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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple Coarclay and Android Auto with the Bloomberg

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Speaker 1: Business App. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: We had some FDA approvals.

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Speaker 3: They're pushing gains in some part of pharmaceutical companies, specifically

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Speaker 3: Novo nor Disk. So here to break that down, and

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Speaker 3: a whole lot more news that's coming out about Novo

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Speaker 3: is Madison Miller, She's Bloomberg Health reporter. But the big

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Speaker 3: news so the weight loss drugg we go. We got

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Speaker 3: this use approval to treat a form of liver disease.

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Speaker 3: So what does this mean for the company.

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Speaker 4: Yeah, so on Friday afternoon, late on Friday, Nova artists

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Speaker 4: got approval for Regovi, which is its weight loss drug

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Speaker 4: to treat a liver disease called MASH. And this sort

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Speaker 4: of is a we've seen over the last couple of years.

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Speaker 4: So many studies come out show the potential health benefits

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Speaker 4: of these weight loss drugs beyond just you know, the

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Speaker 4: reducing the number on the scale. And we knew from

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Speaker 4: studies that there was some benefit to the liver from

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Speaker 4: taking these drugs, and so Nova was able to notch

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Speaker 4: and approval for that, which helps one with insurance coverage.

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Speaker 4: Wigov and then Eli Lilly's drug zet Bound are still

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Speaker 4: not super widely covered by insurance companies for weight loss,

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Speaker 4: but having some of these other health benefits shown and

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Speaker 4: proven in studies helps them convince insures that they are

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Speaker 4: worth covering, and so this gives them an edge against Lily.

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Speaker 4: Lily's drug, Zetbound is not approved yet for this indication,

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Speaker 4: and so it gives them sort of a leg up there,

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Speaker 4: and then it also gets I mean it sort of

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Speaker 4: is another benefit for Novo because they've been struggling over

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Speaker 4: the last year. Just with zet Bound sort of making

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Speaker 4: waves in the market and taking market share from Wagov.

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Speaker 4: This gives them a leg up there as well. And

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Speaker 4: just with the tumultuousness of the last few weeks, they

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Speaker 4: had a CEO ouster and a few other moving pieces.

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Speaker 4: So this is good news for them and we'll we'll see,

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Speaker 4: but it will maybe help them gain back some market share.

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Speaker 2: One of the issues for these weight loss drugs is

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Speaker 2: the cost and if you're not covered by insurance. They

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Speaker 2: really are expensive. So by slashing the cost of a

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Speaker 2: zempic in half, does a company believe that's going to

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Speaker 2: open up a big new vein of new customers. Maybe.

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Speaker 4: So it's interesting because if patients are on ozempic, they

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Speaker 4: are usually on it. It's you know, a type two

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Speaker 4: diabetes treatment and usually.

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Speaker 2: That's covered by diabetes. But does it have a side

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Speaker 2: benefit I guess of weight loss?

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Speaker 5: Yes?

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Speaker 4: So, I mean there are two different drugs, right, There's ozembic,

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Speaker 4: which is the diabetes drug wigov. They both use the

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Speaker 4: exact same active ingredient, which is semiglue tide. Wigov is

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Speaker 4: a higher dose version if you're on azempa gets lower doses,

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Speaker 4: so it's not quite as strong, but there is that

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Speaker 4: weight loss side effect on both drugs. Previously, Novo actually

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Speaker 4: did cut the cost of wigo V down to about

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Speaker 4: the same price five hundred dollars a month back in March,

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Speaker 4: and now they are doing the same for ozempic.

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Speaker 5: But it's interesting because the question.

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Speaker 4: Of whether or not this is going to expand access

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Speaker 4: for more patients sort of remains to be seen. Because again,

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Speaker 4: if you have ozempic, you usually are covered by insurance

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Speaker 4: for it.

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Speaker 3: Now something I also said, there are partnering in this article,

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Speaker 3: it said with good Rx to offer ozempic, we go

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Speaker 3: before the same price as pharmacies. But didn't Novo try

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Speaker 3: the partnership thing with Hymns and Hers and that didn't

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Speaker 3: work out so well.

