Speaker 1: Hello, and welcome to another episode of the All Thoughts Podcast.
Speaker 1: I'm Tracy Alloway.
Speaker 2: And I'm Joe Wisenthal.
Speaker 1: Joe, would you ever go on ozembic?
Speaker 3: Oh?
Speaker 2: Yeah, definitely?
Speaker 3: Yeah?
Speaker 2: Really well yeah, well not. This seems fun.
Speaker 4: It reduces your appetite, probably lose weight. It seems like
Speaker 4: it also has a bunch of other I keep seeing
Speaker 4: these other things, like it's good for like, you know,
Speaker 4: impulse control and all kinds of positive things that, yeah,
Speaker 4: why not.
Speaker 1: Yeah, it's supposed to be good for impulses and addiction.
Speaker 1: And also I think there's some new stat out saying
Speaker 1: that it reduces the risk of heart attack and stroke
Speaker 1: by twenty percent. Well, anyway, who would you?
Speaker 3: I think?
Speaker 1: Yes, however, I would definitely wait for the price to
Speaker 1: come down a little bit and maybe for more of
Speaker 1: the side effects to become a parent, but I'm very
Speaker 1: cautious with these sorts of medical breakthroughs.
Speaker 5: Uh.
Speaker 2: Yeah, I have to. I feel like my like, I
Speaker 2: don't know that.
Speaker 4: Much about all these drugs like ozimpic and mcgovey and
Speaker 4: the other golp ones, but they seem pretty great, and
Speaker 4: I'm just like, yeah, upward and onward. The March of
Speaker 4: progress science. I love it, no, but I actually do
Speaker 4: think like it is. Something I've been thinking about is
Speaker 4: like people are so skeptical of even the possibility of
Speaker 4: the existence of a wonder drug.
Speaker 2: The people are like, Oh, it's.
Speaker 4: Going to do this, it's going to do this, it's
Speaker 4: going to be bad, it's going to reverse, it's going
Speaker 4: to and maybe that's possible.
Speaker 2: But what if it really is a wonder drug?
Speaker 1: Well exactly, And I think it opens up a ton
Speaker 1: of interesting questions, specifically about what it means for wider
Speaker 1: society and the wider economy. When we know that obesity
Speaker 1: and diseases like diabetes have been this huge weight on
Speaker 1: both the socio economy and the healthcare industry.
Speaker 4: Obesity itself is like just this gigantic economic force. It's
Speaker 4: a business force. There are businesses that thrive on how
Speaker 4: much people like to eat unhealthy foods.
Speaker 2: They're huge costs to ensures.
Speaker 4: There are other second order effects of related to injuries
Speaker 4: and heart complications and so forth. It's such a modern
Speaker 4: important phenomenon that we're there to be and maybe it
Speaker 4: kind of looks like there is, but.
Speaker 2: We're there to be.
Speaker 4: This sort of like straightforward way to reduce obesity. It
Speaker 4: seems like the implications would be huge.
Speaker 1: Right, And I keep getting visions of like Star Trek
Speaker 1: in my head where everyone is kind of slim and
Speaker 1: dressed in tracks great and very athletically capable, and we
Speaker 1: all just wander around spaceships. So that sounds great.
Speaker 5: Well.
Speaker 1: Anyway, on a serious note, I think we need to
Speaker 1: dive into these new sets of drugs. What exactly are they,
Speaker 1: how do they work, and more importantly, more interestingly, what
Speaker 1: do they actually mean for the wider economy and the
Speaker 1: business environment.
Speaker 4: So many I'm so glad we're doing it because it
Speaker 4: does feel like beyond just the companies selling these drugs,
Speaker 4: which we know have been taken off. We're recording this
Speaker 4: on August ninth. Just yesterday Nova and Nordis, the Danish company,
Speaker 4: soared because they had another test showing that one of
Speaker 4: these drugs was very good for fighting heart disease. So
Speaker 4: we know that there's like the interest in the vendors
Speaker 4: the sellers of these drugs. But again, what does it
Speaker 4: mean all these second and third order effects if they
Speaker 4: really become extremely widespread and it kind of looks like
Speaker 4: they're on the trajectory feels very unexplored.
Speaker 1: Yep, So let's dive into those second order effects of
Speaker 1: miracle weight loss drugs. A fun episode ahead. We have
Speaker 1: really the perfect guest. We're going to be speaking with
Speaker 1: James Van Galen of Citrinidus Capital also known as Citrini
Speaker 1: on Twitter. So, James, thank you so much for coming on.
Speaker 5: All thoughts, Hi, Tracy, Joe, thanks for having me.
Speaker 1: So, James, from what I remember, you actually have something
Speaker 1: of a medical background. Is that right?
Speaker 5: Yeah? I worked my way through undergrad as a paramedic
Speaker 5: for a while in Bridgeport, Connecticut, and then when I
Speaker 5: transferred to UCLA, I worked as a paramedic in Compton, California.
Speaker 5: So I'm not a stranger to the medical field. Then
Speaker 5: for about four years I started what co founded one
Speaker 5: of Connecticut's first medical marijuana dispensaries. So I definitely am
Speaker 5: not a stranger to the medical field. Now I do
Speaker 5: the hedge fun thing, and it comes in andy once
Speaker 5: in a while.
Speaker 4: Investing in medical technology or sorry, you know, I or biotech.
