1) Danish drug giant Novo Nordisk (NVO) reported first-quarter earnings on Wednesday that were in line with expectations (press release here and investor presentation here). So the stock didn't move on the news.
Revenues (adjusted for a one-time revision) fell 4% on a constant-currency basis, while adjusted operating profit dropped 6%.
The company's flagship GLP-1 drug semaglutide, sold under the brand names Ozempic and Wegovy, launched the weight-loss drug craze in late 2017. But it has since fallen behind a better drug with greater weight loss and fewer side effects – tirzepatide, sold under the brand names Mounjaro and Zepbound, which Eli Lilly (LLY) launched in 2022.
That's why Novo's stock has taken a round trip over the past five years:
It currently trades at a mere 13.1 times this year's consensus analysts' estimates.
The beaten-down shares have drawn the attention of some value investors... Oliver Müller of European investment firm Accresco pitched the stock at Guy Spier's ValueX conference in early February (you can see his presentation here, shared with permission).
But I wasn't persuaded then, and I'm still not today. Semaglutide lost its patent protection in much of the world recently (see my March 24 e-mail). And it looks to fall even further behind Lilly going forward.
2) I'm much more bullish on Lilly, which reported strong first-quarter earnings on April 30 (press release here and investor presentation here). The report sent shares up 10% in one day, and they've subsequently risen another 4%.
Revenues jumped 56%, and earnings per share soared 170%, driven by enormous demand for tirzepatide. This drug requires injections, but the company also now has its first weight-loss pill: orforglipron, sold under the brand name Foundayo. It was approved by the U.S. Food and Drug Administration ("FDA") on April 1 and is now widely available.
I've been pounding the table on these "miraculous" drugs for years (archive here). And on September 25, I said Lilly's stock looked compelling. Since then, shares are up 37%.
The stock trades at a much higher multiple than Novo, at 27.2 times this year's estimates. But I still like Lilly more because of its blockbuster new drug, retatrutide.
"Reta" will likely be approved by the FDA later this year and launch early next year. It's currently in late Phase III trials, and the early results Lilly has released are off the charts...
On the full 12 mg weekly dosage, the average weight loss was 28.7% in 68 weeks. The average participant started at 248.5 pounds and lost 71.2 pounds! This compares with roughly 15% weight loss for semaglutide and 20% for tirzepatide.
Why is reta more effective? This is the way I think about it...
First there was Ozempic – a single agonist which targets GLP-1 (glucagon-like peptide-1) receptors. Then a better, double agonist came out – Zepbound. I call this a GLP-2 because it targets GLP-1 plus GIP (gastric inhibitory polypeptide).
And now there's reta, a triple agonist, which I call a GLP-3. In addition to GLP-1 and GIP, it targets the glucagon receptor. This not only triggers more weight loss, but it also may help burn more fat compared with muscle (though muscle reduction still occurs). Muscle loss is a key downside reported by many people using GLP-1 drugs, so reta improves on this.
Overall, I think Lilly is best positioned to benefit.
3) The benefits of GLP-1 drugs don't just stop at weight loss. At one time, I thought every overweight or obese person would benefit from them... but now I think everyone can.
My thinking was influenced by a close friend, a fit and healthy 74-year-old, who told me that he was microdosing Zepbound. I was shocked because he's not overweight at all. But he said the real impact was that his blood pressure went down and all his blood work was better. He concluded: "It's a miracle drug – the fountain of youth!"
There's also emerging evidence suggesting Zepbound and other GLP-1s may help protect against neurodegenerative diseases like dementia and Alzheimer's...
A seven-year study found that patients with Type 2 diabetes and obesity had a 37% lower risk of developing dementia by taking these drugs. This is likely due to reduced brain inflammation, improved blood sugar control, and weight loss.
This New York Times article from a year ago highlights how research was revving up to investigate whether these drugs could revolutionize Alzheimer's treatment:
Emerging evidence seems encouraging – but questions and caveats abound.
"I think they're definitely promising," said Karolina Skibicka, a neuroscientist and the chair in metabolic physiology at Pennsylvania State University. "And that's sort of how far I would go with the currently available evidence."
In October, the Alzheimer's Association made a post on its website about the possibility of treating the disease with GLP-1 drugs:
This potential breakthrough is generating excitement as researchers await results from EVOKE and EVOKE+, two global clinical trials studying semaglutide, a GLP-1 drug. These findings could represent a pivotal moment for Alzheimer's care, shaping how the disease is treated and managed for years to come.
