By Pratik Jain and Bhanvi Satija
(Portal) – Shares of dialysis providers rose between 3% and 12% on Tuesday as latest data from Novo Nordisk's hugely popular diabetes drug Ozempic suggested its effect in patients with chronic kidney disease was less than expected.
Investors worried after preliminary data in October are betting that most of the benefits of GLP-1 drugs like Ozempic are related to cardiac events, “rather than a breakthrough prolongation of kidney disease progression that the market is worried about.” “said Morningstar analyst Julie Utterback.
The potential of GLP-1 drugs like Ozempic and Wegovy to treat health problems beyond diabetes and obesity has also hurt stocks of bariatric surgery providers, food companies and glucose meter makers.
Colorado-based DaVita rose 8%, while U.S.-listed shares of rival Fresenius Medical rose 12.3% in morning trading. Baxter International, which provides dialysis surgery through its kidney care division, rose 2.5%. DaVita and Baxter are among the top percentage gainers in the S&P 500 Healthcare Index.
The latest data showed that Ozempic delayed the progression of chronic kidney disease in diabetes patients and reduced the risk of major cardiac events and death by 24%, falling short of some investors' expectations, analysts said.
DaVita and German rival Fresenius have played down concerns that GLP-1 drugs will shrink the kidney care market.
Citi analyst Joanne Wuensch attributed the rise in kidney care stocks to investors' high expectations for the trial after it was halted nearly a year ahead of schedule because an interim analysis showed the treatment would be successful.
The study's full results, expected later this year, “will prove to be the real test of dialysis stocks,” Wuensch said.
U.S.-listed shares of Danish drugmaker Novo Nordisk fell 1.7%. The stock has gained more than 20% so far this year on rising demand for its highly effective diabetes and weight-loss medications.
(Reporting by Pratik Jain and Bhanvi Satija in Bengaluru; Editing by Shilpi Majumdar)