Stock markets looked poised to continue their winning ways on Wednesday morning, as stock index futures were higher across the board. Investors will get a look today at the latest thought process from the Federal Reserve when it releases the minutes of its most recent monetary policy committee meeting. They're hopeful that what they read will support the case for leaving interest rates alone when the central bank gathers for its next meeting.
A host of stocks in the healthcare sector made some big moves early Wednesday. News on the popular Ozempic treatment helped push shares of some companies higher, including Novo Nordisk (NVO 0.16%) and Eli Lilly (LLY +0.80%). However, not every company was as fortunate, as shareholders in DaVita (DVA 1.61%) and Fresenius Medical Care (FMS +0.04%) can attest. Here's what you need to know about Ozempic right now and why these companies' shares are reacting the way they are.
A potential breakthrough for kidney patients
On the winning side, the pair of drug developers got a nice boost. Novo Nordisk shares were up almost 4% in premarket trading, while Eli Lilly added early 3% early Wednesday morning.
The news that caused these moves came out late Tuesday afternoon. Novo Nordisk said that it would stop a clinical trial testing semaglutide, the active ingredient in Ozempic, in a once-weekly injectable form for patients with type 2 diabetes and chronic kidney disease. The goal of the study was to show that using Ozempic in conjunction with other standard treatments could better prevent progression of kidney impairment and the risk of death from kidney or heart failure.
NYSE: NVO
Key Data Points
Stopping a trial might seem like a bad thing, but in this case, an independent data monitoring committee came to the conclusion that interim results met the pre-specified criteria for determining that Ozempic met appropriate efficacy measures. In other words, Ozempic performed well enough that researchers didn't need to gather more data in order to conclude that the treatment is effective.
Meanwhile, Eli Lilly's gains came amid hopes that its similar Mounjaro diabetes treatment might prove equally effective in kidney patients. Lilly shareholders have already been hoping that Mounjaro might get approved directly for weight loss as well.
Bad news for dialysis companies
The news from Novo Nordisk wasn't as well received by shareholders of dialysis treatment companies. Shares of DaVita dropped 17% in premarket trading, while Fresenius Medical Care's stock was down 16% before the market opened Wednesday morning.
NYSE: DVA
Key Data Points
Dialysis stocks have already been under pressure from advances related to Ozempic and similar drugs. To the extent that treatments are effective in halting the progression of kidney diseases and avoiding renal failure, fewer patients might need to get regular dialysis treatment. DaVita and Fresenius are among the top providers of dialysis services, so it's understandable that they're taking sizable hits on the news.
The success of Ozempic has had an impact on stocks across the market. Some restaurant stocks have taken hits recently on speculation that if the drug gets formal U.S. Food and Drug Administration approval for weight loss, it could change consumer behavior, with people eating out less. Some had expected that quarterly results from snack and beverage giant PepsiCo (PEP +0.67%) Tuesday would reflect those fears as well, but PepsiCo's CEO said that Ozempic hadn't had a negative impact on its business.
Today's moves show that what's good news for one set of stocks can be bad news for another. Investors should keep an eye on all of these stocks to see the impact that future developments have on the entire industry.
