Novo Nordisk: Alzheimer’s Failure Puts More Pressure on Oral Semaglutide Launch in Obesity

Key Morningstar Metrics for Novo Nordisk

• Fair Value Estimate: $66.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

On Nov. 24, Novo Nordisk NVO announced that two phase 3 trials testing semaglutide to slow the progression of Alzheimer’s disease over two years have failed. Copenhagen shares were down 6% at market close.

Why it matters: It has been almost a year since Novo reported disappointing data for next-generation obesity drug candidate cagrisema in the Redefine 1 study. Since then, Novo has faced continuing GLP-1 market share loss to Eli Lilly and persistent competition from unbranded compounded semaglutide.

• The Alzheimer’s program was a high-risk/high-reward strategy, but given the context of Novo’s recent pipeline disappointments and declining growth, it closes another potential path to the recovery of Novo’s shares.
• We think this puts more pressure on management to maximize execution in the upcoming potential approval and launch of 25 mg oral semaglutide in the US obesity market as well as sales of semaglutide in the new liver disease indication.

The bottom line: While disappointing, the failure of these trials was more likely than not, and we had assumed a 40% chance of approval. We’re maintaining our fair value estimates for wide-moat Novo Nordisk at DKK 423/$66 after removing future potential Alzheimer’s disease revenue from our model.

• Our previous model had incorporated roughly $1 billion in potential sales of semaglutide in Alzheimer’s disease by 2031, before declining with US patent expiration.
• We think new launches that grow the market will help counter pricing pressure and market share loss in 2026, and we model roughly $39 billion in total semaglutide sales in 2030 from obesity ($17 billion), diabetes ($18 billion), and other indications like heart failure and liver disease ($3.5 billion).

Coming up: We will see Alzheimer’s trial details at the Clinical Trials in Alzheimer’s Disease conference on Dec. 3. Because there was some positive effect on disease-related biomarkers, there is a small chance that this leaves the door open for other GLP-1s.