Refreshed polygenic obesity competitive landscape

Updated thoughts on this massive market following yesterday's positive SELECT trial readout ($NVO) and Mounjaro sales beat ($LLY):

• Obesity refresher:
• Defined as BMI >30kg/m^2
• >750M patients globally, including ~40% of US adults --> expected to increase to 1B people / ~50% of US adults by 2030
• Linked to 1/5 US adult deaths

However, just ~2-3% are on anti-obesity medications (AOM)

• Novo's SELECT trial was the biggest catalyst for this space in 2023 - it measured Wegovy's impact on reducing major adverse CV events (MACE) over a period of up to 5 years

The trial enrolled >17K overweight or obese adults with a history of CV disease & no diabetes

• KOLs considered a ~16% redux in MACE to be clinically meaningful - SELECT delivered a 20% redux

Things to monitor once the full data is released:

(1) Any separation in all-cause mortality

(2) What contributed to MACE redux

(3) Safety

+ readthrough to Lilly's SURMOUNT-MMO study

• Payors will see added pressure to reimburse these obesity drugs moving forward, given a redux in CV outcomes has massive downstream cost-saving implications

Importantly, SELECT could pave the way to Medicare coverage of AOMs, which has been locked since 2003. Legislative amendments will take time, but this could potentially be a key issue during the 2024 election cycle, alongside the IRA

• Separately, Lilly reported Q2 results and Mounjaro crushed expectations, with sales coming in >$200M above consensus estimates

Mounjaro is not yet approved for obesity, but off-label usage has been massive (Lilly previously reported ~33% of scripts were diabetes naïve patients)

• That off-label usage has been driven by

(1) supply constraints with Wegovy and

(2) unprecedented demand, largely driven by social media (i.e. patient journeys) & pop culture (celebrity usage)

#Mounjaro, #Wegovy & #Ozempic have billions of views across notable platforms

• Beyond Mounjaro, Lilly's Ph2 asset retatrutide demonstrated BIC efficacy of 24.2% mean weight reduction at 48 weeks (~58 lbs). This is in-line with bariatric surgery

Compare this to Wegovy (~12%) and Mounjaro (~16-22%) and the arms race may be just beginning

• Results for retatrutide may even be better than advertised, since:

(1) the trial enrolled a larger proportion of men than women, and women tend to lose a higher proportion of weight (~29% vs. ~22%)

(2) patients had yet to reach a plateau by study end, implying more potential

• All of this weight loss has translated into massive market share gains for Lilly and Novo

Lilly is now the world's most valuable pharma company and collectively the two giants are worth >$825B

• Other companies are taking notice - as the space gets increasingly crowded, differentiation beyond efficacy & safety will be important:
• Dosing convenience (i.e. less frequent injections or oral)
• Weight loss kinetics (slope of weight loss)
• Data in sub-populations