Novo’s Blockbuster Ozempic Now Shows Kidney Promise, Hitting Rivals 

Novo Nordisk A/S said its diabetes drug Ozempic showed surprisingly early effectiveness in a kidney-failure study, sending shares of the world’s biggest dialysis providers tumbling.

(Bloomberg) — Novo Nordisk A/S said its diabetes drug Ozempic showed surprisingly early effectiveness in a kidney-failure study, sending shares of the world’s biggest dialysis providers tumbling.

An independent data monitoring committee recommended halting the study after finding that an interim analysis had already met pre-set criteria for efficacy, Novo said late on Tuesday. The Danish drugmaker will get full results of the study once the process of closing it is complete, expected by the first half of 2024.

German dialysis provider Fresenius Medical Care AG & Co.’s shares plunged as much as 24% in Frankfurt, the most on record, erasing over €2.5 billion ($2.7 billion) in market value. Baxter International Inc. and DaVita Inc. fell 7% and 15% respectively in early US trading. Novo shares rose as much as 4.4% in Copenhagen, its biggest one-day move in two months.

The impact of Ozempic and a sister drug for obesity, Wegovy, looks likely to stretch into fields far beyond obesity and diabetes. Another large study recently showed that Wegovy cut the risk of heart attacks and strokes. And WalMart Inc. said last week it’s seeing an impact on shopping demand from people taking the drugs. 

Stopping the trial early points to a “somewhat faster effect than we had previously contemplated,” Citigroup Inc. analyst Veronika Dubajova wrote in a note. Kidney disease is one of the areas where drugs like Ozempic could help reduce the number of patients over time, she said. 

Fresenius Medical Troubles

Novo’s surprise results are the latest in a string of blows to Fresenius Medical, the largest dialysis provider in the $36 billion US market, as it tries to orchestrate a turnaround after its costs soared and dialysis patients died during the Covid-19 pandemic. Investors were already worried about the impact of the so-called GLP-1 drugs on its business prior to the kidney study, according to Citi. 

Fresenius Medical shares are down by about one-third since Novo announced its positive heart disease study in August. The company declined to comment on Novo’s kidney trial.

The company is also in the midst of leadership churn. It’s changed its chief executive officer twice in the past year and its shareholders recently approved a plan to change the company’s legal form to gain more autonomy from long-time parent entity Fresenius SE.

While Fresenius SE is giving up its control of Fresenius Medical because of that legal change, it retains a powerful voice as the largest shareholder. Fresenius SE CEO Michael Sen has said he has no intention of selling the 32% stake as he believes in the growth potential of the kidney-dialysis company. Fresenius shares also declined on Wednesday, down as much as 13%, the most since 2018.

Kidney Dialysis Disruption

To be sure, any shrinking of the kidney disease patient population may be 15 years in the future, Oddo BHF analysts wrote in a note. They argued that the new drugs could actually benefit dialysis providers in the short term by helping to ensure that people who start the treatment are already more closely monitored by doctors and less likely to die in the initial months of treatment. 

Ozempic and Wegovy, both known generically as semaglutide, are part of a class of drugs that mimic the GLP-1 hormone released after eating. They help patients feel full for longer and also slow the movement of food through the digestive tract. First developed for type 2 diabetes, they’ve now shown unprecedented effectiveness for weight loss, spurring a market that Jefferies Financial Group Inc. estimated could grow to as much as $150 billion.

Read more: All About the New Obesity Drugs Causing a Big Stir: QuickTake

Novo’s trial, called FLOW, started in 2019 and looked at the progression of kidney impairment in people with type 2 diabetes and chronic kidney disease, enrolling more than 3,500 people in 28 countries.  

–With assistance from Tim Loh.

(Updates with US shares in third paragraph, analyst comment in 10th paragraph)

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