The GLP-1 drug, despite being around for over two decades, is gaining attention for its potential weight loss benefits beyond its original diabetes application. Despite expectations for price reductions and the development of more convenient oral versions, the market remains dynamic. Watch Keye Chow, Alger Senior Healthcare Analyst and Yinglu Zhang, Ph.D, Associate Analyst answer questions on the market opportunity of GLP-1s.
Is the GLP-1 Drug New?
YINGLU ZHANG: The GLP-1 drug has actually been around for more than two decades. So, it started as one class for the diabetes patients. The first GLP-1 drug, Exenatide developed by Lilly, was approved in 2004 for glycemic control in type 2 diabetes patients, and after that, multiple pharmas started improving on the class for better efficacy in glycemic control, and it was discovered that actually, these drugs deliver meaningful weight loss benefits in diabetes patients. So, that's when pharma started testing these drugs in obesity patients who need to lose weight but don't have diabetes.
KEYE CHOW: The opportunity that, hey, there might be some wonder drug that's going to help everybody lose weight, be healthier and feel better about themselves. And if we just do the math on the United States having 40 percent of its population, that’s like 130 million people, who are technically obese and so, I think that's where all the root excitement comes from.
Are There Barriers to Entry That Investors Should Be Concerned About?
YINGLU: An important factor that we think many potentially overlook but we take into consideration is persistence, meaning how long patients stay on the drug before they decide to stop. Now based on data from earlier generations of GLP-1s, we know that 50 percent of diabetes patients will stop after one year either due to side effects or because of inconvenience of administration because it's a weekly injection.
Now we're hearing from Lilly that their latest generation of GLP-1, Mounjaro, is seeing improved persistence over the earlier generations, but we still think it's inevitable to see some patients stop the drug after some time either because they can't tolerate the side effects anymore or they have reached their ideal weight. So, it's a factor that we still can't overlook and that will be important to think about when thinking about the market opportunity of GLP-1s.
Do You See the Price Coming Down?
KEYE: We think the vendors probably expect the price to come down, and it's actually the key debate when it comes to the healthcare system wanting to and being able to give access for the obesity indication. We think another important driver for prices coming down will be, I think, in 2026/2027 we hope to get oral versions of these drugs that demonstrate similar efficacy and safety as the injectables, which people are using today.
Who Do You Like in This Space?
YINGLU: Amgen is developing a long-acting GLP-1 drug that could enable monthly or even quarterly dosing which will be much more convenient for patients.
Zealand Pharma is another name we like. They are not only targeting GLP-1s. They are looking at GLP-2s and also glucagon receptors, going to the novel science for better quality of weight loss. We tend to follow the science and pick out the ones we think with the best science with the highest probability of success and who are in the lead.
What Should Investors Take Away From This Conversation?
KEYE: Despite the health care industry having a relatively tought year in terms of stock performance, We believe a lot of exciting innovation, important innovation is still happening, and that's a lot of what our investment focus on is here at Alger and particularly in our life science strategies. We're looking for important innovations that will change the lives of patients, and we're looking to benefit our shareholders through those discoveries.