Speaker 4: Often it seems like the sort of like Roulette wheel,
Speaker 4: And I'm always skeptical that anyone who is like not
Speaker 4: a scientist can actually have informed insights on new medicines
Speaker 4: and how big they could get, et cetera. Can you
Speaker 4: just sort of like give your overview of like how
Speaker 4: do you even like think about these things? Like if
Speaker 4: you're not like a scientist, how do you even begin
Speaker 4: to wrap your head around like how do these drugs work?
Speaker 4: And how big they could be? And which ones I
Speaker 4: have more potential than others? Like what's your like framework
Speaker 4: for like sort of just like evaluating some breakthrough in
Speaker 4: the first place.
Speaker 5: I mean, I don't do a ton of like biopharma investing.
Speaker 5: I'm not a scientist, but I do have a bus
Speaker 5: network of channel checks and I'm a big proponent of
Speaker 5: basically if you don't know something, ask you know, and
Speaker 5: we are so so I am. You know, I'm always
Speaker 5: bothering them, and you know I'll cost me as a
Speaker 5: couple of dinners or something. And but you know, I
Speaker 5: don't do much, if any investing in companies that are
Speaker 5: still clinical stage, right, And you know, a lot of
Speaker 5: my investing is kind of thematic investing. It's focused on
Speaker 5: these kind of paradigm shifts, these mega trends essentially, and
Speaker 5: when you see something like this, right, you know, all
Speaker 5: the feedback from channel checks is good, and it's something
Speaker 5: that we kind of needed as a you know, as
Speaker 5: a in developed markets at least for decades, right, And
Speaker 5: you just see the kind of behavioral incentives that exist
Speaker 5: surrounding it. And I always come back to basically you
Speaker 5: look at like viagra in the nineties, and you know,
Speaker 5: you did not have to be a doctor to kind
Speaker 5: of see Pfiser just killing it, you know, just doing
Speaker 5: amazingly with this drug that solved the problem that people
Speaker 5: had that you know, needed to be fixed and it worked.
Speaker 5: And you know, honestly, that might be the reason that
Speaker 5: most of us know who Phiser is, right. So you know,
Speaker 5: whether it's buying Maderna when they're developing a co vaccine,
Speaker 5: or buying Eli Lilly when they're developing, you know, a
Speaker 5: fat vaccine, or a Pfiser with Bager in the nineties,
Speaker 5: it all falls under the mega trend looking for kind
Speaker 5: of these paradigm thematic shifts.
Speaker 1: I think people forget nowadays that viagra was initially developed
Speaker 1: for something totally different to what it's used, and that
Speaker 1: happened to be a sort of happy side effect of
Speaker 1: the medication. I guess and then it became known for that.
Speaker 1: But just on this note, let me ask the basic question,
Speaker 1: So how did these drugs gop one I'm not even
Speaker 1: sure what that stands for, but how did these come
Speaker 1: into being? And how are they starting to spread through
Speaker 1: the market such that I meet vcs who will openly
Speaker 1: say that they're on a zempic and I'm pretty sure
Speaker 1: they don't actually have diabetes.
Speaker 5: You know. So GOLP one stands for glucagon like peptide,
Speaker 5: not to get I don't want to get like two
Speaker 5: scientific but basically, the peptide helps kind of prime insulin release, right.
Speaker 5: It allows the body to absorb glucose after a meal,
Speaker 5: and you have specific cells in your pancreas that can
Speaker 5: recognize GLP one through what molecules called receptors. Right. So
Speaker 5: essentially we've been looking into these drugs you know, called peptider.
Speaker 5: The medical field has been looking into them, you know,
Speaker 5: since the seventies. And GLP one's primary benefit was the
Speaker 5: fact that it was able to produce blood glucose levels
Speaker 5: via insulin release, which is you know, very desirable in
Speaker 5: a patient with diabetes. And the thing was the you know,
Speaker 5: when it comes to peptides. Normally, you're trying to mimic
Speaker 5: the peptide that your own body produces. So the actual
Speaker 5: molecule glucagon like peptide one is only to able to
Speaker 5: create these effects for a very short time span. And
Speaker 5: so what these genius anders discovered was that they can
Speaker 5: essentially mimic these hormones and have these molecules that bind
Speaker 5: to the receptors they're called agonists, right, and that can
Speaker 5: create an effect that lasts, you know, four hours or
Speaker 5: even weeks. And that was basically the basis of the
Speaker 5: initial development and the impetus for it was essentially to
Speaker 5: go after diabetes. Right. If you have something that can
Speaker 5: regulate glucose that is possibly dysregulated in a patient with diabetes,
Speaker 5: that's kind of something that seems desirable, right. So they
Speaker 5: were kind of predicted to also prolong this feeling of
Speaker 5: you know, fullness and slow gastric emptying. And they also
Speaker 5: provide a variety effects in the brain. And these drugs
Speaker 5: do cross the blood brain barrier. And the first GLP
Speaker 5: one drug that was approved by the FDA was Exenotide.
Speaker 5: It was marketed under the name Bieta. So Bieta was
Speaker 5: approved in two thousand and five, right, and primarily be
Speaker 5: used in type two diabetes. And while you have something
Speaker 5: like semic glutide right now, which is ozembic generic name frozenpic,
Speaker 5: and then Munjaro, which is Lily's drug. Ters Appetite is
Speaker 5: the generic fan. And the thing is once you have
Speaker 5: a class of drugs, but you can kind of anticipate
Speaker 5: what the side effect profile will be. It's not necessarily
Speaker 5: that you can, you know, anticipate every single side effect,
Speaker 5: but you kind of you get an idea of the
Speaker 5: structural activity relationship. You get an idea of, you know,
Speaker 5: this dose dependent curve and where side effects start becoming apparent.