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Speaker 4: Yeah, yeah, So Hyms was one of several partners that

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Speaker 4: Novo has sort of worked with over the last couple

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Speaker 4: of months again to really make waves and get into

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Speaker 4: this market or gain back market share because it's really

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Speaker 4: lost ground to Eli Lilly.

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Speaker 5: Hyms was one of the companies that they've partnered with.

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Speaker 4: They've partnered with a couple of other telehealth companies as

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Speaker 4: well as CVS to make this cash pay price more

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Speaker 4: widely available, but this is the first time that they're

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Speaker 4: dropping the price of ozempic as well. So this partnership

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Speaker 4: with good Rx, you know, any patient is essentially a coupon,

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Speaker 4: like any patient who goes to a pharmacy uses GoodRx

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Speaker 4: is going to be able to get this cash pay

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Speaker 4: price for ozempic.

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Speaker 2: And Wigov mentioned that the Hymns and Hers, those compound drugs,

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Speaker 2: how effective are they visa v the golp ones themselves,

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Speaker 2: because that would be a if I were like Novo Nordics,

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Speaker 2: I spent all this money to develop, that would be

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Speaker 2: a bummerp receise yes.

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Speaker 4: And that's a really good question actually, that question of

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Speaker 4: how effective are these drugs, because that's the problem is

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Speaker 4: we don't know. There are studies that drug makers are

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Speaker 4: required to do. They have to go through a length

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Speaker 4: the FDA approval process to prove that their medications are

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Speaker 4: safe and effective. Compounded drugs don't go through that same

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Speaker 4: approval process, so there's no actual studies showing how effective

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Speaker 4: those medications are.

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Speaker 5: And it's a little bit of a gamble.

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Speaker 4: I mean, we've seen losing weight on these compounded medications,

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Speaker 4: and we haven't seen a tremendous amount of side effects

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Speaker 4: that are really different from the branded medications. So the

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Speaker 4: problem is just more that we don't actually have a

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Speaker 4: lot of visibility into that compounded market and don't know

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Speaker 4: how those drugs stack up to the branded medications.

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Speaker 3: In the last thirty seconds or so we have where

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Speaker 3: does this all put Eli Lilly then, I mean they

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Speaker 3: already had the setback with the weight loss pill, So

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Speaker 3: so now we're hearing all this about Nova, where does

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Speaker 3: this put.

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Speaker 4: Them Yeah, yeah, I mean it's been it's interesting. Like

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Speaker 4: the two companies, I think last year it was just

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Speaker 4: they were so red hot and there was like nothing,

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Speaker 4: The expectations were sky high. There was really nothing that

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Speaker 4: seemingly could bring them down. But now we're seeing a

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Speaker 4: couple of stumbles and I think that that, you know,

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Speaker 4: shows again how high the expectations are for this market.

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Speaker 4: There's just no room for failure. But we'll see what

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Speaker 4: happens next to Lily.

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Speaker 2: When is the pill going to be available day? Twelve

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Speaker 2: months year?

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Speaker 4: Sometime twenty six So they said that they're planning to

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Speaker 4: file for afday approval by the end of the year

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Speaker 4: and then hopefully launch next year.

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Speaker 2: Stay with us more from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cockplay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 3: We do have some possible dealmaking news, so sources saying

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Speaker 3: to Mobravo when talks about human resources management software provider

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Speaker 3: day Force and take the company private. So what does

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Speaker 3: this all mean, we'll be the right person to break

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Speaker 3: it all down for us. It's Narage Batllities, Bloomberg Intelligence,

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Speaker 3: Senior software analyst, Nearaje. You're joining us from Princeton. Thanks

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Speaker 3: for joining. I want you to see if you can

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Speaker 3: talk to us about day force because I'm reading through

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Speaker 3: the article says shares a falling about sixty percent from

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Speaker 3: their twenty twenty one peak through Friday. Can you talk

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Speaker 3: about some of the things that this company has been

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Speaker 3: struggling with?

