path: root/Finance/Effect of GLP-1's on investment landscape.md

I have been long LLY and NVO because of GLP-1 drugs since early 2022
drug that is nearly as effective as bariatric surgery and acts via, primarily, appetite reduction

Nearly 42% of the U.S. population is obese

5 FDA approved drugs for weight loss, currently: orlistat, phentermine-topiramate, naltrexone-bupropion, liraglutide, and semaglutide
A sixth, tirzepatide, is expected to be approved soon.

Saxenda (Liraglutide - NVO) and Wegovy (Semaglutide - NVO) are the two GLP-1 drugs approved for weight loss by the FDA
Oral preparations are in development

Mounjaro (Tirzepatide - LLY) expected to be approved by FDA for weight loss soon  -  consensus expectations place it sometime in Q4 23 = Q1 24.

GLP drugs have been on the market for 2 decades - 1st was exenatide (marketed under the brand name Byetta)

Will patients keep the weight off if they go off the drug? So far, with wegovy, patients gain back about half of the weight they lose. In early 2024, we’ll find out how Mounjaro stacks up against this

Right now, Novo has a monopoly on GLP-1 drugs that are FDA approved for weight loss.

Lilly’s approval for Mounjaro in Obesity ??

Genuinely effective obesity drugs, as GLP-1s appear to be, should have a positive impact on the bottom line of US health insurers like Cigna (CI), United Healthcare (UNH), Humana (HUM) and Centene (CNC).

Positive for:  InMode (Sells products used to improve muscle tone after abdnominoplasy) (INMD),
tailwind for both Match Group (MTCH) and Bumble (BMBL) simply from people feeling better about the way they look and being more open to dating.


Negative for: Tandem Diabetes (TNDM), Teleflex (relying on increased bariatric surgery volumes for growth) (TFX),
plus size retail - Destination XL (DXLG) or Torrid (CURV) - short-term, those plus-size clothing stores may actually see an increase in demand. - vs LMVH...
medical devices indutry - (A)ResMed (RMD), Inspire Medical Systems (INSP), AdaptHealth (AHCO) & Quipt Home Medical (QIPT), (A) Koninklijke Philips NV (PHG)
^ CPAP machine ones are by far at the most risk. - CPAP Machines, Sleep Apnea & Obesity

fast food
Obese persons are likely responsible for an outsized percentage of sales by volume, and it’s not uncommon to meet someone with obesity who consumes fast food twice a day.
Mounjaro tends to create an almost visceral aversion to fast food
YUM Brands (YUM), Domino’s Pizza (DPZ), Brinker International (EAT), Restaurant Brands (QSR) and Darden Restaurants (DRI). << -- most impacted
prudent to mention DoorDash (DASH) - Planet Fitness (PLNT)
MediFast (MED) or Herbalife (HLF)

The science
GLP-1 (Glucagon-like peptide-1)
helps prime insulin release, thus allowing the body to absorb glucose after a meal
GLP-1 is able to reduce blood glucose levels via insulin release

#Currently approved GLP-1 Drugs

Novo Nordisk: Semaglutide (Ozempic/Wegovy/Rybelsus)
half-life of around 7 days in the blood, making it a longer-lasting GLP-1
 Semaglutide was originally intended for use in diabetic patients but quickly began apparent that one notable effect was the ability of semaglutide to also cause decreases in weight


Eli Lilly: Tirzepatide/Mounjaro
half-life of around 5 days
Originally for use for diabetic type 2 patients (T2DM)

Mounjaro approved for weight loss (q423) ???

Novo Nordisk: Rybelsus
Oral treatment
Rybelsus is FDA approved, but not yet approved for weight loss.

Eli Llly: Orfoglipron/LY3502970/ Formerly Chugai OWL833
Orfoglipron is an oral GLP1R agonist - half life of 25-68 hours
comparable weight loss with other GLP1R agonists such as semaglutide and Rybelsus, but has a slightly better side effect profile and achieves weight loss in a shorter period of time. It is not currently FDA approved.