Speaker 5: And so with GLP ones they have side effects, right,
Speaker 5: they have some gi side effects, and these GLP one
Speaker 5: receptor agonists, like semic glutide, they can be pretty bad.
Speaker 5: But what Lily saw was essentially it was decided that
Speaker 5: they would try it to go after different receptors in
Speaker 5: the same system, right, so they kind of get this.
Speaker 5: It's got like Ter's Appetite. Munjaro is basically a a
Speaker 5: dual GLP one receptor and then GIP receptor agonists. So
Speaker 5: the way that that works is the GIP activity allows
Speaker 5: you to take a higher dose before experiencing the side effects,
Speaker 5: the GI side effects, and we also kind of know
Speaker 5: you know these since these drugs, you know, Trulicity was
Speaker 5: a big one that it was approven I think twenty
Speaker 5: fourteen for type two diabetes. It saw very wide use.
Speaker 5: So when you encounter someone and they're like, oh, you know, no,
Speaker 5: for sure, these drugs are going to aunt your insides,
Speaker 5: you know, like I don't. I don't blame them for
Speaker 5: that because if you look at the history of weight
Speaker 5: loss medication, you think Fenn Fenn, right, which like basically
Speaker 5: melted your heart. Then you know vermon event, which was
Speaker 5: like this genius invention where the scientists were like, well,
Speaker 5: you know the cannabinoid receptors basically the receptors that THHC
Speaker 5: act on, those make you hungry, So if we block
Speaker 5: those receptors, then it should make you not hungry. And
Speaker 5: it did. But you know what else the cannabinoid receptors
Speaker 5: make you is happy. So I don't know how they
Speaker 5: didn't see it as coming, but it made people very
Speaker 5: sad and increase the likelihood that they would commit suicide.
Speaker 5: And that so that drug was pulled very quickly, and
Speaker 5: you know, you kind of look at the pass of
Speaker 5: the weight loss industry. People take you know, tapeworm pills
Speaker 5: and just doing absolutely insane things, and it's kind of like, Okay,
Speaker 5: now you have this drug and the absolute worst concern,
Speaker 5: you know that there's a warning on the FDA label
Speaker 5: is that it may you know, it may result in
Speaker 5: thyroid cancer. But the thing is the only time that
Speaker 5: that's ever been observed with these gop one drugs is
Speaker 5: in mice. And the thing about mice is when you're
Speaker 5: doing a trial with a mouse, the mouse is not
Speaker 5: going to tell you I can't handle these side effects anymore,
Speaker 5: I'm going to stop taking the injection. Right, No mice
Speaker 5: drop out of trial studies. So what happens is, you know,
Speaker 5: like the if you were to take the equivalent dose
Speaker 5: that caused you know, these endoprin cancers in mice, before
Speaker 5: you reach that point, you would be so sick to
Speaker 5: the level of not being able to function. And it
Speaker 5: is so the dose was much much higher, and that,
Speaker 5: you know, the it has not been observed in humans.
Speaker 5: And the other thing is this is probably a little controversial,
Speaker 5: but the fact is, like obesity is devastating, right, it
Speaker 5: is absolutely terrible the way that increases mortality. I mean,
Speaker 5: I'm going to drop some statistics that Lily dropped on
Speaker 5: an earnings call, which is that you know, there are
Speaker 5: two hundred and thirty six OBC related health conditions. Type
Speaker 5: two diabetes risk is increased by two hundred and forty
Speaker 5: three percent in people with obesity, heart disease by sixty
Speaker 5: nine percent, high blood pressure by one hundred and thirteen percent,
Speaker 5: high cholesterol by seventy four percent. And the contribution to
Speaker 5: all course call all cause mortality is so significant that essentially,
Speaker 5: if I had a drug that would again this has
Speaker 5: never been observed in humans, It's probably not going to
Speaker 5: be because of the relationship that I described with the dose.
Speaker 5: But let's say I had a drug that one hundred percent,
Speaker 5: no matter what, forty years you're going to develop that
Speaker 5: word cancer from me. Even if that was the case,
Speaker 5: if it also one hundred percent of the time made
Speaker 5: you not opdes anymore, the net effect on your life
Speaker 5: expectancy would still be positive.
Speaker 4: You know, you mentioned in the beginning that you as
Speaker 4: an investor, you like to think about people called paradigm
Speaker 4: shifts or mega trends and so forth, and one of
Speaker 4: the things that thinking about it in this context, and
Speaker 4: I think there is a very good argument. I'm basically
Speaker 4: sold that the rise of these drugs will constitute a
Speaker 4: paradigm shift or a mega trend or something like that,
Speaker 4: and I feel like many people buy that. But the
Speaker 4: other thing is that like betting on mega trend often
Speaker 4: is not trivial in terms of even if you could
Speaker 4: predict the trend, you might not know what to invest in.
Speaker 4: And so, you know, a good example might be say
Speaker 4: like the rise of Chinese industry or something like that
Speaker 4: over in the you know, in the twenty first century,
Speaker 4: since it's entry into the WTO. And it's not like
Speaker 4: I don't think like buying like Chinese stocks have like
Speaker 4: been like some like extraordinary winner certainly like long stretches
Speaker 4: of time where that doesn't work. So like, what's the
Speaker 4: next step from identifying mega trend to then thinking about, okay,
Speaker 4: these will be actual winners as public market investments.
