Novo Nordisk’s groundbreaking drug, Ozempic, is not only causing a stir in weight-loss markets but also posing a threat to companies specializing in the treatment of kidney failure. Ozempic, along with its counterpart Wegovy, belongs to a new class of drugs called GLP-1 receptor agonists. Initially developed to tackle diabetes, these drugs are now on the brink of revolutionizing obesity treatment in the United States and beyond.
While their potential in tackling obesity is well-established, scientists are exploring additional applications for these drugs. In a significant development, Novo Nordisk recently announced that Ozempic demonstrated impressive efficacy in a trial for kidney failure among diabetes patients. The trial showed such promising results that it was discontinued early on the recommendation of an independent data monitoring committee, as it had already met the pre-defined criteria for effectiveness. Full results from the trial are expected in the first half of 2024.
On the back of this news, American depositary receipts of Novo Nordisk experienced a 2.6% surge during premarket trading on Wednesday. While this positive development benefits Novo Nordisk, it appears to be bad news for dialysis-services providers. DaVita shares plummeted by 14% during premarket trading, with Baxter International experiencing an 8.9% drop.
As analysts at Citi highlighted in a note, the evidence supporting the use of GLP-1 receptor agonists continues to grow, extending beyond their significant impact on weight loss and blood glucose control. In light of these positive developments, the analysts have raised their target price for Novo Nordisk stock to 745 Danish kroner ($106) from the previous 600 kroner. As a result, Novo Nordisk stock rose by 3.1% to 670.30 kroner in local trading.