The skinny on weight loss therapies and their investment potential
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Why are weight loss drugs capturing the attention of patients, investors, board members, analysts, and company leaders?
Weight loss drugs are garnering significant interest due to their potential in a rapidly growing market, forecasted to escalate from $6 billion to an astounding $130 billion by 2030.1 This surge is driven by the drugs' effectiveness in facilitating body weight loss, treating type 2 diabetes, and lowering the risk of other health conditions such as cardiovascular events including heart attack, stroke, and death due to cardiovascular disease. GLP-1s (weight loss drugs) offer potential not only for improved health outcomes but also massive commercial success.
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What types of brands are in this space?
Prominent brands in the weight loss drug market include Ozempic, Wegovy, Mounjaro, and Zepbound from the likes of Novo Nordisk and Eli Lilly.2 However, the space has other players that are either part of the value chain or are developing their own proprietary GLP-1 weight loss drugs. -
What are GLP-1 drugs and how do they work?
GLP-1 drugs are glucagon-like peptide-1 agonists and recent studies have shown that GLP-1 drugs have led to 10-20% reduction in body weight.3 GLP-1s target the body's natural hormone response to eating. By mimicking the activity of the GLP-1 hormone, these drugs trigger insulin release, block glucagon secretion, slow down gastric emptying, increase satiety (how full you feel after eating) and reduce appetite, thereby decreasing caloric intake. This mechanism has been successful in fostering significant weight loss and improving various health parameters. -
What other impacts are they having on the body beyond the weight scale?
Other patients reported a reduction in sleep apnea, arthritis symptoms, and reduced desire to partake in negative addictive behavior. Investigations are taking place on GLP-1 therapies impact on fatty liver disease, Alzheimer's, Parkinson's and others. That being said, some patients experience negative side effects, such as nausea and vomiting when using these GLP-1s.
Beyond promoting weight loss, GLP-1 drugs are making a broader impact by reducing risks associated with obesity-related diseases such as diabetes and cardiovascular disease. The SELECT study showed GLP-1 therapies lowered the risk of heart attack, stroke and cardiovascular death by approximately 20% and all causes of morbidity by 19%.4 Furthermore, 73% of patients didn't progress to diabetes.
The rising popularity of GLP-1s is transforming the pharmaceutical market, heralding a 'revolution' in treatment options for obesity and associated conditions, this shift could position them as one of the most significant drug categories ever. -
Are these therapies currently covered by insurance?
Many plans, including Medicare Part D plans, cover the use of GLP-1 for type 2 diabetes or for those with cardiovascular risks. However, weight loss specific coverage varies. At the national level, coverage estimates range from 25-50% for weight loss therapies.5 Both Novo Nordisk and Eli Lilly have savings programs that aim to reduce out-of-pocket expenses regardless of insurance coverage.
Some experts anticipate private coverage to nearly double in 2024 and production of GLP-1s is expected to continue to increase which could also lower costs.6 -
What type of unique investment opportunity is presented by THNR?
THNR presents a distinctive investment opportunity by offering investors access to the burgeoning sector of weight loss drugs and treatments through an Exchange Traded Fund (ETF). Positioned for potential capital appreciation in a growth category, THNR's unique approach consolidates a variety of the sector's key players, including pharmaceutical GLP-1 manufacturers and the larger value chain within a single investment vehicle. This strategy not only aims to mitigate the risk of individual company performances but also has potential to capitalize on the companies that are creating value and growing across the sector.
We believe the current market leaders are well-positioned for success, however their competitors have promising drugs in the pipeline that may be more effective or easier to administer (i.e. injection pen vs. pill-based options) and these companies are contributing to the GLP-1 market growth. Other industries such as food manufacturers, weight loss programs, and gyms are adjusting their business models and revenue forecasts as they consider the reverberating effects of these GLP-1 weight loss therapies.
THNR is the first pure play index-based weight loss ETF strategy, it offers a forward-thinking investment option at the exciting intersection of healthcare innovation and market opportunity.
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Sources:
1 https://seekingalpha.com/news/4111624-goldmansachs-raises-obesity-drug-market-estimate
2 As of 06/05/2023 Eli Lilly is a 15.71% holding, and Novo Nordisk is a 14.98% holding in THNR.
3, 4 Morgan Stanley, GLP-1: The Weight of Speculation, 12/2023. Medscape, Semaglutide Cuts Cardiovascular Events in Landmark Trial, 08/2023.
5 https://hrexecutive. com/as-anti-obesity-drug-prices-soar-how-employers-can-navigate-difficult-choices/ and Eli Lilly: The GLP-1 Opportunity, While Increasingly Recognized, Is Under estimated (LLY) | Seeking Alpha
6 https://www.reuters.com/business/healthcare-pharmaceuticals/us-employers-covering-weight-loss-drugs-could-nearly-double-2024-survey-2023-10-09
A non-diversified fund and can invest a greater portion of its assets in securities of individual issuers which could cause greater fluctuations than a diversified fund. A narrowly focused portfolio concentrated in the pharmaceutical industry or healthcare sector, may exhibit higher volatility and be vulnerable to factors affecting them due to regulation, litigation, costs and competition.
Small and/or mid-capitalization companies may be more vulnerable to adverse general market or economic developments. Securities issued by foreign companies present risks beyond those of securities of U.S. issuers.
Amplify Investments LLC serves as the investment adviser to the Fund. Penserra Capital Management LLC serves as investment sub-adviser to the Fund.