The Amplify Weight Loss Drug & Treatment ETF (THNR) launched on May 21, 2024. Over that short period of time, the ETF was up 2.7% relative to a negative 1.4% return for the DJ Select Pharma TR Index.
Second quarter stock market performance continued its upward trend, albeit at a slower pace than the first quarter of the year, with the S&P 500 TR Index advancing another 4.3%. YTD the market has risen 15.3% despite higher for longer interest rates and mixed economic data. Artificial intelligence stocks continue to be the fuel propelling market gains, with the technology and communication services sectors leading the way.
In Health Care, the GLP-1 drug segment is the rising star of the pharma and biotech industries, equivalent to what AI is for technology. Goldman Sachs projects the market opportunity for GLP-1 drugs will rise to $130 billion by 20301 , recently revised up from a prior forecast of $100 billion.
While currently two companies, Eli Lilly and Novo Nordisk have the bulk of the market share for GLP-1 drugs including Ozempic, Wegovy, and the new generation of dual agonist drugs, Monjauro and Zepbound, there are many new drugs in the pipeline with less frequent dosing and more convenient drug dispensation methods. The GLP-1 drug opportunity is a diversified opportunity set, well suited for an ETF portfolio.
Top performers contributing to returns include Eli Lilly (+12.7%), Zealand Pharma (+41.6%) and Novo Nordisk (+5.4%) 2 Click here for THNR’s top 10 holdings.
Eli Lilly reported Q1 earnings growth of 59%, beating forecasts, driven by strong sales for its latest obesity drug Zepbound which had sales of $517 million versus analyst expectations for only $373 million. Lilly stock is also rising based on a promising Alzheimer’s drug, donanemab which just received FDA approval.
Shares of Danish biotech company Zealand Pharma surged after positive results for its weight loss drug petrelintide. The drug demonstrated similar weight loss to Ozempic and other GLP-1 drugs with fewer side effects in a small phase 1 trial.
Danish pharma Novo Nordisk announced it is investing $4b to expand weight loss drug production in the U.S., with a 1.4 million sqft. Manufacturing facility in North Carolina to help meet surging demand. Including the latest investment, Novo Nordisk has committed $6.8bn this year to boost its own in-house production capacity. Novo’s profits rose 28% in Q1 but is facing rising competition from Eli Lilly.
Detractors on performance for the period included Viking Therapeutics (17.5%)
Biotech Viking Therapeutics’ stock is up 150% this year on its VK2725 weight loss therapy drug. In a phase 2 study, VK2735 proved highly effective at reducing body weight, a result which sent Viking Therapeutics' shares skyrocketing. In addition, an oral version of the drug in phase 1 also looks promising. The stock sold off recently when Novo Nordisk reported positive results for a drug formulation similar to Viking’s that can be taken orally.
The pipeline of GLP-1 drugs and their enablers continues to evolve, making a diversified investment in this health care segment, a compelling opportunity.
Click here to see performance table.
All data as of 6/30/2024. Subject to change at any time. Fund holdings should not be considered recommendations to buy or sell any security. View Current Complete Holdings
Index Definitions:
The Dow Jones U.S. Select Sector Specialty Indices are designed to measure the performance of DJICS subsectors. The Dow Jones U.S. Select Pharmaceuticals Index (DJSPHM) comprises stocks from the Dow Jones U.S. Broad Stock Market Index that are classified in the DJICS Pharmaceuticals subsector. The Standard & Poor's (S&P) 500 Total Return Index is an unmanaged, market-capitalization-weighted index of the 500 largest U.S. publicly traded companies by market value, and assumes distributions are reinvested back into the index. It does not include fees or expenses. It is not possible to invest directly in an index.
1https://www.bloomberg.com/news/articles/2024-05-31/goldman-sees-obesity-drug-market-growing-to-130-billion-by-2030?sref=on4LSPp2
2All percentages shown indicate total return of the sector for the month.