Fri. Jul 19th, 2024

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Weight loss drugs exploded into the public eye this year, and 2024 will bring more change to the evolving market. 

The drugs skyrocketed in popularity in 2023 as they helped patients shed significant weight, despite hefty price tags, mixed insurance coverage and a handful of unpleasant side effects

Demand for the drugs is unlikely to slow down in 2024, especially as treatments gradually become more accessible. Much of Wall Street believes the weight loss drug market will only expand, with some analysts projecting that it will be worth $100 billion by the end of the decade. Goldman Sachs analysts expect 15 million U.S. adults to be on obesity medications by 2030.

But next year, investors will be watching how the dominant players in the market, Novo Nordisk and Eli Lilly, navigate supply issues plaguing their treatments. Patients have been struggling to get their hands on Novo Nordisk’s weight loss injection Wegovy, its diabetes treatment Ozempic, and Eli Lilly’s diabetes injection Mounjaro.

Analysts expect supply constraints to improve but note that the broader issue will take years to resolve. 

Outside of supply headwinds and the lack of broader insurance coverage for weight loss drugs, Novo Nordisk and Eli Lilly have a big year ahead of them. 

Novo Nordisk could win approvals for expanded use of Wegovy in the U.S. and Europe. Eli Lilly’s newly approved weight loss drug, Zepbound, could garner more than a billion dollars in sales in its first year on the market.

Both companies are also expected to release new data that could show other potential health benefits of their drugs beyond weight loss and diabetes management, which may increase insurance coverage down the line. 

Next year may mean even more to the other companies hoping to join what’s so far been a two-horse race to make weight loss treatments.

New drug data from Pfizer and Amgen, and the potential for more buyouts or collaborations between larger companies and smaller makers of obesity drugs, could alter the market’s competitive landscape in the coming months.

Supply issues could ease but won’t go away

The supply problems plaguing Wegovy, Ozempic and Mounjaro are likely “the biggest thing” investors will watch next year, Guggenheim analyst Seamus Fernandez told CNBC. 

Some analysts said supply constraints will likely persist for years, but expect them to ease in 2024 as Novo Nordisk and Eli Lilly work to expand manufacturing capacity for their drugs. 

Novo Nordisk during its third-quarter earnings call in November said it is “looking at significantly scaling our supply” of Wegovy in the U.S. in 2024. TD Cowen analyst Michael Nedelcovych told CNBC that the company during the call appeared to suggest that such a change wouldn’t look like a big jump in supply but rather steady improvements over time.

Supply could increase more significantly years from now: Novo Nordisk in November said it would invest $6 billion to expand its manufacturing facilities in Denmark, noting it will finish construction from the end of 2025 through 2029. The company also said it would spend around $2.3 billion to expand another production site in France. 

Top weight loss and diabetes drugs

Wegovy from Novo Nordisk is a weekly weight loss injection for adults with obesity or who are overweight. The drug mimics a hormone produced in the gut called GLP-1 to suppress a person’s appetite.

Zepbound from Eli Lilly is a weekly weight loss injection for adults with obesity or who are overweight. The treatment mimics GLP-1 and another gut hormone called GIP to reduce appetite and food intake.

Ozempic from Novo Nordisk is a weekly injection that helps lower blood sugar levels in adults with Type 2 diabetes. The medication mimics GLP-1 to suppress appetite and help the pancreas make more insulin.

Mounjaro from Eli Lilly is a weekly injection that helps lower blood sugar levels in adults with Type 2 diabetes. The drug mimics GLP-1 and GIP to curb appetite and stimulate insulin production.

Meanwhile, Eli Lilly said during its third-quarter earnings call in November that supply of Mounjaro has improved in the U.S. even as it remains constrained around the globe.

Executives also said that Eli Lilly is on track to achieve its goal of doubling production capacity for drugs such as Mounjaro, in part through investments in new manufacturing sites in North Carolina and Indiana.

But Eli Lilly CEO David Ricks said on the call that the company is “aggressively planning” further production buildup for Mounjaro and other drugs. He added that “it’s a problem we work on every day. So we’re not at all happy with the capacity.”

Zepbound could become a blockbuster 

The FDA approves Eli Lilly’s Zepbound, a weight loss drug similar to Ozempic and Wegovy.

