Motley Fool Money: The State of Weight-Loss Drugs
Released on March 1, 2025
Hosts: Dylan Lewis, Ricky Mulvey, and Mary Long
Guest: Carl Thiel, Motley Fool Analyst
1. Introduction
Mary Long opens the episode by introducing Carl Thiel, a Motley Fool analyst, to discuss the burgeoning market of weight-loss drugs, particularly focusing on GLP1 (Glucagon-Like Peptide-1) drugs like Ozempic and Mounjaro. She highlights the optimism among investors due to recent growth and development in this sector, mentioning opportunities beyond injectable forms currently in development.
2. Market Overview and Growth
Ricky Mulvey sets the stage by outlining the significant societal shift towards the adoption of weight-loss drugs over the past decade. He notes the impressive sales growth for major pharmaceutical companies:
- Novo Nordisk's obesity care products saw a sales increase of over 50% last year.
- Eli Lilly's Mounjaro sales surged by 60%.
An estimated 1 in 20 American adults are currently using weight-loss drugs, with 1 in 8 having tried them at some point. However, Carl Thiel cautions that these numbers mask deeper complexities regarding drug efficacy and retention.
Carl Thiel [00:01]: "There is this number that keeps getting thrown around and that is that this is going to be a $150 billion annual market. Now, I feel that it's one of those numbers that's become kind of thoughtless and is not really getting re-examined."
(00:01)
3. Understanding GLP1 Drugs
How GLP1 Drugs Work:
Carl Thiel explains that GLP1 is a natural hormone produced in the small intestine, released upon eating, and stimulates insulin production while suppressing hunger. The primary challenge with natural GLP1 is its short half-life (1-2 minutes), leading to the development of synthetic GLP1 drugs with extended half-lives (5-7 days).
Carl Thiel [03:12]: "So GLP1 is a natural hormone that everybody makes in their own body... the structure of the GLP1 drugs was originally inspired by the venom of the Gila monster."
(03:12)
Differences Among Key GLP1 Drugs:
- Ozempic and Wegovy: Both contain semaglutide as the active ingredient.
- Mounjaro and Zepbound: Both contain tirzepatide, a GLP1 agonist combined with a second hormone agonist called GIP (Glucose-Dependent Insulinotropic Polypeptide).
Carl Thiel [04:35]: "Ozempic and Wegovy are both semaglutide... Manjaro and Zepbound... also have a second hormone agonist in it called gip."
(04:35)
4. Beyond Weight Loss: Broader Impacts
Ricky Mulvey brings up the potential of GLP1 drugs in treating addictions, citing preliminary studies and anecdotes.
Carl Thiel [05:32]: "They are actually being studied in clinical trials for some of this... the idea that there is an addiction role here is not entirely surprising."
(05:32)
However, Carl notes that while there's more than anecdotal evidence, definitive approvals and data are still pending.
5. Concerns and Side Effects
The discussion shifts to the side effects of GLP1 drugs, including gastrointestinal issues, mood changes, and insomnia. There's also concern about these drugs being prescribed to children, potentially leading to adverse outcomes.
Carl Thiel [06:48]: "What you will see over and over again in the clinical trials is that the companies will talk about mild to moderate side effects... over 50%, by most measures, stop taking these drugs within a year."
(06:48)
Carl emphasizes the disparity between clinical definitions of "extreme" side effects and individual experiences, highlighting a significant dropout rate due to side effects and other factors like insurance coverage.
6. FDA Developments and Compounding Pharmacies
Ricky Mulvey inquires about the FDA ending the shortage of semaglutide products and its implications for companies like Eli Lilly and Novo Nordisk.
Carl Thiel explains that while major companies may reduce sales, compounding pharmacies will continue to supply customized versions for patients who require specific formulations.
Carl Thiel [08:53]: "While Hims and Hers is certainly forecasting a decline in their sales of GLP1 drugs, they're not expecting it to go to zero."
(08:53)
He further elaborates on the role of compounding pharmacies in providing tailored doses, ensuring a continued, albeit reduced, market presence.
7. Ethical Concerns and Potential Risks
Addressing concerns from health influencers about the misuse of GLP1 drugs, especially among individuals with eating disorders, Carl acknowledges the seriousness yet notes the lack of substantial data.
Carl Thiel [11:58]: "Eating disorders are something that have impacted people in my life... we just don't have the numbers behind it."
(11:58)
He stresses the importance of proper medical evaluation in prescribing these drugs and the complexities introduced by telehealth.
8. Patent Expirations and Market Impact
Ricky Mulvey brings attention to the impending patent expirations for key drugs:
- Ozempic: Patent expires in 2032 (U.S.)
