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Simon Brown: I'm currently chatting with Ross Yammin from Laurium Capital. Ross, thank you for your early morning. Novo He wants to go to Nordisk, Eli Lilly, etc. But first, GLP-1 was something I had never heard of this time last year. Think about when you first heard it. I think it was towards the end of last year, and I still didn't really understand. What is GLP-1?
Ross Yamin: Good morning Simon. It's a little early in the morning here in London, but it's even better to be on your show. So thank you so much for having me.
Yesterday, Novo Nordisk, currently Europe's most valuable company, hosted a Capital Markets Day. I think it was a very sophisticated event, typical of the company. The company announced some very exciting news, and the stock price hovered just below 9% on the day.
But maybe before I get into the highlights, we can chat about GLP-1 and maybe remind some of our viewers who aren't familiar with GLP-1 what GLP-1 is. [give] Here's a quick look at the opportunities that lie ahead for these companies.
I think if I had to show someone in the audience the charts of these stocks over the past few years and ask them to guess which one they're thinking about. [was involved]they would probably guess that it is one of the names of the Magnificent Seven.
So maybe give a little context.These two [pharmaceutical] Companies have been competing with each other for 100 years. Historically, they focused on diabetes treatment, specifically assisting with incident management for diabetic patients. Now, over the last decade or so, they have continued to innovate and create a new class of drugs that are glucagon-like peptide receptor agonists. I promise this will be the last very complex terminology I use this morning.
This drug is more commonly known as GLP-1, or GLP-1 for short. These are medications that are injected weekly. They mimic the hormones released by the human body after someone eats food.
So what does this do? It helps the body manage sugar and insulin levels, and very importantly, as we'll get to in a moment, it also acts as a very, very effective appetite suppressant.
This drug was originally created to treat diabetes. Even today, the majority of both companies' revenue comes from diabetes treatment. But in testing with diabetic populations, both Novo and Lilly noticed that patients were losing weight, and their weight was dropping significantly. Depending on what type of study and what population they looked at, people lost up to 20 to 21 percent of their body weight once they started taking these drugs.
Numerous drug trials and millions of dollars in research and development later, the two companies have developed a drug that could be the solution to the world's obesity problem. Now, yesterday in the capital markets, Novo reminded us that there are more than 800 million people in the world living with obesity. So there's an addressable market there, and I think that's an opportunity that has really excited the market and resulted in Lilly and Novo stock moving quite parabolically for some time now.
So, Simon, going back to yesterday's capital markets day – I'm going to be very, very careful not to lose sight of the details and all kinds of nuances here – there was one really important highlight and that was that Novo It is that some industries have been released. -Key data in the development of oral GLP-1 candidates.
Some context here is important. Both Lilly and Novo are really struggling to keep up with the demand for these drugs. In recent years, we have not been able to produce enough GLP-1. One potential solution to this problem is the development of his GLP-1 in tablet form. Simply put, tablets are easier to mass produce than injectables.
Novo told us for the first time yesterday that its oral GLP-1 candidate in a Phase 1 trial led to an average weight loss of 13% at 12 weeks, which was significant. That's higher than the 6-8% that Lilly's oral candidates told us they achieved in tests earlier this year.
So the supply side of oral GLP-1 is the aspect that's really getting people excited. I think another important aspect to consider is that these injection pens are much more invasive than tablets. Indeed, if I were to consider taking these drugs, I think it would be much better to take a pill every day and get an injection once a week.
There was a lot of information yesterday. As I said, it was a very polished performance by the company and its management team, but the key piece of information that really moved the market was around Novo's oral candidate development.
Simon Brown: I also respect your opinion. That's a big step. There are two large stairs here. One is the ability to manage weight loss with drugs rather than old-fashioned exercise methods, and Oral Candidate is a big step forward there.
If you look at the impact of GLP-1 more broadly, let's say there are 800 million obese people, and let's say 10% or 20% of them are able to reduce their obesity, but this will primarily be in developed markets. Probably. These are not cheap drugs. That means from 100 million people to 150 million people now living a different lifestyle. Suddenly, the gym gets busy. Probably because Match.com is all about Tinder. And the flip side of that is bad for McDonald's. If this is a game changer, there will be some ripple effects in the future.
Ross Yamin: Yes, certainly. This is certainly what makes this topic so interesting to me. I think these drugs are going to have far-reaching impacts, not just on the negative side, as you mentioned there, but on all kinds of different fields and industries. There are probably more negatives than positives, but these will have far-reaching implications. Perhaps you can elaborate on some of the commonly written ones.
Let's start with the negative side, and as mentioned there, the immediate and perhaps most obvious one is the fast food industry. When I think of fast food, I immediately think of America. More than 40% of the American population is classified as obese. And certainly, if these drugs are adopted at the speed and scale we suspect, fast food consumption will definitely decline, which could be a clear headwind for companies like McDonald's and Coca-Cola. It would mean that there is a sex.
The following, of which much has been written, relate to some of the other “sin” areas. I am specifically referring to alcohol and tobacco here. It is beginning to become clear that people taking these drugs smoke and drink less. And in fact, I was on the phone with a US alcohol expert this week and spent 15 minutes of the 45 minute call discussing GLP-1 and the threat it poses to the alcohol industry.
Another interesting thing, and you have to look a little bit more closely at certain pharmaceutical fields to understand this, is in the medical technology field. Therefore, obesity is associated with various complications. Novo showed last year that people with diabetes who take these drugs are 20% less likely to have a heart attack or stroke. This week, researchers showed that taking these drugs reduces the effects of chronic kidney disease by about 20%. And I think that a brighter world means fewer knee and hip replacement surgeries.
That is, on the same day that positive GLP-1 data is announced, many of these medical technology companies that promote other medical interventions appear to be trading in the other direction. is common. .
Simon Brown: I understand the point. I don't have much time so I'll leave it as is. But the impact will be enormous. I'd like to use the word “magic bullet,” but it's so insane it's scary. But the influence is probably there.
Thank you to Ross Yamin from Laurium Capital for this early morning.