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Speaker 6: Yeah, Hi, Lisa, this has been even beyond a day

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Speaker 6: force struggling point. The HCM industry which they play in

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Speaker 6: the HR and payroll software that has been under pressure

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Speaker 6: along with application software. And just for a little bit

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Speaker 6: of valuation perspective, application software companies, they're in the seventeenth

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Speaker 6: percentile of their historical range and day forces at an

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Speaker 6: all time low. And this is telling because they are

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Speaker 6: facing a lot of deceleration on the top line. They

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Speaker 6: in twenty twenty one, twenty twenty two, they are at

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Speaker 6: twenty two percent sales growth. Now we're looking at eleven

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Speaker 6: percent for this year and next year, and there's a

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Speaker 6: lot of factors coming into play here. They have a

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Speaker 6: lot of competition. The customers are slowing in terms of

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Speaker 6: new ads as well as the upsell and cross sell

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Speaker 6: to existing customers.

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Speaker 2: So is this just the spending and in human resources

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Speaker 2: part of the pie. Is that slowing or is it

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Speaker 2: competition here? What's the problem for some of these companies.

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Speaker 6: Yeah, their competition push is limited. They play in the

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Speaker 6: larger enterprise segment, so they run into UKG or workday,

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Speaker 6: so it's not so much competition, but it's a little

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Speaker 6: bit of a macro trend. You have US labor non

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Speaker 6: farm payroll additions which discel Ray significantly and that's growing

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Speaker 6: at about a one percent pace. It averages two to

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Speaker 6: three percent, so we have a macro factor. Second, they

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Speaker 6: have a portfolio which is common to a lot of peers,

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Speaker 6: so there's a lot of portfolio convergence in HR software.

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Speaker 6: It's covering like payroll scope, account administration, workforce management, talent management,

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Speaker 6: learning management. So these players have all converged on the

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Speaker 6: same portfolio. They're trying to push that sale, but there's

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Speaker 6: only a limiting sale per customer that they're able to

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Speaker 6: translate to. For example, they're selling about thirteen dollars of

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Speaker 6: software per employee and it's only growing at a five

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Speaker 6: percent pace.

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Speaker 3: Now, No, Reij, were you surprised by this report, because

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Speaker 3: it seems like from how you were talking, I mean

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Speaker 3: kind of this path was leading to the way it

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Speaker 3: is that this report came out today.

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Speaker 6: Yeah. No, this didn't catch us by surprise in the

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Speaker 6: sense that we're expecting more consolidation. Paycheck acquired Paycore in April,

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Speaker 6: and that was a smaller player that targeted more small

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Speaker 6: SMB segments. This player, day Force, they're targeting a large

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Speaker 6: mid market customer, so we're not surprised the valuations are

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Speaker 6: quite low. The one positive factor here is eight CM

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Speaker 6: ranking in terms of AI disruption across app software is

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Speaker 6: on the lower side. Sales and marketing is on the

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Speaker 6: higher end. It service management is on the higher end.

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Speaker 6: So that may be a little bit of the appeal

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Speaker 6: coming from Thomas Bravo's lens where the AI agents are

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Speaker 6: not going to take over the app function hr software,

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Speaker 6: So easily stay with us.

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Speaker 2: More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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Speaker 1: with the Bloomberg Business app, listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 3: So Air Canada, right, they pulled their financial guidance through

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Speaker 3: a year, and thousands of Air Canada flight attendants they

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Speaker 3: walked out over the weekend. So what we want to

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Speaker 3: do is find out more behind the strikes, more behind

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Speaker 3: what's going on here with us to explain more as

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Speaker 3: francois to flow. He is US airline aerospace analyst here friends,

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Speaker 3: WI thanks for joining us over from the Princeton office.

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Speaker 3: First off, I mean this is the peak Trumble travel

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Speaker 3: summer season. How much of an impact is it going

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Speaker 3: to have for the company?

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Speaker 7: Yes, good morning, Yes exactly. That's the worst time that

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Speaker 7: it could happen. It's August, it's one of the busiest,

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Speaker 7: busiest months of the year. And when we look at

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Speaker 7: the number of consoliations during this weekend, almost eighty percent

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Speaker 7: of the flight and the seat we're concoled during this weekend,

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Speaker 7: So it's really significant. When we try to do the math,

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Speaker 7: we get to something around two hundred million impact revenues,

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Speaker 7: So that would be about three percent of the six

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Speaker 7: point two six point three billion all then you expected

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Speaker 7: for this quarter. So's it could be, it could be big.