Courtesy: Eli Lilly

Morgan Stanley expects Zepbound to rake in $2.2 billion in sales in 2024, according to a note released after the drug’s approval in November. Meanwhile, Bank of America analysts in a November note projected $2.7 billion in Zepbound revenue in 2024. 

Some analysts expect far more sales growth for Zepbound and Mounjaro beyond 2024. Tirzepatide, the active ingredient in both drugs, has a “very strong shot of being the best-selling molecule of all time in the pharmaceutical industry,” said Guggenheim’s Fernandez. 

Wall Street is enthusiastic about Zepbound in part because it may cause more weight loss than Wegovy. Studies directly comparing the two, including an ongoing trial from Eli Lilly, would need to confirm that.

Results from that trial could come out next year after initial data from separate studies examining Zepbound as a potential treatment for other health conditions, including heart failure.

Mixed insurance coverage will likely weigh on sales of Zepbound and other weight loss drugs in 2024, but Eli Lilly has already secured some coverage for the drug. 

Wegovy could make history again 

Wegovy made history this year when it slashed the risk of serious heart problems by 20% in people with obesity and heart disease in a late-stage trial. In 2024, the drug could shake up the pharmaceutical industry again if U.S. and European regulators decide to approve it for that purpose. 

Those potential approvals, which would make Wegovy the first GLP-1 drug to have an expanded use for heart health, are a “foregone conclusion” for Novo Nordisk, Cantor Fitzgerald’s Louise Chen told CNBC.  

Still life of Wegovy an injectable prescription weight loss medicine that has helped people with obesity. It should be used with a weight loss plan and physical activity. 

Michael Siluk | UCG | Getty Images

An FDA approval could potentially increase the uptake of Wegovy, encouraging more obesity specialists, primary care providers and cardiologists to prescribe it to eligible patients, said Dr. Eduardo Grunvald, medical director for UC San Diego’s Center for Advanced Weight Management.

An approval may also put more pressure on U.S. insurers to eventually cover Wegovy and similar weight loss treatments, opening the door for broader use.

Eli Lilly is also studying the cardiovascular benefits of Zepbound in a phase three clinical trial in diabetes patients with increased cardiovascular risk, and results are expected in late 2024. The drugmaker is conducting a similar study in obese patients with heart-health risks, but results may not come until 2027. 

Meanwhile, Novo Nordisk’s other treatments could reach their own milestones next year.

Novo Nordisk expects to release data in the first half of 2024 from a late-stage trial examining Ozempic as a treatment for kidney failure in diabetes patients with chronic kidney disease. The company hinted that the trial would be a success when it halted the study a year earlier than planned in October based on an interim analysis.

Upcoming clinical trial data releases

A phase-three trial from Eli Lilly on Zepbound as a treatment for cardiovascular complications in diabetes.
A phase-three trial from Novo Nordisk on Ozempic as a treatment for kidney failure in diabetes patients with chronic kidney disease.
A phase-three trial from Novo Nordisk on a 25-milligram version of its once-a-day weight loss pill.
A phase-three trial on Zepbound as a potential treatment for heart failure in patients with obesity.
A phase-three trial on Zepbound as a potential treatment for non-alcoholic fatty liver disease, which is caused by fat buildup in the liver, in patients with obesity.
A phase-three trial on Zepbound as a potential treatment for obstructive sleep apnea, or the pause of breathing during sleep due to blocked airways, in patients with obesity.
A phase-three trial on IcoSema, a combination of once-weekly insulin and once-weekly semaglutide, in patients with diabetes.

Novo Nordisk will also release phase three clinical trial data on a 25-milligram version of its once-a-day weight loss pill, which uses semaglutide, the same active ingredient as in Ozempic and Wegovy. 

That trial is crucial because Novo Nordisk is waiting to see that data before filing for approval of the oral weight loss drug, said Cowen’s Nedelcovych. He added that in the long term, the availability of weight-loss pills could boost capacity for their injectable counterparts. 

Also in 2024, a study following patients from a previous late-stage trial could potentially generate data supporting Wegovy as a treatment for preventing the development of diabetes, Nedelcovych said.

