Ozempic may find yet another clinical use. The drug, developed by Danish pharmaceutical giant Novo Nordisk (NYSE:NVO), has been making waves throughout the healthcare industry. Now, a recent trial suggests that it may have other important uses.
Novo Nordisk recently stopped a trial early after the drug proved able to delay kidney disease progression in patients with diabetes. This is great news for NVO, but not so much for its competitors. Dialysis leader DaVita (NYSE:DVA) has been falling all morning since news broke of the Ozempic trial success. This suggests that DVA stock could be in for some difficult times if Novo Nordisk’s success continues.
Should investors be worried about other companies in the kidney treatment space? Let’s take a closer look at this development and assess what it is likely to mean.
What’s Happening with DVA Stock
Despite an impressive rally yesterday, DVA stock is in a race to the bottom today and is among this morning’s top losers. As of this writing, it is down more than 19% for the day and isn’t showing signs of a rebound.
This isn’t to say there isn’t room for two players in the kidney disease treatment space. But it is important to remember that Ozempic is one of the trendiest names in health and fitness right now.
Many celebrities, including Elon Musk, have praised its effectiveness for weight loss. This is excellent for its brand value and it has certainly helped Novo Nordisk make significant progress this year. NVO stock is currently up more than 41% year to date (YTD). DVA stock, by contrast, down slightly in that time period. The company has a difficult battle ahead if it wants to compete with the year’s miracle drug.
Granted, analysts from UBS have described the recent DaVita selloff as a “big overreaction.” In a note to investors, the team stated “While this development suggests GLP-1s may slow the progression of chronic kidney disease it’s worth reviewing the sample of the study to put the news into perspective.”
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