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Speaker 7: And the question is how long does it take for

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Speaker 7: Canada to resume and get back to the full operation,

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Speaker 7: because it's not just the flights and the seats console

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Speaker 7: during the three days, but it's also our long does

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Speaker 7: it take to resume and return to a normal operation,

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Speaker 7: knowing that we are not even sure when flights and

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Speaker 7: attendance will go back to work. So that's the big question.

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Speaker 7: And then obviously the impact, the lasting impact on booking things,

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Speaker 7: fairs and the brain name that the struck could have

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Speaker 7: through the rest of the year, because when this kind

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Speaker 7: of event happened, you usually end up having to discount

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Speaker 7: a little bit first to low customer back to your flight,

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Speaker 7: so there is also those questions. But that's the kind

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Speaker 7: of amount that we see for this quarter. And I

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Speaker 7: just to give a little bit also of context, this

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Speaker 7: happens at a time where Canada is it by the

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Speaker 7: US trade dispute that all not only impacts the GDP,

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Speaker 7: but also impact the travel patterns and Air Canada was

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Speaker 7: definitely facing big headings because of this and had to

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Speaker 7: relocate seats from the US to somewhere else, and that

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Speaker 7: had an additional impact on yells during two Q and

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Speaker 7: likely three.

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Speaker 2: Q Air Canada. What's the market how's the market share

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Speaker 2: shakeout in Canada?

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Speaker 7: Or in Canada they have almost fifty percent of the

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Speaker 7: market in terms of capacity, between forty five and fifty

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Speaker 7: depending on the market, depending on the quarter, but it's

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Speaker 7: very significant. And then you have a second competitor, west Jet,

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Speaker 7: which is about thirty percent. So you have a very

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Speaker 7: too strong airlines in Canada that have a sizeable share.

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Speaker 2: All right, friend, So what Canadians this winter when it

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Speaker 2: gets cold? You're telling me they're not going to fly

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Speaker 2: down to Arizona and Florida.

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Speaker 6: Probably less.

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Speaker 7: At least Air Canada cut travel to the US. They

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Speaker 7: cut eight percent into Q. They were likely to do

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Speaker 7: the same through the end of the year. That's the

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Speaker 7: only way in order to make sure that yield remain

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Speaker 7: kind of stable. They manage this in two Q. The

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Speaker 7: UPE was to do it again in three Q and

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Speaker 7: four Q. Will see if that can happen. We see

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Speaker 7: what kind of fright attendance can get during the negotiation,

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Speaker 7: because it's also some things that the market could be

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Speaker 7: looking at.

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Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple Coarclay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Let's switch to tech. Like when I go to vacation,

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Speaker 2: I go to like the Jersey shore Man Deep sing, No,

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Speaker 2: the dude picks Calgary, like in Canada, Like, who does that?

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Speaker 2: I mean? I love skiing out there, so I don't.

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Speaker 2: Maybe he knows something we've done. It's beautiful out there.

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Speaker 2: I get it, Man Deep, sing, Bloomberg Intelligence Senior tech analyst,

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Speaker 2: Man Deep. Here's the story I want to get to.

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Speaker 2: Back in my day, if you were in a public

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Speaker 2: startup company and your stock was all tied up in

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Speaker 2: a private company, you had to wait for an IPO,

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Speaker 2: then you had to wait for the six month lockup,

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Speaker 2: then you could begin starting selling. That's not the case today.

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Speaker 2: The people open AI. There's something about six billion dollars

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Speaker 2: in stock here. This is becoming more and more common,

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Speaker 2: isn't for your tech companies?