Speaker 5: Well, let me talk a little bit about hype, right,
Speaker 5: You just had Dan Lobe and talking about how it's
Speaker 5: more important to monitor you know, Reddit boards than it
Speaker 5: is to monitor fund.
Speaker 4: Baby Tracy's Tracy's message in her bloombergs.
Speaker 5: Tracy's ready to ready to spend up a fun that
Speaker 5: takes advantage of that. I think she's very proud of
Speaker 5: the redd investors. What was that the guy in the
Speaker 5: basement has the edge If that's the case.
Speaker 1: Yeah, well it's all about the story, all about the narrative, right,
Speaker 1: and the guy reading Reddit might have a better handle
Speaker 1: on that.
Speaker 5: But go ahead, right, this kind of you know, the
Speaker 5: metic investing. So yeah, you guys, ever heard of the
Speaker 5: Gardner hype cycle? Yeah? For those who haven't, the way
Speaker 5: that it looks is you have this kind of parabolic
Speaker 5: rise between the technology trigger and then the peak of
Speaker 5: inflated expectations, and kind of the axiomatic way to give
Speaker 5: an example of this would be the dot com bubble. Right.
Speaker 5: You have the technology trigger, which is the Internet, and
Speaker 5: then you it kind of goes parabolic all the way
Speaker 5: up to the peak of inflated expectations, which would probably
Speaker 5: be you know, in nineteen ninety nine pets dot com
Speaker 5: type stuff where the things that are happening are absolutely ridiculous, right,
Speaker 5: the forecasts are insane. And the thing about a mega
Speaker 5: trend or you know, a theme that is persistent, is
Speaker 5: it doesn't go unnoticed for very long. It can be
Speaker 5: a significant amount of time. But you know, you speak
Speaker 5: about like Chinese industry in the twenty first century, you know,
Speaker 5: like there was a period of time where you could
Speaker 5: have been early on that and you could have invested
Speaker 5: and made excellent returns that you know, the peak of
Speaker 5: inflated expectations, and then uh kind of exited before I
Speaker 5: guess I think maybe there was kind of a byphasics,
Speaker 5: so maybe it would have been the Asian currency crisis.
Speaker 5: But the then what happens is you get this trophic
Speaker 5: disillusionment right where it's like this technology isn't real. Everything
Speaker 5: is kind of hyped up. It was all bs whatever. Right,
Speaker 5: it's a bubble, and that's exactly it was a bubble.
Speaker 5: And then you get this well, you know, the thing
Speaker 5: funny thing is people say it's a bubble while it's
Speaker 5: going up, which is kind of like when people say,
Speaker 5: you know, like, okay.
Speaker 4: This is the difference between a journal instor just a
Speaker 4: bu blah blah blah blah, and then other people are.
Speaker 2: Making a for chane.
Speaker 4: It's like right, like you know, like this is why
Speaker 4: no reporter should ever should ever get into trading.
Speaker 5: I mean, you know, like how long was you know,
Speaker 5: Bitcoin had a you know, awful year last year, but
Speaker 5: like how long was it going up for before? You know,
Speaker 5: like obviously it was a bubble. But like, you know,
Speaker 5: that doesn't mean that you have to like be like
Speaker 5: a monk about it. You don't have to have this
Speaker 5: monastic view where God forbid I benefit from a bubble.
Speaker 5: You know, those people are wrong. Who cares? So anyway,
Speaker 5: you get to kind of this trave disillusionment. And then
Speaker 5: the next phase is kind of the slope of enlightenment
Speaker 5: where you know, you borrow a phrase from the VCS,
Speaker 5: it gets democratized. You know, you can go out in
Speaker 5: the street right now. If I got on the street
Speaker 5: and I ask someone what the Internet is, they're going
Speaker 5: to look at me like I have five heads. They
Speaker 5: don't necessarily have to know how it works, but they
Speaker 5: know what it is, right, And then you get the
Speaker 5: plateau of productivity. In the prototypical Gardner hype cycle, the
Speaker 5: plateau of productivity is actually below the peak of inflated expectations.
Speaker 5: But I think most of the time in markets it's
Speaker 5: actually higher. Obviously, there's a bit survivorship bias on this.
Speaker 5: You know, nobody that owned pets dot Com benefited from
Speaker 5: the plateau of productivity. But if you think about you know, Facebook, Amazon, Apple,
Speaker 5: you know these you know they or even you know,
Speaker 5: you look at like the nifty to fifty in the seventies, right,
Speaker 5: like some of them have had very bad returns, like IBM.