#Clinical-Stage GLP-1 Drugs

Eli Lilly: Mazdutide/ LY3305577 / Formerly Innovent IBI362
Oxyntomodulin (OXM) acts as a dual GLP1R/GR dual agonist
 half-life, to around 7.5-9.8 days
 Mazdutide overall appears to achieve superior weight loss, in shorter periods of times compared to GLP1R agonists. However, due to the lower sample sizes, these impressive effects are likely to become more tempered as clinical trials progress.

# Glucagon Receptors and Triple Agonists (GGG)

While GLP1R and GIPR reduce caloric intake, by reducing appetite, Glucagon receptors (GR) can act in concert by increasing energy expenditure.

Sanofi produced a triple agonist, SAR441255
Sanofi have since discontinued development of the triple agonist for human use for uncited reasons.

Hanmi Pharmaceuticals: Efocipegtrutide/HM15211

Eli Lilly: Retatrutide/ LY3437943
 A half-life of 5 days also allows Retatrutide to be administered only weekly


These results taken together suggest that adding even mild amounts of GR agonism (to increase energy expenditure) on top of a dual agonist like Tirzepatide is able to produce even more pronounced decreases in weight.

# Different combinations of dual agonist: GIP1R and GR
Altimmune: Pemvidutide/ALT-801

Novartis: Bimagrumab/BYM338
Bimagrumab shows a separate mechanism from GLP1R or GIPR agonism, instead targeting muscle cells

Novo Nordisk: CagriSema
analog of amylin
 acts as an agonist for calcitonin receptors

Boehringer Ingelheim / Zealand Pharma (ZLDPF): Survodutide (aka BI 456906)



So far, Eli Lilly and Hanmi Pharmaceuticals are the only companies so far pursuing clinical trials of triple agonists. Whether Novo Nordisk or Sanofi decide to renew their efforts for a triple agonist, or other competitors decide to compete also remains to be seen.

#Companies most directly related to peptide research related reagents include (but not limited to):

Thermo Fisher Scientific (TMO)
Merck (MRK)
Bio-Rad Laboratories (BIO)
Agilent (A)
Abcam PLC (ABCM)

#Tangentially related are companies that provide auxillary services, such as DNA and RNA sequencing technologies:

Illumina (ILMN)
Pacific Biosciences of California (PACB)
10X Genomics (TXG)


Rhythm Pharmaceuticals (RYTM) is also involved in peptidergic drugs for weight loss.
Its drug Imcivree (setmelanotide) has been approved by the FDA for three rare genetic diseases that cause obesity and is currently seeking approval for Hypothalamic Obesity (obesity due to genetic or physical damage to the hypothalamus).It has a neuroendocrine pathway independent of the GLP-1 receptors, working by stimulating melanocortin-4 receptors (MC4R) to reduce hunger and increase basal metabolic rate. The side effect profile is more serious than GLP1R agonists, including depression and suicidal ideation and it is not approved for other types of obesity. MC4R mutations are a rare form of genetic disorder that leads to obesity reduced metabolic rate and glucose imbalances. This disease is readily treated by MC4R agonists, such as setmelanotide.


Eli Lily and Novo already trade at rich valuations, but during the ramp of Viagra while there were still no generic alternatives Pfizer traded higher than 90x LTM earnings.

# Conclusion

GLP-1 Drugs work for their intended purpose and will likely represent a revolution in the way obesity is treated as well as obesity rates in the developed world

The consequences and benefits for various parts of the economy now that we are seeing outcomes previously only consistent with bariatric surgery available in a pharmaceutical will be wide-reaching and important for investors to monitor

If you are uncomfortable with the current valuations of LLY and NVO, I would recommend looking into more downstream effects where tailwinds provided by these drugs may not be priced in to expectations by the market and/or consensus estimates yet.