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Speaker 8: It is, and I think Meta exacerbated that trend by

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Speaker 8: you know, the aquihiers. They've made in the last two

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Speaker 8: three months. I mean, there are startups that have just

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Speaker 8: disappeared without an outright acquisition because Meta acquired their top

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Speaker 8: five people or top ten people. And look, when you

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Speaker 8: have that sort of risk of losing talent, you got

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Speaker 8: to find ways to, you know, liquidate your stuff, the

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Speaker 8: stock that you have in your company. And for open Ai,

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Speaker 8: I mean, talent is paramount. This is a company that

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Speaker 8: may end up doing, you know, almost a twenty billion

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Speaker 8: dollar revenue run rate by the end of this year,

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Speaker 8: and the same thing for Entropic Andthropics started off the

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Speaker 8: year at a billion dollar round right now at a

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Speaker 8: five billion dollars round rate. When you five x your

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Speaker 8: revenue like that, you have to find ways to, you know,

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Speaker 8: keep your employees happy and retain them. And I think

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Speaker 8: this is their way of making sure the employees can

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Speaker 8: liquidate some of their stuff.

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Speaker 3: So is this a perk for all open ai employees?

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Speaker 3: I mean, do you have to be there a certain

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Speaker 3: amount of time or can anyone take part in this?

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Speaker 8: I mean, we don't know that level of detail, but

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Speaker 8: suffice to say, I think they've allocated a certain amount

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Speaker 8: and the private valuation of this company has gone from

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Speaker 8: almost two hundred and fifty to three hundred billion dollars

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Speaker 8: to five hundred billion dollars now, and so clearly there

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Speaker 8: is a lot of appetite for a company like open Ai,

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Speaker 8: which is at the frontier of everything that's going on

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Speaker 8: in generative AI, and you know there are buyers of

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Speaker 8: that kind of stuff.

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Speaker 2: I got to satisfy the banker gene in me. Is

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Speaker 2: there an open Ai IPO at some point?

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Speaker 8: Probably they will. And my hunch is, you know, when

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Speaker 8: you are a category leader in any sort of technology trend,

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Speaker 8: you want to be a public company because one, it

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Speaker 8: clearly helps you get more you know, long term investors

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Speaker 8: for your stock. And also it's it's great pr So

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Speaker 8: I can't imagine, you know, uh an open ai stay

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Speaker 8: private for very long. But that being said, you know,

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Speaker 8: their financials don't look great. I mean, from what we know,

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Speaker 8: they're burning a lot of cash right now, so it's

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Speaker 8: not a very profitable business model. But the top line

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Speaker 8: growth is really what is getting them all the attention

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Speaker 8: right now, so they will have to clean up that

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Speaker 8: op X side if they plan to go public. So

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Speaker 8: I don't think it's imminent in the near term, but

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Speaker 8: I would be surprised if it happens in the next

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Speaker 8: two years.

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Speaker 3: Hey, manap in the last minute we have here left.

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Speaker 3: Does this put you know, open ai as the world's

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Speaker 3: most valuable startup? I mean, does it push it past SpaceX?

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Speaker 3: Is it sustainable.

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Speaker 2: By far?

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Speaker 8: And look the top line growth. As I said, both

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Speaker 8: for open Ai and Tropic, this is not something we

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Speaker 8: see very often. So at their revenue base. I mean,

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Speaker 8: they are clearly the most coveted and the most talked

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Speaker 8: about name, and that's going to be the case for

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Speaker 8: a while.

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Speaker 2: Man, deep, what skill is the AI skill?

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Speaker 6: Like?

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Speaker 2: What are these people acquiring in these acquahiers? When are

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Speaker 2: pants as big packages? What's the is it coding? Is

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Speaker 2: it just engineering? Five oh five?

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Speaker 6: What is it?

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Speaker 4: So?

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Speaker 8: Right now, when you think about how GPT four and

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Speaker 8: five became smarter and smarter, it's about, you know, engineers

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Speaker 8: who can help these models become smarter and smarter in

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Speaker 8: terms of answering more questions. Is doing more types of

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Speaker 8: things and that requires a certain knowledge of probability, statistics,

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Speaker 8: tokenization that you know, the way large anglig models are built.

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Speaker 8: There is a neural net aspect to it, and that

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Speaker 8: refinement of LLM is what is making them more intelligent?

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Speaker 8: So you need to have that basic level understanding of

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Speaker 8: tokenization and what are the tokens that makes these LLM

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Speaker 8: smarter and smarter? And I think that's why they deserve

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Speaker 8: to get all that at tension.

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