Speaker 5: But then you know, honeywell or carry your global you know,
Speaker 5: you get the uptake on the GDP effect. And essentially
Speaker 5: this is kind of the enemy of the mega trend,
Speaker 5: right because it's very easy to recognize it in the beginning,
Speaker 5: and then if you're too late with it, you're gonna
Speaker 5: think that the peak of inflated expectations is just the
Speaker 5: pullback right when it's not. You know, So this is
Speaker 5: kind of something where it's good to continuously monitor whether
Speaker 5: your thesis is playing out, whether it is actually had
Speaker 5: you know, whether it's artificial intelligence or you know, like
Speaker 5: you said, the rise of Chinese industry, or the Inflation
Speaker 5: Reduction Act and the impact and impetus of fiscal spending
Speaker 5: or you know, GLP one drugs that as long as
Speaker 5: you are on top of it and you can see,
Speaker 5: you know, what are the earnings expectations like and what
Speaker 5: are the actually you know, like like Nvidia is probably
Speaker 5: gonna you know, beaten raised for the next couple of years,
Speaker 5: but then you you know, where is going to be
Speaker 5: the point where the expectations aren't sustainable and when it
Speaker 5: comes to you know, you said you wanted to talk
Speaker 5: about the knock on effects, which kind of I mean,
Speaker 5: that's my favorite part of these things, right, like like
Speaker 5: when you actually capture a theme and you know, let
Speaker 5: me ask you a question like do you think the
Speaker 5: knock on effects are happening yet?
Speaker 1: I don't know what the take up. So my impression
Speaker 1: is that actually we should ask how much do these
Speaker 1: drugs actually cost because my impression is that they're pretty
Speaker 1: expensive and so they're not making huge inroads into the
Speaker 1: general population just yet, but that could easily change.
Speaker 5: Well, you know, right now, as far as weight loss
Speaker 5: is concerned. As an FDA on label indication, Novo has monopoly, right.
Speaker 5: Novo has wegov, which is the drug that you know
Speaker 5: just was had the big headline about twenty percent production
Speaker 5: in heart attack risk and essentially when they had you know,
Speaker 5: they can much charge what they want, right, and the
Speaker 5: way that it's going to develop is Lily's drugman jar
Speaker 5: which is much more effective, and there are other drug
Speaker 5: bredits true Tide which is still in clinical trials, but
Speaker 5: Munjara will be approved for weight loss. But at the
Speaker 5: end of this year, you know that was reaffirmed by
Speaker 5: or within the next six months. Right, that was reaffirmed
Speaker 5: by the Lee on their earnings call. And let me
Speaker 5: get the answer to the question first, because I want
Speaker 5: to go into something that's going to answer your question,
Speaker 5: but I do want to assess, right, so you think
Speaker 5: that the not going effects are happening yet no?
Speaker 4: So actually I've been wondering about this because I actually
Speaker 4: was kind of under the impression link. When are we
Speaker 4: going to see a company crash on earnings because they say,
Speaker 4: you know what, we're seeing our sales collapse because.
Speaker 1: No one's eating our chips.
Speaker 4: Has it come up on any like fast food calls?
Speaker 2: Yet?
Speaker 4: Has it come up on any like CpG company earnings
Speaker 4: calls yet? Like I remember, like last quarter, like check
Speaker 4: the textbook company said like, all right, we're running into
Speaker 4: trouble because AI is like affecting our ability to sell
Speaker 4: this product that helps people with their homework.
Speaker 5: So have we seen someone will ever say that again.
Speaker 5: You know that, right, Joe. Yeah, Now, even if it's happening,
Speaker 5: no one will ever blame AI again, right, they know
Speaker 5: what happened to Shtags.
Speaker 4: So is there are the companies yet that are saying,
Speaker 4: you know what, in our customer base, we're seeing a
Speaker 4: change in consumption patterns of something because of these drugs
Speaker 4: A ton really a ton?
Speaker 5: Yeah? So just to go through a couple, right, and
Speaker 5: this will answer your question Tracy right where First up, Yes,
Speaker 5: the drugs are expensive. These drugs cost about eight hundred
Speaker 5: to twelve hundred dollars a month, you know which is
Speaker 5: a lot, and that is for ozembic gob And like
Speaker 5: I said, you know, you don't have anything that makes
Speaker 5: this much money that doesn't have competition. Right, So, yes,
Speaker 5: Lily will get approved for Munjaro on weight loss and
Speaker 5: then there will be a duopoly and that'll probably last,
Speaker 5: I don't know, you know, anywhere from a year to
Speaker 5: three years or something like that. But to come back
Speaker 5: to Viagra, right, if you think about it, Viagra in
Speaker 5: nineteen ninety eight cost eighty eight dollars a pill. Okay,
Speaker 5: now it costs two. There there is whether it's through generics,
Speaker 5: whether it's through competition, you know, the cialis what the
Speaker 5: way that it works is, you know, you have you
Speaker 5: have competition, you have economies of scale, you have insurance coverage,
Speaker 5: you have you know, the generic drugs. Eventually, glp ones,
Speaker 5: in fact, in twenty thirty one will face mandatory discounting
Speaker 5: under the Inflation Production Act. So are they expensive right now? Yeah?
Speaker 5: But and to come back to what we were saying
Speaker 5: before that still did not you know, GLP ones were
Speaker 5: mentioned a thousand times in the in the in the
Speaker 5: Q two Q three earnings. Wow, that's interesting. Only half
Speaker 5: of that was by pharmaceutical companies.
Speaker 1: Okay, I just I just did a transcript search and
Speaker 1: there's a there's a Herbal Life earnings transcript where they
Speaker 1: talk about GLP one drugs, like possibly back in the business.
Speaker 5: I will never short Herbal Life just because we also
Speaker 5: what happened with that. I am always willing to learn
Speaker 5: from another person's mistake. And you know, like, but of
Speaker 5: luck to actman if he wants to go after it again.
Speaker 5: But you know, if you have documents searched up, Tracy,
Speaker 5: you can look at metafest yeah, and metafest Yeah, Metafest.
