Lilly’s (LLY) recent climb to reach a $1T market cap will come under scrutiny in the coming days when Novo Nordisk (NVO) posts late-stage trial data showing how Rybelsus, its diabetes pill containing semaglutide, the active ingredient of Wegovy, could treat Alzheimer’s disease.
At the Clinical Trials on Alzheimer’s Disease (CTAD) meeting in San Diego next month, the Danish drugmaker is set to release data from two Phase 3 trials designed to evaluate how the GLP-1 drug could decrease the rate of cognitive decline in Alzheimer’s patients.
Impact on stock price
The much-anticipated readouts, scheduled for a Dec. 3 presentation, could be a key catalyst for Novo (NVO), which has lost nearly 45% of its value this year amid pressure on its GLP-1 franchise from LLY and compounding weight-loss drugmakers such as Hims and Hers (HIMS).
While the company is expected to post some initial data before the official release, Wall Street analysts project Novo’s (OTCPK:NONOF) shares to rise by as much as 10% in the event of a clear success, while a failure could lead to a ~5% drop, Reuters reported.
The twin trials named EVOKE and EVOKE PLUS for more than 1,800 patients with early Alzheimer’s were designed to decrease patients’ rate of cognitive decline by at least 20% as their main goals.
A positive readout could chart a new path for the weight loss maker in the market for Alzheimer’s drugs, currently dominated by Eli Lilly (LLY) and Biogen (BIIB)/Eisai (OTCPK:ESALF) with their intravenous options Kisunla and Leqembi, respectively.
Two sides to the story
Novo (NVO) appears to be quietly preparing for a positive outcome, with SA analyst Finance Flash, who has a Strong Buy rating on the stock, pointing out that the company has already posted several job openings related to the Alzheimer’s field.
“An oral medication that was safe is a big deal in terms of marketability,” said David Knopman, a neurologist at the Mayo Clinic in Rochester, Minnesota, adding, “There will be a very low threshold for a drug like that.”
However, Seeking Alpha analyst Lane Simonian was skeptical. “Semaglutide may reduce the risk for Alzheimer’s disease in diabetics or prediabetics and slow down its early progression, but transformative results are unlikely, and potentially severe side effects remain,” Simonian wrote with a Hold rating on NVO.
With GLP-1s’ potential in Alzheimer’s disease already proven in prior studies, the analyst added that, however, the company will have to share any expanded market with drugmakers such as Lilly (LLY), which will conduct their own studies.
The Indiana-based pharma giant, whose blockbusters, Zepbound and Mounjaro, also belong to the same GLP-1 category, said it will continue “to closely monitor the evolving science to better understand” how GLP-1s could impact brain health.