attacks and strokes successful overweight radical with cardiovascular disease, arsenic good arsenic to treat chronic kidney disease successful diabetes patients. 

Meanwhile, a rival cause by U.S. rival Eli Lilly, tirzepatide (known arsenic Mounjaro and Zepbound), which besides targets the GLP-1 hormone arsenic good arsenic different gut hormone called GIP, is approved for treating mean to terrible obstructive slumber apnea successful adults with obesity.

But the benefits whitethorn not extremity there. Amid accrued competition, further indications person go a caller frontier for cause developers alongside new formats similar pills.

GLP-1s and the brain

Observational studies person shown that GLP-1s look to quiescent cravings not conscionable for food, but besides for alcohol, tobacco, and recreational drugs, arsenic they impact the brain's reward pathway. By seemingly changing dopamine signals successful the brain, these drugs could trim cravings and let the idiosyncratic to beryllium much rational erstwhile faced with tempting options.

"There is involvement successful knowing the imaginable of semaglutide connected assorted encephalon functions," Laura Nisenbaum, enforcement manager astatine Alzheimer's Drug Discovery Foundation (ADDF), told CNBC.

"Understanding that inflammation and vigor usage successful the encephalon is going to beryllium truthful important for our mean cognitive function," Nisenbaum said. Recognizing that nexus volition beryllium utile successful galore antithetic neurological and neuropsychiatric indications wherever changes oregon harm to the encephalon interaction mood, behaviour oregon cognition, she added.

Evolving information suggest that semaglutide and rival cause tirzepatide made by Eli Lilly mightiness beryllium the archetypal effectual "anticonsumption" agents with the imaginable to dainty excessive nutrient cravings, obesity, intoxicant consumption, nicotine addiction, recreational cause use, and adjacent uncontrollable buying behaviors, a study by researchers astatine Saint Luke's Mid America Heart Institute and University of Missouri found.  

Another small-scale randomized objective trial recovered that low-dose semaglutide reduced intoxicant depletion and importantly reduced cravings compared to placebo successful patients with intoxicant usage upset implicit 9 weeks of treatment. The results warrant larger objective trials of incretin therapies for intoxicant usage disorder, the researchers concluded.

The Alzheimer's disappointment that wasn't

Another imaginable added payment of this people of drugs could beryllium however it interacts with the dementia process.

In November, Novo disappointed investors erstwhile it published data connected a two-year-long objective proceedings investigating whether semaglutide could dilatory down cognitive diminution successful patients with Alzheimer's disease.

Hopes had tally precocious that the medicine mightiness beryllium capable to assistance radical suffering from the astir communal benignant of dementia, arsenic it had been observed successful real-world studies that diabetes patients taking semaglutide developed Alzheimer's astatine a little complaint than those who didn't.

But the late-stage proceedings failed to conscionable its main goal, showing that semaglutide didn't importantly interaction cognition successful Alzheimer's patients. Novo said it would discontinue a one-year hold of the proceedings owed to the results.

However, immoderate scientists told CNBC it shouldn't beryllium seen arsenic a failure. They accidental that adjacent if the results were disappointing, it was a well-conducted proceedings that the subject assemblage was capable to larn from.

"It conscionable gave a antagonistic effect arsenic acold arsenic the cause is acrophobic successful that peculiar population," said Ivan Koychev, subordinate prof successful neuropsychiatry astatine Imperial College London. 

Semaglutide however, affects Alzheimer's illness proteins successful the close direction, arsenic seen successful biomarker measures, Koychev said. "They're impacting Alzheimer's disease-linked proteins, they trim their quantity successful the cerebrospinal fluid, which suggests that it is interacting straight with the alternate pathology."

There was besides an observed simplification successful systemic inflammation biomarkers, according to Novo. "The reasoning is that it whitethorn beryllium this anti-inflammatory effect that, if it is implemented aboriginal capable successful the illness process, you tin substantially modify the hazard of dementia," Koychev said.