Speaker 5: They heerbal life didn't get hit as bad. But you know,
Speaker 5: I don't know if that's I don't know what that
Speaker 5: was a function of. I think they tried to explain it.
Speaker 5: I didn't really vibe with the explanation, but Metafest basically
Speaker 5: said that, you know, we're we sell things that you know,
Speaker 5: people use to lose weight, and there's like we cannot
Speaker 5: handle the competition from a drug that actually works, right
Speaker 5: that they you know, I think the direct quote is that,
Speaker 5: you know, customer acquisition is being pressured by GLP ones.
Speaker 5: But you know what they're doing now. Their strategy is
Speaker 5: essentially okay, let's do it too, you know, yeah, everyone
Speaker 5: else's maybe right, just do something similar, yeah, exactly, and
Speaker 5: that you know, like I love a company that is
Speaker 5: like torqued up levered melting price like a melting ice cube,
Speaker 5: and then position and right in the center of like
Speaker 5: a you know, like a burgeoning you know, huge trend,
Speaker 5: right because you know, like a good example from another trend,
Speaker 5: artificial intelligence would be like applied opt to electronics, right,
Speaker 5: which is like like it was destroyed and then you know,
Speaker 5: with eight hundred G and the data center demand for
Speaker 5: optical you know, it's a we're so back right, It
Speaker 5: was so.
Speaker 4: But I hadn't heard of Metafest, but I'm reading their
Speaker 4: descriptions and among the things that they and among the
Speaker 4: things that they make are pretzels, puff cereal, crunch drinks,
Speaker 4: hearty choices, oatmeal, pancakes, pudding. So I'm basically I don't
Speaker 4: know that maybe the products are delicious, but I'm imagining
Speaker 4: the type of things that people who are sort of
Speaker 4: like really trying to lose weight are, Like, I'm going
Speaker 4: to eat these puffs and shakes because they're a little
Speaker 4: bit healthier than the alternative.
Speaker 5: I mean, you don't need to That's the thing you
Speaker 5: don't need to work like, like, you know, I was
Speaker 5: talking about my channel checks earlier, and I have an
Speaker 5: end of chronologist, you know, like Eli Lily was one
Speaker 5: of my biggest positions from you know, twenty twenty two,
Speaker 5: twenty twenty one even, and it kind of got surpassed
Speaker 5: during the AI stuff. But I built up a basically,
Speaker 5: you know, like I would go to like an end up.
Speaker 5: Whenever you have a position that's super big, you know
Speaker 5: you're on top of it, right, and you can expense
Speaker 5: a trip to enoprenologist conference and you go there and
Speaker 5: like I'm speaking to these people and they're like, I
Speaker 5: have a patient who was eating five thousand calories a day,
Speaker 5: which is like a full time job, right, like like
Speaker 5: five thousand. Once you get to like five thousand and
Speaker 5: six thousand calories, that's like I mean that that is
Speaker 5: like eight full meals a day, right, And he's like,
Speaker 5: I am, he's having issues because I have to recommend
Speaker 5: protein supplementation because he can't get above five hundred calories
Speaker 5: a day. So if you look at a company like Metafest,
Speaker 5: that's basically you know, selling this food that's a little
Speaker 5: bit healthier for you and you know, maybe taste the
Speaker 5: same so that you know you don't have to you're
Speaker 5: kind of getting better macronutrients or something. I mean, there
Speaker 5: might be an opportunity there for the protein shakes, but overall,
Speaker 5: like you don't really need to worry about if you're
Speaker 5: taking this struggle, you don't really need to worry about,
Speaker 5: uh oh, you know, let me buy food that's like
Speaker 5: more that's less calorically dense, because like it doesn't matter,
Speaker 5: you're not going to eat it anyway. And this is
Speaker 5: kind of interesting because when you're looking at when you're
Speaker 5: like monitoring social media, you know, like always monitoring, like
Speaker 5: you know, Google trends, Wikipedia trends, and for a little bit,
Speaker 5: I think this was like the middle of last year,
Speaker 5: you know, monitoring Google trends, and this Google trend comes
Speaker 5: up called ozempic face.
Speaker 1: Oh yeah, people get really gone from weight loss.
Speaker 5: Literally like I had, and I'm like my fingers on
Speaker 5: the sell button. I'm like if it affects your face,
Speaker 5: like I'm out, you know, And it turns out like
Speaker 5: people were like, oh god, like ozempic causes you to
Speaker 5: have like, you know, like a gaunt face or something,
Speaker 5: and it's like not really, what's causing you to look
Speaker 5: gaune is the fact that you're losing a ton of
Speaker 5: weight very quickly. Right. And you have another one where
Speaker 5: like people are like worried about hair loss and you
Speaker 5: know that is it's a condition called intelligent effluvium, right,
Speaker 5: which is basically the same thing when you lose too
Speaker 5: much weight. You you know, your body is kind of
Speaker 5: like burning nutrients for energy. You're at a caloric deficit
Speaker 5: and you lose cair it's totally reversible, and with like
Speaker 5: ozembic face, It's like you can't see wrinkles on like
Speaker 5: an inflated balloon, right like it that's just how it works.
