Novo Nordisk After a tough year: Plunging stock prices lead to biggest Leadership reshuffle Over the course of the company’s 100-year history, investors have abandoned the Danish drugmaker and its weight-loss business.

As the lucrative market attracts new players, investors appear to have largely given up on Novo’s ability to turn its progress in GLP-1 drugs into financial gains. However, scientists say the drug still has potential.

The initial focus was on the drug’s ability to control weight and blood sugar and combat related conditions such as heart disease, but its scope is now broadening amid growing interest in how it affects the brain.

Semaglutide, better known as Ozempic and Wegovy, is a GLP-1 receptor Agonists were originally developed for diabetics to control blood sugar levels. However, as its appetite-suppressing and weight-loss properties became known, it was quickly prescribed off-label by doctors en masse. Today, it’s approved for anti-obesity purposes and brings in billions of dollars in revenue each year for its manufacturer, Novo Nordisk.

Now, the medical community is discovering that these drugs have an increasing number of added benefits.

The FDA says: “Wegovy promotes weight loss, among other potential mechanisms that are not fully understood” Wrote In a statement in August, the company approved the drug to treat liver disease. Semaglutide is also approved by regulators to reduce the risk of heart attacks and strokes in overweight people with cardiovascular disease, and Treat chronic kidney disease in patients with diabetes.

Meanwhile, a competing drug from a U.S. rival Eli Lilly and CompanyTezeparatide (called Mounjaro and Zepbound), which also targets the GLP-1 hormone as well as another intestinal hormone called GIP, is approved to treat moderate to severe obstructive sleep apnea in obese adults.

But the benefits may not end there. As competition intensifies, additional indications have become new frontiers for drug developers new forms such as pills.

GLP-1 and the brain

Observational studies show that GLP-1 appears to suppress not only food cravings, but also cravings for alcohol, tobacco, and recreational drugs because they affect the brain’s reward pathways. By seemingly altering dopamine signaling in the brain, these drugs can reduce cravings and allow individuals to become more rational when faced with tempting options.

“There is interest in understanding the potential of semaglutide on a variety of brain functions,” Laura Nisenbaum, executive director of the Alzheimer’s Disease Drug Discovery Foundation (ADDF), told CNBC.

“Understanding inflammation and energy use in the brain is important for our normal cognitive function,” Nissenbaum said. She added that recognizing this connection could be useful for many different neurological and neuropsychiatric indications in which changes or damage to the brain affect mood, behavior or cognition.

Evolving data suggest that Eli Lilly’s semaglutide and rival drug tezepatide may be the first effective “anti-consumer” drugs, with the potential to treat excessive food cravings, obesity, alcohol consumption, nicotine addiction, recreational drug use and even uncontrollable shopping behavior. study Discovered by researchers at St. Luke’s Mid-America Heart Institute and the University of Missouri.

Another small-scale randomized clinical trial The study found that low-dose semaglutide reduced alcohol consumption and significantly reduced alcohol cravings compared with placebo in patients with alcohol use disorder who received nine weeks of treatment. The researchers concluded that these results justify larger clinical trials of incretin therapy for alcohol use disorder.

Alzheimer’s Disappointment Isn’t So

Another potential added benefit of this class of drug may be how it interacts with the dementia process.

In November, Novo disappointed investors. published data A two-year clinical trial is testing whether semaglutide can slow cognitive decline in people with Alzheimer’s disease.

Hopes are high that the drug can help people with the most common form of dementia, as diabetic patients who took semaglutide were observed in real-world studies to have lower rates of Alzheimer’s disease than those who didn’t.

But late-stage trials failed to achieve their primary goal, showing that semaglutide did not significantly impact cognition in Alzheimer’s patients. Novo said it would stop extending the trial by one year in light of the results.

However, some scientists told CNBC this should not be viewed as a failure. Even if the results are disappointing, they say it was a well-conducted trial from which the scientific community can learn.

“To the extent that the drug is used in certain groups, it just gives negative results,” said Ivan Koychev, associate professor of neuropsychiatry at Imperial College London.

However, Koichev said, semaglutide affects Alzheimer’s proteins in the right direction, as seen in biomarker measurements. “They are affecting proteins associated with Alzheimer’s disease, and they reduce their amounts in the cerebrospinal fluid, suggesting a direct interaction with alternative pathology.”

Reductions in systemic inflammatory biomarkers were also observed, Novo said. “The idea is that if this anti-inflammatory effect is implemented early in the course of the disease, the risk of dementia can be significantly reduced,” Koichev said.

“The signal is always in the prevention space rather than the treatment space,” he added.

Likewise, Nisenbaum said a useful next step would be to test semaglutide and other GLP-1s early in the disease as preventive treatments.

Novo Nordisk said it was reviewing all data from the trial, but it was too early to speculate further on the impact semaglutide might have on people with dementia.

Science and the streets

Although Novo develops innovative technologies that have the potential to have a significant impact on public health, many investors have turned their back on the company over the past 18 months due to challenges to its growth prospects.

Novo shares have had their worst year since listing on Nasdaq in Copenhagen more than three decades ago. At its peak in mid-2024, the stock traded above DKK 1,000. Today, it trades at about 320 crowns.

The stock has fallen 50% so far this year as competition intensifies from U.S. rival Eli Lilly and so-called compounding pharmacies producing cheaper generic versions of semaglutide. Failed to convince investors that its pipeline would deliver significant financial gains Promising market entrants It also adds to the stress.

Alzheimer’s trial data released in November sent shares down 5.8% on the day, although analysts said it was always a long shot and Novo management themselves called it a “lottery ticket,” underscoring the high degree of uncertainty surrounding its results.

Two Alzheimer’s drugs currently on the market, Eli Lilly’s Kisunla and Biogen/Eisai’s Leqembi, have been shown to Slow the progression of Alzheimer’s disease Up to one-third, but there is a risk of serious side effects.

ADDF’s Nisenbaum said the drugs were studied 15 years ago, and there were many negative studies along the way. “In each trial, we learn something that leads to a better understanding of the patients in clinical trials and how to measure what happens to them.”

“This is definitely a long game,” she said, adding that she hopes semaglutide or other new drugs that target risk factors could be used in combination with Kisunla and Leqembi.

But the market doesn’t see it that way, for a number of reasons.

First, investors’ time horizons are much shorter than the typically decades-long process of bringing drugs to market, meaning drug development often conflicts with the faster pace of the public markets. Adding new indicators to drugs also takes time because they require support from often lengthy clinical trials.

Second, semaglutide’s key patents are set to expire in 2031 and 2032, which will give other companies the green light to manufacture generic versions of semaglutide.

“We don’t see a strong case for a valuation floor,” Jefferies analysts said in late November, noting that Novo now enters a five-year patent expiration window but has no real moat.

“Lower U.S. prices could spur additional demand and improve patient retention, but we do not believe that generics and compounded drugs cannot compete at these prices,” they added. They have an “underperform” rating on the stock.

Pressure from the Trump administration lower drug prices The threat of high import taxes on Americans last year created additional headwinds for Novo and many of its pharmaceutical peers.

Goldman Sachs analysts led by James Quigley were slightly more optimistic. “We maintain our Buy rating on Novo Nordisk, and while near-term/mid-term outlook expectations have been significantly lowered, we continue to believe there may be some deal opportunities as the obesity market evolves,” they wrote in a note in late November.

“While Novo is unlikely to take the lead, we still see Wegovy, CagriSema and Oral Wegovi driving value above what the market currently expects, although we acknowledge this may take time and evidence of scripted upside before investors give their trust,” they added.