A make-or-break year for Pfizer

New data next year will be crucial to determining whether Pfizer gets a piece of the weight loss drug space. The stakes are high: CEO Albert Bourla has said the company hopes to capture $10 billion of that market. 

Pfizer axed a twice-daily version of the only obesity product in its pipeline earlier this month after patients taking the pill lost significant weight but had trouble tolerating the drug in a mid-stage study

Now, the company is pinning its hopes on a once-a-day version of the pill, known as danuglipron, which it believes may cause fewer adverse side effects. Pfizer said it expects to release more data on that version of the drug in the first half of 2024, which will help the company decide whether to start a late-stage study on the pill. 

CFOTO | Future Publishing | Getty Images

However, some analysts have raised questions about whether the once-a-day version will be easier to tolerate.

“Despite ongoing work, tolerability still appears to be an issue with the product, and it is not clear to us why this will improve” in a phase three trial or with a once-daily version, JPMorgan analyst Chris Schott said in a December note.

Barclays analyst Carter Gould said in a December note that it is “increasingly apparent” that the company will have to look externally for an obesity treatment, whether that’s through an acquisition or partnership, to capture a slice of the weight loss drug market like it had hoped.

Meanwhile, upcoming data will reveal how serious Amgen’s weight loss drug portfolio is. In the first half of 2024, Amgen is slated to publish early stage trial data on an oral weight loss medication.

In the second half of the year, Amgen plans to release mid-stage trial data on an injectable drug that helped cause up to 14.5% weight loss after 12 weeks in an early study.

Watch for buyouts and partnerships

Pfizer isn’t the only company that could benefit from looking externally for obesity drugs. 

Larger drugmakers used acquisitions of smaller businesses, or partnerships with them, to carve out space in the weight loss drug market this year. More companies could deploy the strategy next year, analysts said.

“There are a bunch of other large-cap pharmas on the list who could do this,” said Cantor Fitzgerald’s Chen. 

Swiss company Roche said earlier this month it would buy the privately held U.S. obesity drugmaker Carmot Therapeutics for $2.7 billion. AstraZeneca signed a licensing agreement with Chinese biotech company Eccogene to develop an obesity pill. 

Novo Nordisk and Eli Lilly have also snapped up smaller obesity drug companies this year to maintain their dominance in the market. 

Recent weight loss drug buyouts and partnerships

Roche in December said it will buy privately held obesity drugmaker Carmot Therapeutics for $2.7 billion.
AstraZeneca in November said it signed a licensing agreement with Chinese biotech company Eccogene to develop an obesity pill.
Novo Nordisk in August said it will acquire the privately held obesity drugmaker Inversago Pharma for $1.08 billion. 
Novo Nordisk in August said it will acquire Embark Biotech, which develops obesity and diabetes drugs, for up to $500 million. 
Eli Lilly in July said it will acquire privately held obesity drugmaker Versanis for $1.93 billion.

In a statement to CNBC, Novo Nordisk said it has increased its focus on “sourcing and elevating external innovation” to complement its in-house products and broaden its drug pipeline, especially for diabetes, obesity, cardiovascular disease and rare blood disorders.

The company also said it is interested in the “full range of business development activities,” from acquisitions to partnerships on early or late-stage products, when it comes to companies with new biological drugs, new potential treatment targets and new mechanisms of action, or how a drug works.

Chen said acquisitions or partnerships may be the only way for small- to mid-cap weight loss drugmakers to catch up with Eli Lilly and Novo Nordisk.

Some smaller companies have indicated that they are open to the idea: Altimmune said Dec. 5 that it is looking for partners to launch and develop its experimental obesity drug pemvidutide. 

Shares of Altimmune have jumped more than 140% since Nov. 30, when the company released mid-stage trial data showing that its injectable drug caused 15.6% weight loss on average after 48 weeks.

Other smaller weight loss drugmakers include Structure Therapeutics, whose once-daily pill helped overweight or obese patients lose up to 10 pounds of weight on average after a month in an early-stage trial. The company is expected to report mid-stage trial data on its drug in diabetes patients this month and more results on the pill in patients with obesity early next year, Guggenheim’s Fernandez noted. 

Still, some bigger drugmakers may wait to see larger and later-stage data from smaller companies before moving to acquire them. That data may not come out until 2025 or later for many firms, said Fernandez.

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