Speaker 5: And it's kind of amazing to me because you have
Speaker 5: this kind of imphasis where people are like, oh, like
Speaker 5: this is that, this is the side like we gotcha,
Speaker 5: you know, like this is I knew there was going
Speaker 5: to be a catch. And it's like people are so
Speaker 5: unaccustomed to the idea of there being a weight loss
Speaker 5: drug that works that they are confusing the side effects
Speaker 5: of the drug with the side effects of the effects
Speaker 5: of the drug, which is you know, success being successful
Speaker 5: weight loss just.
Speaker 2: For voice worth.
Speaker 4: I'm sorry, I keep going back this. I'm reading the
Speaker 4: metafest transcript from earlier in the week and one of
Speaker 4: the one of the questions is rbal life doesn't say anything.
Speaker 2: I'm paraphrasing.
Speaker 4: Well, one of the questions from the analysts is erbal
Speaker 4: life didn't say anything about GLP one drugs affecting their business?
Speaker 2: What about you? And they're like, well, we're not going
Speaker 2: to comment.
Speaker 4: On rbal life, but yeah, we're feeling it, so yeah,
Speaker 4: it actually it came up. They also cited higher customer
Speaker 4: acquisition costs. Again, they say, pressured by less prospects being
Speaker 4: identified by coaches, impacted by competition from GLP one drugs,
Speaker 4: inflationary pressure.
Speaker 2: So it's coming up.
Speaker 1: Wait, so can I ask you a basic question?
Speaker 5: Wait?
Speaker 1: Wait, just before we go further, can I ask a
Speaker 1: basic question, which is, like how many people are on
Speaker 1: these drugs right now?
Speaker 5: I mean, so I would rather not comment, right, I
Speaker 5: think that I would never be talking about something like
Speaker 5: this if I didn't think that it was early, right,
Speaker 5: and the so like you can look at penetration like
Speaker 5: type two diabetes, right, you know, talking about like penetration
Speaker 5: of a drug that's been approved for an indication for
Speaker 5: a year. You know, it's like you're not really going
Speaker 5: to get an accurate picture, you know, majarro And also
Speaker 5: a drug where like there's only been one approved for
Speaker 5: you know, and then you get also the fact that
Speaker 5: like there are talking about, you know, mentions on earnings.
Speaker 5: There are significant supply chain issues with these drugs right now,
Speaker 5: like like Novo's having trouble sourcing the drugs coming in
Speaker 5: autoinjector right, which is basically if you think of an EpiPen,
Speaker 5: you know, you take it once a week and you
Speaker 5: know it's like a button that you wish but you
Speaker 5: look at like like talking still about like the earnings mentions,
Speaker 5: if you look at Stevenado or Garretsheimer or even Beckton Dickinson.
Speaker 5: The problem is that they can't produce enough of it,
Speaker 5: which would tell you something about demand, right, like, like
Speaker 5: even I.
Speaker 1: Know this would turn into a supply chain episode eventually.
Speaker 5: Please don't try to get me to talk about the
Speaker 5: sly chainer so I will seem very silly. But the
Speaker 5: thing is just even Lily, right, Obviously they have to
Speaker 5: temper their optimism, but they're having to ramp up production
Speaker 5: at all, you know, five global facilities just because of
Speaker 5: the fact that like they're like overwhelmed. They could not
Speaker 5: even have anticipated this level of demand. Right during Lily's
Speaker 5: earnings call, Chris Shibatani and analyst was asking a question
Speaker 5: that was basically like Novo and Lily, you've been confronted
Speaker 5: by this demand that was like beyond what you could
Speaker 5: have possibly planned for. And with Lily, you know, Majar
Speaker 5: isn't even a proof for weight loss yet, and so
Speaker 5: essentially it would be kind of premature to say, you
Speaker 5: know what the penetration of these drugs is right now.
Speaker 5: But what I will say is that and I have
Speaker 5: a chart that I can you know, send you maybe
Speaker 5: can put it up on the site that essentially the
Speaker 5: obesity rate in the US in nineteen seventy four was
Speaker 5: twelve percent, right, and now it's forty two percent. And
Speaker 5: for the past five decades, there have not been two
Speaker 5: sequential years in which the obescd rate has ticked down.
Speaker 5: It hasn't happened for fifty years. So you know, when
Speaker 5: you look at that, I first off, I think it's
Speaker 5: not just reasonable but rational to think that you can't
Speaker 5: have a society that has both advanced medication and then
Speaker 5: half of its populace affected by a disease and not
Speaker 5: think that eventually those two things were resolve each other. Right.
Speaker 5: And if you look at the sixty eight week trial
Speaker 5: data Munjarro, and you adjust for you know, the average compliance,
Speaker 5: and you know which patients dropped out prematurely, and then
Speaker 5: you adjust for the fact that about after you drop
Speaker 5: out of the trial, about half of the weight loss
Speaker 5: you still maintained about half of the weight that you lost,
Speaker 5: but about half of it goes away, and so you
Speaker 5: adjust for all those things. If Munjaro a sixty eight
Speaker 5: week trial data has a thirty percent penetration rate in
Speaker 5: the obese population. Right, the obeset rate in the United
Speaker 5: States would be lower than it was in nineteen ninety seven.
Speaker 5: And you know, like that could happen over the course
Speaker 5: of two or three years. And so for a line
Speaker 5: that has gone up into the right to go down,
Speaker 5: you know that significantly.