"The awesome was ever successful the prevention abstraction alternatively than the attraction space," helium added.

Similarly, Nisenbaum said a adjacent utile measurement would beryllium to trial semaglutide and different GLP-1s earlier successful the people of the illness arsenic a preventative therapy.

Novo Nordisk said it was reviewing each information from the trial, but that it was excessively aboriginal to speculate immoderate further connected the effect semaglutide mightiness person connected dementia patients.

The subject versus the Street

Despite the information that the innovations developed by Novo person the imaginable to importantly interaction nationalist health, galore investors person turned their backmost connected the institution implicit the past 18 months arsenic its maturation prospects look challenges.

Novo shares are having their worst twelvemonth connected grounds since listing connected Nasdaq Copenhagen over 3 decades ago. At its highest successful mid-2024, the banal traded astatine supra 1,000 Danish kroner. Today, it trades astatine astir 320 kroner.

The stock's year-to-date driblet of 50% is being driven by accrued contention from U.S. rival Eli Lilly and alleged compounding pharmacies making cheaper, copycat versions of semaglutide. A nonaccomplishment to person investors that its pipeline volition bring important fiscal gains amid a flurry of hopeful marketplace entrants besides adds to the pressure.

Novo Nordisk shares successful the year-to-date

The Alzheimer's proceedings information readout successful November led shares to driblet 5.8% connected the day, contempt analysts saying it was ever a agelong changeable and Novo absorption themselves called it a "lottery ticket," — underlining its highly uncertain outcome.

The 2 Alzheimer's drugs presently connected the market, Eli Lilly's Kisunla and Biogen/Eisai's Leqembi person been shown to slow down the progression of Alzheimer's disease by up to a 3rd but travel with the hazard of terrible broadside effects.

These medicines were studied 15 years ago, and determination were galore antagonistic studies on the way, ADDF's Nisenbaum said. "Each one, we learned thing that past led to an betterment successful knowing our patients successful the objective trials and past however to measurement what's happening successful them."

"It's perfectly astir the agelong game," she added, hopeful that semaglutide oregon different caller drugs that people hazard factors could beryllium utilized successful operation with Kisunla and Leqembi.

But the marketplace doesn't spot it similar that, and determination are galore reasons why.

First of all, investors' clip horizons are overmuch shorter than the decades-long process it typically takes to bring a cause to market, meaning pharmaceutical improvement often clashes with the speedier gait of nationalist markets. Adding caller indicators for a cause besides takes time, arsenic they request to beryllium backed up by often lengthy objective trials.

Secondly, semaglutide is facing cardinal patent expiries successful 2031 and 2032, which volition springiness the greenish airy to others to marque generic versions of semaglutide.

"We don't spot a bully statement for a valuation floor," Jefferies analysts said precocious November, noting that Novo present enters the 5-year patent expiry model with nary existent moat.

"Lower U.S. prices whitethorn stimulate further measurement request and heighten diligent retention, but we are not of the presumption that, astatine these prices, generics and compounders cannot compete," they added, standing shares astatine Underperform.

Pressure from the Trump medication to lower cause prices for Americans, and the menace of precocious import taxes, person served arsenic further headwinds for Novo, arsenic good arsenic for galore of its pharma peers implicit the past year.

Goldman Sachs analysts, led by James Quigley, are somewhat much optimistic. "We stay Buy-rated connected Novo Nordisk, arsenic portion expectations person reset sharply downwards for near/medium-term estimates, we proceed to judge determination could beryllium immoderate measurement accidental for Novo arsenic the obesity marketplace evolves," they wrote successful a enactment precocious November.

"While Novo are improbable to instrumentality a starring share, we inactive spot opportunities for Wegovy, CagriSema and oral Wegovy to thrust worth successful excess of what the marketplace presently believes, though we admit that this volition apt instrumentality clip and grounds of an uptick successful scripts earlier investors springiness credit," they added.