Novo Nordisk stock tumbled Friday — pulling Corbus Pharmaceuticals into a steep dive — after its new approach to weight loss caused neuropsychiatric side effects.
The Denmark-based drugmaker tested a new pill it acquired with Inversago Pharmaceuticals last year in patients with obesity and metabolic syndrome. The pill works differently from Novo's other weight-loss drug, semaglutide, which mimics the GLP-1 hormone. This drug, dubbed monlunabant, blocks a cannabinoid receptor. This receptor helps regulate weight and energy balance.
At the lowest dose, patients lost 7.1 kilograms (or roughly 16 pounds) over 16 weeks, compared with a 0.7-kilogram (or 1.5-pound) loss for the placebo group. Patients started with a baseline weight of 110.1 kilograms (242 pounds). Higher doses didn't lead to greater weight loss, Novo Nordisk said in a news release.
But the same gastrointestinal side effects that plague the GLP-1 drug class also showed up in patients who received the cannabinoid receptor-targeting drug. Further, monlunabant recipients experienced mild to moderate neuropsychiatric side effects, including anxiety, irritability and sleep disturbances.
Martin Holst Lange, Novo Nordisk's head of development, said the company still needs to "determine the optimal dosing to balance safety and (effectiveness)." Novo Nordisk is now planning to run a second midstage study in 2025.
Novo Nordisk stock tumbled 5.5%, closing at 127.51. Shares of Corbus, which is working on a similar weight-loss drug, crashed 62.3% to 19.51.
Meanwhile, shares of companies working on GLP-1-based drugs jumped. Eli Lilly stock rose 0.7% to 921.49. Shares of Viking Therapeutics and Structure Therapeutics advanced a respective 3.4% and 8.2%. But Terns Pharmaceuticals reversed and closed a fraction lower.
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Weight Loss 'Underwhelming'
The neuropsychiatric side effects aren't entirely unexpected. Leerink Partners analyst David Risinger notes Sanofi had a cannabinoid receptor 1-targeting drug approved in Europe for weight loss. But it penetrated the central nervous system and led to neuropsychiatric side effects. It was later withdrawn from the market.
"Interestingly, Novo announced plans to initiate a Phase 2b obesity trial in 2025," he said in a report. "We think that the decision is driven by the company's interest in diversifying its obesity portfolio."
Risinger doesn't have a rating on Novo Nordisk stock.
He also says the 6.3% difference in weight loss between monlunabant patients and placebo recipients is "underwhelming." In another 16-week study, Eli Lilly's pill, orforglipron, led to 8% placebo-adjusted weight loss. But Novo executives projected 15% weight loss with monlunabant.
Corbus' Drug Could Be Safer
But RBC Capital Markets analyst Brian Abrahams says the drug could still find a market. It's hard to determine because Novo Nordisk didn't outline the event rates or severity.
"There was no mention of suicidal ideation or depression, with most events likely irritability and anxiety, which we believe may still be acceptable," he said in a report. "Recall too, that monlunabant had demonstrated about 14% placebo-adjusted increases in psychiatric adverse events in Phase 1 (testing)."
He believes Corbus' drug could have an advantage when it comes to safety. Roughly one-tenth the amount of drug ends up in the brain, he said. This could mitigate the neuropsychiatric side effects and still lead to weight loss.
Abrahams didn't list a rating for Novo Nordisk stock, but rates Corbus stock an outperform.
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