What happened
Wednesday was not a good day for the stocks of healthcare companies that specialize in treatment for kidney disease. One with a target on its back was Baxter International (BAX -0.25%); the company's share price took a hit of more than 12% on the day. Investors were concerned about the success of an already-popular drug in fighting kidney afflictions, as demonstrated in clinical testing.
So what
That drug is Novo Nordisk's (NVO 0.84%) semaglutide, which has been commercialized under the brand names Ozempic and Wegovy. Semaglutide is known and in high demand for its weight-loss properties, although it has potential for other uses.
Novo Nordisk had been putting it through its paces in a clinical trial testing its efficacy in limiting renal impairment in patients with type 2 diabetes and chronic kidney disease. Late Tuesday, the Danish pharmaceutical company announced that it decided to halt the testing. In its words, this is because "the results from an interim analysis met certain pre-specified criteria for stopping the trial early for efficacy."
Since kidney care is Baxter International's bread and butter, investors were understandably spooked by the semaglutide news. Novo Nordisk has become a pharmaceutical industry powerhouse thanks largely to Ozempic/Wegovy. As such, it can present a real threat to kidney disease specialists if it develops an efficacious product.
Now what
Baxter International wasn't the only kidney-focused biotech or pharmaceutical company to get slammed on Novo Nordisk's news. While the American company has enjoyed a good position in the segment for years, it might have a tough time withstanding the potential rise of semaglutide. Investors were right to be concerned about this development.