No wonder my friend Scott Galloway said in this podcast clip that these drugs are "a gift from God" and "are going to be a more impactful technology than AI."
4) I've shared many stories from my friends and readers who are on these drugs – most notably in my February 9, 23, 24, and 25 e-mails. Here are a few more...
A 37-year-old male friend wrote:
I started taking 2 mg of retatrutide once a week in early March. I'm 6 feet tall, and I weighed 236 pounds on March 8 when I started. By end of April, I was down to 212 pounds. I lost the first 7 to 8 pounds in the first week (mostly water weight, I assume) and then continued to lose 2 to 3 pounds weekly after.
I've used ChatGPT to track rough estimates of my calorie intake and daily activities. I'm also tracking protein as I'm trying to maintain and build muscle mass, aiming for 160 to 180 grams of protein each day. I work out daily (lifting and 10 to 20 minutes of light cardio), and I walk 7 to 8 miles per day. That leads to a calorie expenditure of about 3,000 calories per day and an intake of around 2,000 calories per day.
Outside of a few early days where I was struggling with staying hydrated, I have not felt nausea. I've had a few days where I'm lower on energy, but it's not consistent. In fact, I generally have a lot more energy. My heart rate has increased, which is one potential downside – I track my resting heart rate in the 60s, where it was previously more in the 50s. I also have noticed a few times in intense cardio (fast running) where my heart rate really spikes.
I'm generally not that hungry while on the drug, so hitting some of the protein goals each day has been more challenging. But I don't crave any sweets or unhealthy food, and I still find I have the same amount of drive – in fact, I'm even busier and working more than before I started.
A middle-aged female friend who started on a GLP-1 drug six weeks ago wrote:
Slow and steady decline in weight. Minimal side effects: I nap more, little digestive effects (other than slowing it down), and the food noise has turned into a complete lack of interest in snacking. I've upped the protein and instead of going to high-intensity workout classes, I do heavy weights at home. I'll be going back to the classes when I'm halfway to my goal (that's in about 20 pounds). I'm doing a body spec the end of this month.
Another middle-aged female friend has dropped from 112 to 102 pounds in two months of microdosing. She's worried about losing more, so she's consuming protein shakes. She says, "I've lost the weight I gained from menopause. And the food noise that's been in my head every day since I was 13 is gone."
In my February 9 e-mail, I wrote about a guy who I met at the ValueX conference who was 70 pounds overweight. I urged him to get on Zepbound, but he thought he could lose the weight he wants to without the drugs.
Well, I saw him again at the Berkshire Hathaway (BRK-B) meeting last weekend, and, he admitted he hadn't lost any weight since then. So he just started on Zepbound – and I confidently predict he'll be delighted he did.
Meanwhile, he wrote to me that his wife has been taking it and has had great results. In addition to her losing weight, he said:
The inflammation in her knee is totally gone, which removed her from the knee surgery list. Just to be clear, this was supposed to be a knee osteotomy, where the bones above and under the knee are broken to better align them (my wife has X-legs, aka knock-knees). The pain was excruciating, but now it's almost entirely gone.
She joined several Facebook groups of people with her condition and found many people like her in which the inflammation and pain went away.
It's important to point out that it's not because of the weight loss, as the inflammation and pain went away soon after she started on Zepbound, before she lost weight. Also, she's encountered many people whose shoulders, elbows, necks, etc. benefited. It's the drug's anti-inflammatory properties that work.
You can see why I'm such a believer in these drugs.
5) The annual Sohn Investment Conference will take place this coming Tuesday, May 12 in New York City. Along with the Robin Hood Investors Conference, I think it's the best conference in the world. And it's for a great cause – raising money for pediatric cancer research.
Over the more than two decades I've been attending, I've met a lot of great people, learned a ton, and profited from some great stock ideas – like JetBlue (JBLU) in 2014, which quickly tripled for reasons I discussed in my August 27, 2024 e-mail.
This year's speaker lineup is stacked, including David Einhorn, Larry Robbins, Marc Lasry, Alexis Ohanian, Alex Sacerdote, Orlando Bravo, and many more. If you're interested in attending, you can learn more and buy a ticket here.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.