This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
The market for weight loss drugs is big enough to allow a plethora of competitors to thrive, as per the prevailing thesis. And we are not just talking about GLP-1 agonists from heavyweights such as Novo Nordisk and Eli Lilly and Company but also newer concoctions, including Amylin-based treatment that is being championed by Zealand. However, it is the unusual agility that is being demonstrated by the reigning Goliaths in this sphere that continues to limit the ascendancy of upstarts.
As our regular readers would know, we maintain a generally positive view of weight loss treatments that leverage GLP-1 agonists. Glucagon-Like Peptide-1 (GLP-1) hormone suppresses hunger by stimulating the release of insulin in the pancreas, blocking the unhelpful release of glucagon after meals to prevent excess glucose from entering the bloodstream, and slowing gastric emptying to reduce the overall intake of food.
Novo Nordisk uses Semaglutide as its proprietary GLP-1 agonist in drugs that are marketed under Ozempic and Wegovy labels. As per the results of a critical phase-3 trial, Semaglutide reduces the risk of “major adverse cardiovascular events (MACE)” by “statistically significant 20%.”
Novo Nordisk’s only other major competitor, Eli Lilly and Company, offers Tirzepatide as its proprietary drug to combat diabetes and obesity. The drug not only leverages a GLP-1 agonist but also a Glucose-dependent Insulinotropic Polypeptide (GIP) one as well to supposedly provide superior results. Eli Lilly markets Tirzepatide under the Mounjaro and Zepbound labels, with the former geared toward diabetes and the latter billed as a treatment for obesity.
While these GLP-1 treatments for obesity are quite effective, there remains significant room for improvement. For instance, as per the results of a double-blind study, over half of the weight lost via GLP-1 drugs such as Zepbound comes back after quitting. Moreover, the FDA has been looking into reports of suicidal thoughts or actions as a direct result of GLP-1 drugs from the likes of Novo Nordisk and Eli Lilly and Company (LLY).
Enter Amylin which is being championed by Zealand. Unlike GLP-1 agonists, Amylin works solely by increasing the feeling of satiation to reduce the overall intake of food, thereby inducing weight loss. As per its early-stage trials, Amylin can induce a quantum of weight loss that matches those produced by GLP-1 offerings, but with significantly reduced side effects of vomiting, nausea, and constipation.
Nonetheless, the weight loss Goliaths are not sitting idle in the face of new challenges. For instance, Novo Nordisk’s CagriSema drug is currently undergoing phase-3 trials. The drug combines Wegovy with Cagrilintide, a long-acting Amylin analog. As per the results of its phase-2 trial, a weekly dose of CagriSema induced an average loss of around 15.6 percent of body weight at 32 weeks of uninterrupted administration. In contrast, a regimen involving Cagrilintide alone induced an average weight loss of just around 8.1 percent, with Wegovy’s lone treatment faring worse after inducing a weight loss of just 5.1 percent.
The weight loss market is expected to support annual sales of around $100 billion by 2030. While the agility in the face of new competition is currently keeping Novo Nordisk and Eli Lilly and Company at the apex of this lucrative pie, it remains to be seen whether upstarts like Zealand can mount an effective challenge through innovative agonists such as Amylin.