Novo Nordisk's Breakthrough Drug Causes Sharp Decline in Competitor's Shares

Shares of German kidney dialysis services firm Fresenius Medical Care plummeted on Wednesday following the success of Novo Nordisk's groundbreaking drug against kidney failure.

Shares Take a Hit

Fresenius Medical Care's shares (FME, -18.56% FMS, +0.92%) slumped by a staggering 23%, while its part owner Fresenius (FRE, -10.40%) experienced a loss of 12%. This downturn was a direct result of Novo Nordisk's decision to halt a trial of their drug, semaglutide, against a placebo. The trial focused on measuring the progression of renal impairment in individuals with type 2 diabetes and chronic kidney disease, and it was stopped early due to the drug's remarkable efficacy.

On the other hand, Novo Nordisk's shares (NOVO.B, +3.71% NVS, +0.90%) jumped by 3% during Copenhagen trade. As the second-largest company in Europe by market capitalization, just behind Nestle, this positive momentum further solidifies their position.

Potential Impact on the Patient Population

Analysts at Citi, led by Weronika Dubajova, note that "we see kidney disease as one of the areas where GLP-1s could potentially negatively impact the size of the relevant patient population over time." They view the early termination of the FLOW trial as evidence supporting this notion, indicating a potentially faster effect than initially anticipated.

Dominance in the Market

GLP-1 drugs are commonly used for managing diabetes and weight loss. Eli Lilly is also conducting trials for similar drugs and is expected to be a key player in the market alongside Novo Nordisk.

Novo Nordisk's GLP-1 drug, Ozempic, specifically targets patients with type 2 diabetes. The trial included 3,534 individuals with type 2 diabetes, with a median age of nearly 67 years. Two-thirds of the participants were at a very high risk for chronic kidney disease progression.

Results Awaited

Novo Nordisk has stated that it remains unaware of the trial's results as it is blinded until its completion. The trial is expected to conclude in the first half of 2024.