Novo Nordisk stock popped Wednesday — and slammed dialysis providers DaVita and Fresenius Medical Care — after hinting that its diabetes drug, Ozempic, could also treat chronic kidney disease.
On today's stock market, Novo Nordisk stock jumped 6.3%, closing at 98.84, while shares of DaVita and Fresenius tumbled a respective 16.9% and 17.6%. Shares of Novo rival Eli Lilly also jumped 4.5% to close at 605.28.
Novo tested a once-weekly dose of its diabetes and weight-loss drug, semaglutide, in patients with type 2 diabetes and chronic kidney disease. Late Tuesday, the company said it will stop the study almost a year ahead of schedule based on interim results examined by an independent data monitoring group. Novo itself hasn't seen the results, but the committee said the drug demonstrated pre-specified criteria for effectiveness.
The results sent Novo Nordisk stock well above its 50-day moving average, MarketSmith.com shows. Shares briefly dipped below that mark earlier this month and were trading in line with it this week. But Novo stock is still slightly below its record high at 100.88, achieved on Sept. 11.
Novo Nordisk Stock: One Drug To Rule Them All?
Semaglutide is the active ingredient behind three of Novo's biggest products, diabetes drugs Ozempic and Rybelsus, and weight-loss drug Wegovy. It belongs to the GLP-1 drug class, which is gaining steam for its ability to prompt extreme weight loss and treat obesity-related conditions.
Novo says kidney disease could be one of those areas. The company began a study called Flow in 2019, testing a once-weekly semaglutide shot against a placebo in more than 3,500 patients with type 2 diabetes and kidney disease. It hopes to delay the progression of chronic kidney disease and reduce the risk of death due to kidney and cardiovascular disease.
Novo expects to unveil the results of the Flow study in early 2024.
The hint that semaglutide could delay the progression of kidney disease hit dialysis stocks, which have benefited from high rates of obesity and diabetes. Both can worsen kidney disease.
Medical Devices Under Pressure
Medical device makers like Dexcom, Abbott Laboratories and ResMed along with robotic surgery behemoth Intuitive Surgical have also struggled amid concerns GLP-1 drugs can improve obesity-related conditions like diabetes and sleep apnea, or reduce rates of bariatric surgery.
Novo Nordisk stock, on the other hand, has climbed markedly. Shares have a strong Relative Strength Rating of 96 out of a best-possible 99, according to IBD Digital. This puts Novo's stock performance in the top 4% of all stocks over the past 12 months.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
