The Newest Weight-Loss Drug Has Astounding Economics
Only every decade or so do scientists create a whole new class of drugs...
Yes, there are always new treatments and improvements in health care. But on occasion, scientists take a completely different approach to their research... and open the door to something fundamentally new.
If that breakthrough happens to target a life-threatening condition that affects hundreds of millions of people worldwide... well, it becomes a blockbuster.
And that creates blockbuster stocks.
That's the case with weight-loss drugs today... particularly with Eli Lilly (LLY) and its new weight-loss pill, Foundayo.
You've already heard about the weight-loss drug boom. Odds are you know someone on Ozempic, Wegovy, Zepbound, Mounjaro, or potentially a lower-cost "compound" version of these drugs.
This market is huge. And shares of Eli Lilly – today's Top Stock – show it (as did, for a time, those of its competitor Novo Nordisk (NVO))...
What many folks don't realize is that this boom is just getting started.
These drugs are going to get better and cheaper. They can make the population much healthier. And more people are going to take them.
There's a lot of science... but it's extremely exciting for both patients and investors. So you should know what's going on – especially the implications of Eli Lilly's new pill.
Three Big Ideas About Weight-Loss Drugs
Eli Lilly Just Made Every Other Weight-Loss Drug Obsolete
Earlier this month, the U.S. Food and Drug Administration ("FDA") approved Eli Lilly's new weight-loss pill, orforglipron (trade name: Foundayo).
It's big. Most weight-loss drugs in the current class – like Ozempic, Wegovy, and Zepbound (also owned by Eli Lilly) – are injectables. This new one is a pill.
There are others, including an oral form of Wegovy called Rybelsus.
But Foundayo is different.
The other weight-loss drugs are peptides, a type of protein. Without getting too in the weeds, they're built from chains of amino acids that must be synthesized with extreme precision. That means they're complicated and expensive to make.
Foundayo is a chemical compound – made the same way aspirin is. It doesn't need bioreactors or cold-chain shipping. It can be manufactured by the billions in a standard factory. And it could cut the cost of weight-loss drugs by a factor of 10.
The weight-loss numbers among patients match...
Novo Nordisk's Rybelsus shows about 13% weight loss in 48 weeks. Foundayo shows about 11% in 60 weeks. Statistically, those are within the margin of error, so it's about the same result.
(Put simply, different samples will always produce slightly different results because you're dealing with different people each time. So when numbers are close enough, they're effectively the same.)
But the economics between the two aren't even close. Eli Lilly's pill is much cheaper and can scale to tens of millions of patients.
For now, most folks use injections... then struggle to keep the weight off after they've hit their goal. But weight-loss management will change.
The playbook is now clear: injectable to lose weight, pill to maintain weight. And Eli Lilly owns the best pill.
This Market Is Bigger Than Anyone on Wall Street Thinks
Right now, about 1 in 8 U.S. adults reports taking a GLP-1 weight-loss drug.
That's already a massive number. But Dave Lashmet, the biotech analyst who I sat down with this week, says we're still in the early innings.
His prediction: Within a few years, two-thirds of U.S. seniors (or folks aged 55 and older) will be on these drugs.
That's not a wild guess. More than 50% of Americans hitting Social Security age each year are clinically obese. Another large chunk is overweight. And the benefits go far beyond the scale.
These drugs cut the risk of heart attack and stroke by about 20%. They reduce inflammation in ways that dramatically improve osteoarthritis pain scores. They're showing real results against fatty-liver disease – a condition with no option for dialysis, where your only choices are a transplant or death.
The weight-loss drug market is projected to be worth $170 billion by 2031. I expect it to come in much higher than that.
The Next Generation of Drugs Will Build Muscle While You Lose Fat
Here's the problem nobody on Wall Street is talking about...
One-third of the weight people lose on GLP-1 drugs is lean body mass. That means you're losing muscle.
That's a serious issue, especially for older patients, where muscle mass is one of the strongest predictors of mobility and longevity.
Enter bimagrumab...
Bimagrumab is a monoclonal antibody that blocks myostatin, the protein that tells your muscles to stop growing. In early trials, patients on bimagrumab actually gained muscle and lost weight.
There's a catch, though. Bimagrumab alone spikes triglycerides and cholesterol. But pair it with a GLP-1 drug, and those risks disappear. The combination gives you massive weight loss, no muscle loss, and no added heart risk.
Novo Nordisk's next big drug CagriSema – an amylin-plus-semaglutide combo expected to win FDA approval this year – still carries the same muscle-loss flaw as every other GLP-1.
Eli Lilly, however, is pursuing the combination of tirzepatide with bimagrumab.
If that works as expected, it won't just help you lose weight. It'll make you stronger while you get thinner. That's the real endgame. And Eli Lilly is closer to it than anyone.
Watch to Learn More
To hear more of my discussion with our in-house biotech specialist Dave Lashmet, check out today's Top Stocks video. We break down the different weight-loss drugs on the market, the new ones coming soon, and the financial differences between Eli Lilly and Novo Nordisk...
You can watch the entire episode on our YouTube page by clicking the image above. Be sure to like and subscribe to get more of our videos.
(Was this newsletter forwarded to you? Sign up for FREE here.)
Straight to the Source
- A study on orforglipron from the New England Journal of Medicine, detailing the drug's weight-loss results
- Eli Lilly's development pipeline
- An interview with Eli Lilly CEO Dave Ricks, explaining the scale of the company's new pill
Until next week,
Matt Weinschenk
Publisher and Director of Research
What do you think about Top Stocks? Send any and all feedback to thisweek@stansberryresearch.com. We read every e-mail you send in.