Ross Yammin from Laurium Capital dips into the opportunities and threats possibly posed by Novo and Lilly’s ‘wonder' drug.
SIMON BROWN: I’m chatting now with Ross Yammin from Laurium Capital. Ross, I appreciate the early morning. I want to get to the likes of Novo Nordisk and Eli Lilly. But first, GLP-1 is something which this time last year I’d never heard of. I’m trying to think when I did first hear of it. I think towards the end of last year it was mentioned, and I still wasn’t quite sure. What is GLP-1?
I think if I were to show somebody in your audience the charts of these stocks over the last couple of years, and I had to ask them to guess which one they thought , they’d probably be guessing it was one of the Magnificent Seven names. The drugs were initially created to treat diabetes. As we stand today, the majority of the revenue that the two companies make still comes from the treatment of diabetes. But sort of in testing among their diabetic populations what both Novo and Lilly realised is that their patients were losing weight and they were losing a lot of it.
Novo told us for the first time yesterday that their oral GLP-1 candidate in a phase-one test was leading to an average of a 13% reduction in an individual’s body weight at the 12-week point, and that was quite a bit larger than Lilly’s sort of 6-8% that they had told us that their oral candidate had achieved in testing a little earlier in the year.
If we look more broadly at impacts from GLP-1, if we’ve got 800 million people with obesity, let’s say 10% or 20% of them manage to reduce their obesity, this is mostly going to be in developed markets. These are not cheap drugs. That’s 100 million to 150 million people who now have a different lifestyle. Suddenly gyms get busier, perhaps – maybe Match.com, because they’re all on Tinder. And the flip side is bad for McDonald’s.
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