Anti-obesity drugmakers Novo Nordisk and Eli Lilly have an enormous lead on their competitors, however given the huge and precious market, rivals are nonetheless keen to affix the race. Financial institution of America analyst Geoff Meacham has been very bullish in regards to the alternative, which he calls “unprecedented” given the prevalence of weight problems and the massive curiosity traders have proven on this class up to now. Meacham was among the many first to foretell the class might hit $100 billion in peak gross sales, however now many analysts anticipate the market could possibly be even bigger . Based on the Facilities for Illness Management and Prevention, about 42% of U.S. adults have weight problems, a pricey situation that is related to different big selection of different medical situations, together with coronary heart illness, stroke and most cancers. Novo Nordisk, the maker of Ozempic and Wegovy, estimates almost 800 million individuals worldwide have weight problems. Competitors is coming This week, each Zealand Pharma and Viking Therapeutics confirmed the competitors is coming as they reported encouraging progress from their experimental therapies on this broad class, which despatched their shares hovering on the information. Zealand shares popped 35% on Monday after upbeat outcomes for its liver illness therapy survodutide. The therapy, which has a fast-track designation from the Meals and Drug Administration, is also being studied for weight problems. VKTX YTD mountain Viking shares 12 months up to now Then, Viking shares greater than doubled in buying and selling on Tuesday, placing the inventory on tempo to report a greater than 300% year-to-date acquire, after the corporate stated its GLP-1/GIP receptor agonist VK2735 hit all its major targets in a section 2 medical trial. Sufferers enrolled within the research misplaced about 13% of their weight after 13 weeks, which may be very aggressive with different medicine on this class. Maybe much more encouraging, there weren’t any indicators that weight reduction was plateauing, and the drug was well-tolerated with few sufferers discontinuing therapy. On the similar time, shares of each Novo and Lilly pulled again in buying and selling on Tuesday. The competitors is “not an issue for Eli Lilly or Novo Nordisk, but it surely actually raises the bar for them each,” Yuri Khodjamirian, chief funding officer at Tema ETFs, stated in an interview. The Tema Cardiovascular and Metabolic ETF (HRTS) , which is up 12% 12 months up to now, owns Novo, Lilly and Viking. REGN YTD mountain Regeneron shares 12 months up to now Cardiovascular and metabolic illness is an space that was lengthy uncared for by the bigger pharmaceutical corporations, however they’re taking note of the brand new developments, that are “very thrilling,” Khodjamirian stated. What’s extra, he does not assume that this might be a winner-take-all state of affairs, so Tema has investments in different early-stage corporations working to develop weight reduction medicine or taking different approaches to treating weight problems. These embrace Biohaven , an organization engaged on medicine to stop the muscle loss that may accompany use of GLP-1 medicine, or Regeneron , which is trying right into a genetic method to treating weight problems. Blended success However growing medicine on this area is not simple. “[T]hose new entrants have had blended outcomes as Pfizer’s two belongings and a few smaller gamers (e.g., Construction Therapeutics and Altimmune ) that underscore the medical challenges of the area,” Meacham wrote in a current analysis observe. “Regardless, we anticipate the variety of entrants to proceed to swell, particularly [as] we see progress on entry + reimbursement.” However each Construction and Altimmune had been buying and selling larger Tuesday on Viking’s information. Different corporations working within the class and adjoining remedies embrace Terns Prescribed drugs and Scholar Rock . AstraZeneca and Roche have jumped into the area by making acquisitions . ALT 6M mountain Altimmune shares over the previous six months Jeff Jonas, portfolio supervisor at Gabelli Funds, sees different methods traders may gain advantage from growing curiosity in anti-obesity drugs. That features drug distributors like McKesson , who will profit from the rising quantity of gross sales, and gamers who take part within the provide chain like Becton Dickinson . He was an investor in contract drug producer Catalent , which might be purchased out by Novo Nordisk’s guardian in a deal that’s aimed toward boosting Novo’s manufacturing capability. The portfolio supervisor expects Lilly and Novo have about two extra years to take pleasure in their duopoly within the class earlier than competitors intensifies and the present $1,000-plus a month checklist costs for the GLP-1 medicine “collapse.” Nonetheless early days Some analysts and traders admit it’s nonetheless very early days for weight problems therapy and lots of questions stay to be answered. For instance, sufferers who take these medicine can see the load creep again on as soon as they cease taking the medicine. However will these individuals need to keep on these medicine for all times? That is not clear. Particularly when one considers that the unwanted effects — which might embrace nausea, constipation and diarrhea — can pressure some sufferers to discontinue use. Subsequent-generation medicine within the pipeline might search to alleviate a few of these signs — and can seemingly be rewarded by sufferers if they will. In the intervening time, nonetheless, it hasn’t mattered a lot when sufferers halt therapy as a result of the medicine are in such demand that the businesses are promoting all they will manufacture. BofA’s Meacham lately shared IQVIA script information for the week ended Feb. 16 with shoppers that confirmed strong progress in GLP-1 prescriptions, up 22% from a 12 months in the past. Meacham stated he expects GLP-1 medicine accounted for a 31% share of the diabetes market within the first quarter, up from 25% within the first quarter of 2023. He estimated that 14% of the prescriptions for GLP-1 treatment are being written for weight problems, whereas 86% are for diabetes. “We proceed to anticipate above consensus progress within the area, as we’re bullish on adoption from payers and broader weight problems uptake,” Meacham wrote. Zepbound, which was authorized by the FDA to deal with weight problems in late 2023, is gaining share shortly, giving Lilly a 46% share of the general GLP-1 market, based on Meacham. For weight problems solely, Lilly has already gained a 38% share, regardless of solely being out there for 13 weeks, he stated. And Lilly has the prospect to achieve much more floor with it grabbing about 47% of all the brand new prescriptions being written. What’s subsequent for Viking As for Viking, a few of Tuesday’s monumental inventory good points are being fueled by hypothesis that one other bigger pharmaceutical firm, like a Merck or a Pfizer will look to purchase it, based on Tema’s Khodjamirian. That may usually be the playbook within the sector. Khodjamirian famous that manufacturing these medicine is a tough course of, and Viking might want to construct a gross sales pressure as effectively to compete in opposition to the already established Novo and Lilly. However with the run-up within the inventory, it is change into a extra pricey proposition. Gabelli’s Jonas stated he is skeptical of Pfizer’s curiosity provided that they’re already busy integrating earlier acquisitions and have amassed an excellent quantity of debt. However, he stated, the run-up in Viking’s inventory worth might enable it to fund its personal progress. Commenting on Viking’s inventory run-up, William Blair analyst Andy Hsieh stated, “… we’re admittedly in uncharted territory concerning the industrial potential of the GLP-1 class, and the general public’s strong consciousness might drive entry enlargement (particularly, initiation of Medicare reimbursement or progress in company-sponsored healthcare plans).” Hsieh stated a competitor might problem Lilly and Novo by competing on worth. “We additionally emphasize that one of many idiosyncrasies of the U.S. healthcare system, which grants pharmacy profit managers vital energy to form prescription patterns by the creation of formularies, might current a chance for non-first-in-class rivals.”
