Treating America’s weight problems epidemic is popping into massive enterprise. Two pharmaceutical corporations, Eli Lilly (LLY) and Novo Nordisk (NVO), are main the weight-loss revolution with a brand new class of medicine often known as GLP-1 agonists.
Surging income and rising pleasure has led some analysts to match the success of GLP-1 medication within the well being and wellness market to the substitute intelligence increase within the tech trade.
The rise of GLP-1 medication
Medicine like Ozempic from Novo Nordisk and Zepbound from Eli Lilly have taken the market by storm, not just for their effectiveness in weight administration but in addition for the numerous increase they’ve given to firm inventory costs.
The increase is fueled by a category of medicine often known as GLP-1 agonists. GLP-1 is a naturally occurring hormone within the physique that’s produced after you eat, serving to your physique handle blood sugar, regulate insulin and curb starvation whereas slowing down digestion. GLP-1 agonists bind to GLP-1 receptors within the physique, mimicking the consequences of the hormone.
The primary GLP-1 drug was Byetta (exenatide), authorised in 2005 for sort 2 diabetes. Nearly 5 years later, Novo Nordisk launched Victoza (liraglutide), one other diabetes drug primarily based on human GLP-1. In 2014, liraglutide turned the primary GLP-1 treatment authorised for weight administration within the U.S.
Nonetheless, the true turning level happened two years in the past when Novo Nordisk’s semaglutide (marketed as Ozempic for diabetes and Wegovy for weight reduction) revolutionized the sphere. Not like its predecessors, semaglutide required solely weekly injections, as an alternative of each day or twice-daily dosing.
Not like many different weight-loss drugs, GLP-1s have proven constant optimistic leads to scientific trials. The shortage of available and efficient weight-loss alternate options makes GLP-1s a standout possibility with tens of millions of potential prospects in the US alone.
The American Affiliation for the Development of Science named GLP-1 medication because the scientific breakthrough of 2023, noting that these therapies “are reshaping drugs, standard tradition and even world inventory markets.”
GLP-1s spur income, drive up shares for drug corporations
The success of GLP-1 medication has amplified investor curiosity in Huge Pharma corporations.
As the primary firm to broadly market and distribute GLP-1 medication, Novo Nordisk has seen its share worth leap 137 % in simply two years, from $53 a share in Might 2022 to $126 in Might 2024. The corporate additionally reported gross sales progress of 36 % in 2023.
Novo’s market worth is now larger than the gross home product of Denmark, its residence nation.
However Eli Lilly, the Indianapolis-based pharmaceutical firm and fellow diabetes drug maker, wasn’t far behind. Zepbound, its drug to deal with continual weight problems, was authorised by the FDA in November 2023.
Income for Eli Lilly jumped 25 % in the course of the first quarter of 2024 in comparison with the identical time final yr. It’s now the most effective performing shares within the S&P 500.
Eli Lilly raised its full-year steerage throughout its Might 1 earnings report, and expects full-year adjusted earnings of $13.50 to $14 per share, up from earlier steerage of $12.20 to $12.70 per share.
LLY shares went for about $776 on Might 8. The corporate’s 0.7 % dividend yield solely sweetened the deal for a lot of traders.
Neither firm exhibits indicators of slowing. In February, Novo Nordisk introduced plans to accumulate three manufacturing services to fulfill demand for its blockbuster medication. Eli Lilly can be racing to extend provide, with seven manufacturing websites both ramping up or underneath building.
Different weight-loss drug firm shares to look at
As shares of Novo Nordisk and Eli Lilly climb, some traders are eyeing different pharmaceutical corporations with promising new weight reduction medication within the works.
It’s rapidly turning right into a crowded subject, as traders hope to seek out an undervalued gem with moonshot potential.
Listed here are different contenders within the increasing weight-loss drug market.
Amgen (AMGN)
Shares of biopharmaceutical large Amgen (AMGN) spiked on Might 3 after the corporate reported optimistic outcomes from mid-stage trials of its investigational weight problems drug, MariTide.
MariTide holds a possible edge over rivals in terms of person expertise: Sufferers would use a handheld auto-injector simply as soon as a month, or presumably even much less continuously. This could possibly be a game-changer in comparison with the weekly injections required by present market leaders, Wegovy (Novo Nordisk) and Zepbound (Eli Lilly).
Nonetheless, detailed information from that mid-stage trial isn’t anticipated till the tip of the yr, and it could take a number of years for the drug to return to market.
On Might 8, shares of Amgen went for $305, up from $230 a share in Might 2023.
Viking Therapeutics, Inc. (VKTX)
Viking Therapeutics isn’t presently manufacturing a weight-loss drug, however their lead candidate, VK2809, is in part two trials.
Along with its experimental weight-loss injection drug, Viking additionally plans to begin a part two trial of a once-a-day oral weight-loss pill later this yr.
VKTX has seen vital progress over the past two years. On Might 8, shares traded for about $79, up from round $22 two years in the past.
VKTX could possibly be a gorgeous purchase for traders searching for a high-risk, high-reward alternative. The longer term progress potential for Viking Therapeutics hinges on the success of VK2809. If authorised, it might develop into a serious participant within the weight administration market.
AstraZeneca (AZN)
AstraZeneca, a British pharmaceutical firm, first tried to develop its personal oral GLP-1 drug in-house. The corporate ultimately deserted the mission in favor of licensing an experimental weight-loss tablet from a Chinese language firm known as Eccogene in November 2023.
This new drug, which remains to be in scientific trials,has the potential to trigger fewer uncomfortable side effects than present injectable therapies.
AstraZeneca paid $185 million upfront to accumulate the drug license, and agreed to shell out as much as $1.8 billion extra to bankroll future scientific, regulatory and advertising milestones.
The corporate dropped two different developmental applications, together with stage two trials for a sickle cell treatment, with a purpose to liberate assets for its weight problems drug growth.
Whereas AstraZeneca is betting massive on its newly licensed drug, the product remains to be in early trials, placing the corporate at a drawback to its rivals. Shares of AstraZeneca went for $76 on Might 8 and haven’t budged a lot in a yr.
Trying forward
Buyers are bullish about weight-loss medication and the businesses that make them. Analysts see great progress potential, too.
J.P. Morgan Analysis forecasts that the GLP-1 market will exceed $100 billion by 2030, and complete GLP-1 customers within the U.S. could quantity 30 million by the tip of the last decade — round 9 % of the general inhabitants.
In the meantime, Goldman Sachs predicted in February that these new weight-loss medication might increase the U.S. gross home product by 1 % within the coming years.
It’s unimaginable to foretell which corporations will develop the simplest and most secure GLP-1 medication over time, which solely provides to investor uncertainty — and pleasure — about future earnings.
Editorial Disclaimer: All traders are suggested to conduct their very own unbiased analysis into funding methods earlier than investing choice. As well as, traders are suggested that previous funding product efficiency is not any assure of future worth appreciation.