# additional notes

Norvo Nordisk has Ozempic(Diabetes) and WeGovy(WeGovy) which are the same drug approved for different uses. Semaglutides.

Elly Lilly has has Mounjaro(tirzepatide) which is better in some ways.

70% of American's are overweight. 238 million
40% are Obese. 136 million

They make people feel full faster.
They change the kinds of food people like.


The impact this drug has on a persons relationship with food is incredible:

People crave high-fat/non-sweet foods much less and prefer low fat sweet foods more (see pictures)
People also eat vastly less calories. (most studies being a reduction of 20-35%)

Sources say shortage could run into 2025.

Ozempic loses exclusivity sometime around 2032. At this point we should see a ramp of of generics entering the market and the beginning of what looks to a fully pentrated market.

1-months prescription is anywhere between $800-1300 and insurers aren't covering it yet.

Once we see Novo and Elly hit peak demand at current prices I am sure they will lower their prices and keep lowering until ozempic loses exclusivity.

Will gov subsidise the drug eventually ?

Where we are with drug penetration in the markets ?

research on:
1. Lasting side effects. There are some.
2. Average time of use as once patients stop it ex behavior change the weight comes back.


how long will people take it for; if they stop, for how long, etc.


GLP-1 users have a 20-30% reduction in daily calorie intake driven by 20-40% reduction in daily meals/snacks.
impacted: HSY, CPB, DPZ

MS projects 24 million US anti-obesity medication users in 2035 (7% of US population).
As I said on the call, I think 7% by 2035 sounds conservative. By then, AOMs will be safer, cheaper, and more effective. I guess 20%-30% will use.


Studies show that patients lose up to 18 % bodyweight after 68 weeks. and then rebound but not all the way. They also:

snack less
eat fewer meals
exercise more

Price is a major problem so we need to understand as much as we can about when competitors will bring their drugs to market.

-Novo loses exclusivity sometime in 2032.

-GLP 1 agonists like SAXENDA(daily injection) & Trulicity (30% less effective.) go off patent in 24 & 28

Pfizer also has Danuglipron. Lotiglipron is discontinued.

Danuglipron (oral) showed significant weight loss (5% or more in 16 weeks) in phase 2 trials.

Do patients regain weight after treatment cessation? Yes. - therefore must cycle on the drug or permanent

Side effects of (Ozempic/WeGovy/Mounjaro) are quite significant.

Vomiting
The shits
Ect

Long lasting effect could be kidney failure- BUT this is most likely caused by dehydration due to diarrhea and its not conclusive whether its caused by the drug itself.

The catalyst for when these drugs really start to reflect in the food industry's revenue will be when the drugs are cheaper and more acessible.

Will be before 2032 but probably not before 2025/6.

expensive & innaceble until when ?


Ozempic very effective at preventing kidney disease progression into kidney failure.
Most cases of kidney failure are caused by diabetes, obesity, and high blood pressure. It's an enormous drag on healthcare systems
^ - negative for Davita Inc(DVA)

How much does it matter that every consumer product in the world depends on a tiny cohort of super consumers?
The top 9% of US adults account for 34% of US candy consumption
The top 5% of Canadian gamblers account for 53% of online gambling spend
The top 10% of American adults account for *over 70%* of US alcohol consumption
the top 20% of US adults account for…
70% of ice cream consumption
75% of coffee consumption
77% of soda consumption
87% of cigarette consumption
How many American industries have been propped up for the last 50 years by the poor impulse control of a small cohort of people with eating problems, drinking problems, and gambling problems?

Ozempic is significantly more muscle sparing than Mounjaro
expects triple G drugs like Retatrutide will be significantly less muscle sparing than Mounjaro as well

Mounjaro is significantly better tolerated by nearly all patients with diabetes and prediabetes

Very excited for CagriSema and bimagrumab

Very bearish on insulin pumps in general.