- Mounjaro: Patent expires in 2036
Carl Thiel discusses the typical impact of patent cliffs, where generic competition can lead to an 80-90% drop in sales for branded drugs. However, he notes that the GLP1 market has seen generics for earlier drugs like Exenatide and Ligurotide.
Carl Thiel [14:13]: "If you assume that Lilly and Novo Nordisk continue to dominate the market and you assume it really does go to $150 billion, well, you know, Lilly starts to grow into that valuation and they start to look pretty reasonable just a few years out."
(14:13)
He highlights Eli Lilly's strategic pricing adjustments and the introduction of vial forms to cater to out-of-pocket consumers and those needing compounded drugs.
9. Innovation: Weight-Loss Pills vs. Injections
Eli Lilly's investment of $550 million in Glipron, a non-peptide small molecule weight-loss pill, is a focal point. Carl Thiel explains the distinction between peptide-based drugs and small molecules, emphasizing the challenges of making peptides effective as oral pills due to degradation in the stomach.
Carl Thiel [16:43]: "Glipron... is a non peptide agonist. They're not the only ones that are working on this... if it works, it's really important because those drugs are much easier to manufacture."
(16:43)
While optimistic about the potential, Carl cautions about the complexities and possible side effects that need to be addressed in Phase Three trials.
10. Investment Strategies and Stock Considerations
Ricky Mulvey expresses concerns about the high valuation of Eli Lilly and Hims and Hers, comparing their price-to-earnings ratios. Carl Thiel suggests a basket approach for retail investors, recommending diversification within the sector.
Carl Thiel [20:01]: "I do think Lilly is pretty clearly the best positioned company in this space right now... but there’s a lot of uncertainty about this because it's so competitive."
(20:01)
He recommends including other large pharmaceutical companies like Novo Nordisk and Pfizer in investment baskets to mitigate risks associated with rapid market changes and competitive pressures.
11. Competitive Landscape
Beyond major players, smaller companies like Viking Therapeutics and Structure Therapeutics are emerging with innovative approaches to GLP1 drugs. Carl Thiel mentions:
- Viking Therapeutics: Developing both injectable and oral versions of GLP1 plus GIP drugs, with favorable side effect profiles.
- Structure Therapeutics: Working on peptide small molecules.
Partnerships, such as Eli Lilly with Lycna in Hong Kong, aim to enhance drug efficacy and address issues like muscle mass preservation during weight loss.
12. Economic and Societal Impacts
Zooming out, Carl Thiel discusses the limited but emerging economic effects of widespread GLP1 drug adoption. Specific trends include:
- Household Spending: Reduced food purchases among GLP1 users.
- Food Industry Response: Companies like General Mills and Conagra launching products tailored for GLP1 users with smaller portions and enhanced nutritional profiles.
- Medical Services: Decrease in bariatric surgeries as more individuals opt for pharmacological weight loss methods.
Carl Thiel [25:36]: "You'll see companies like General Mills and Conagra... targeting the needs of GLP1 users."
(25:36)
He anticipates gradual improvements in cardiovascular health at the population level, contingent on long-term drug efficacy and adherence.
13. Future Trials to Watch
As the episode concludes, Carl Thiel highlights key upcoming trials and drug developments:
- Eli Lilly's Retatrutide (Triple G): Targets GLP1, GIP, and Glucagon receptors, aiming for greater efficacy. Results expected later in the second quarter.
- Novo Nordisk's Amacretin: An oral drug entering Phase Three trials, poised to follow Semaglutide as a successor.
These trials are pivotal in determining the next generation of weight-loss drugs and their market viability.
14. Closing Remarks
Mary Long wraps up the episode by reminding listeners that the Motley Fool may have holdings in the discussed stocks and that all personal finance content meets their editorial standards. She underscores the importance of independent research and due diligence before making investment decisions.
Notable Quotes:
- Carl Thiel [00:01]: "There is this number that keeps getting thrown around and that is that this is going to be a $150 billion annual market."
- Carl Thiel [03:12]: "So GLP1 is a natural hormone that everybody makes in their own body... inspired by the venom of the Gila monster."
- Carl Thiel [14:13]: "If you assume that Lilly and Novo Nordisk continue to dominate the market and you assume it really does go to $150 billion..."
- Carl Thiel [20:01]: "I do think Lilly is pretty clearly the best positioned company in this space right now..."
Conclusion
The episode provides a comprehensive analysis of the current state and future prospects of weight-loss drugs, particularly GLP1s. While the market shows substantial growth and investment potential, challenges such as side effects, patent expirations, and competitive pressures remain. Investors are advised to consider diversified approaches and stay informed about ongoing clinical trials and market developments.
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