Speaker 4: So I'm not surprised that, you know, mentions of GOLP
Speaker 4: onees are popping up on various conference calls. You know,
Speaker 4: some obvious ways, like the company that maybe makes the
Speaker 4: devices for its use, or the companies that have some
Speaker 4: other weight loss solution that may be feeling pressure. But
Speaker 4: like for example, today again August ninth, we got earnings
Speaker 4: from Wendy's. No mention of GLP one there. Yet I
Speaker 4: looked last month, we got earnings from PEPSI. And you know,
Speaker 4: if I were to think about, like, okay, in theory,
Speaker 4: in some future world where these drugs are very cheap
Speaker 4: and widespread, and who would theoretically be losers from drugs
Speaker 4: that reduce one's appetite for fast food, for salty foods,
Speaker 4: for high carb foods, whatever it is in your mind,
Speaker 4: is it obvious that A some of these big consumer
Speaker 4: oriented companies are going to be losers, and B if
Speaker 4: it is, when would you expect to see, like what
Speaker 4: pick a predicted quarter when maybe this would.
Speaker 2: Come up on a Wendy's earnings call.
Speaker 5: Well, so let's think, you know, first off.
Speaker 4: Or or if the premise of the question is totally
Speaker 4: off the mark, that's fine too.
Speaker 5: No, no, no, I mean it's a it's a I don't know,
Speaker 5: we're talking about second order effects that this seems a
Speaker 5: little first order Joe, Okay, you're right, you're right. No,
Speaker 5: but no, no, I mean it's a great point, right,
Speaker 5: And I think that the sent I mean, you know,
Speaker 5: Wendy's sells so much food right like it's it's uh
Speaker 5: me too. I don't want to I don't want to
Speaker 5: malign Wendy's. But the thing is, I think that if
Speaker 5: you wanted to be able to predict this, what you
Speaker 5: would have to do is you'd probably have to use
Speaker 5: all data or you know, credit card data, and you
Speaker 5: would have to look at the company and maybe eat
Speaker 5: a lot of fast foods for a month to figure out.
Speaker 5: But like, which of these companies you're going to be
Speaker 5: my new analyst. No, which of these companies are willing
Speaker 5: to or are basically making up for or low margins
Speaker 5: with high volumes, right because the because it's not like
Speaker 5: these drugs are going to automatically make you, you know
Speaker 5: the Jack Lalane right, Like, you're not gonna You're not
Speaker 5: just gonna be like the hell you all your habits
Speaker 5: are healthy now, Like if you're eating fast food every day,
Speaker 5: you will probably continue to eat fast food every day.
Speaker 5: You will just eat a lot less of it, like
Speaker 5: a lot less of it. And let's say chapatte for example, Yeah,
Speaker 5: probably not going to be that negatively affected, you know,
Speaker 5: like like people you know, they'll probably have the same
Speaker 5: order and they'll just finish, you know, a couple of
Speaker 5: bites bit or something. I don't necessarily want to speak
Speaker 5: to this, but just thinking of like RBI's for example,
Speaker 5: I think it's owned by a private company, so I
Speaker 5: can you know, talk about without issue. But like the
Speaker 5: prototypical let's just speak theoretically, there's you know, all you
Speaker 5: can eat Biffet or something. They might do really well
Speaker 5: because people eat less, but at the same time they
Speaker 5: might be patronized less because you know, nobody wants all
Speaker 5: you can eat, and you're not getting a good deal anymore.
Speaker 5: So if you have a company and you look at
Speaker 5: the data and basically the way that they make money
Speaker 5: is by selling a ton of food that they get
Speaker 5: very cheaply and make up for you know, kind of
Speaker 5: lower margins by selling a ton of it, that company
Speaker 5: probably isn't going to do too great. But you know,
Speaker 5: it wasn't just metafest for example, you know, going beyond
Speaker 5: the idea of like food being impacted, Like right now,
Speaker 5: Lily has a trial for Munjaro. Basically, what these companies
Speaker 5: are doing is they are on this kind of blitz
Speaker 5: scale for like the data, right because like most of
Speaker 5: these things you can kind of rationally expect, like for example,
Speaker 5: with the Wigobi headline, Gooby reduces heart attack risk by
Speaker 5: twenty percent. I mean kind of like duh, you know,
Speaker 5: like like oh, like you know, if you if you
Speaker 5: go from being obese to not obese, you're going to
Speaker 5: have a lower chance of heart attack. Right. But they
Speaker 5: but what they have to do is you know, have
Speaker 5: these you know, vigorous trials that actually prove it. Like
Speaker 5: so for example, Lily is going right now for obese
Speaker 5: induced sleep ABNA or ni osio or arthritis, and so
Speaker 5: like a company like res Med. Right, ResMed was talking
Speaker 5: about it for you know, like a while on their
Speaker 5: earnings call, and the response was essentially, you know, I'm
Speaker 5: trying to remember exactly what they said, Oh right, a
Speaker 5: seatbad machine. The costs over a lifetime for a seatbad
Speaker 5: machine are like about fifteen thousand dollars. And then they
Speaker 5: did their own math, which was like, well, these GLP
Speaker 5: one drugs cost one thousand dollars a month, and if
Speaker 5: you multiply, if you have a forty year old patient,
Speaker 5: you multiply that by forty years, Well, really a GLP
Speaker 5: one drugs, you know it's going to cost you four
Speaker 5: hundred and eighty thousand dollars. So obviously you know we're
Speaker 5: coming in at fourteen fifteen thousand, where obviously the option
Speaker 5: we're not going to be really affected by this. And
Speaker 5: you know, to take that into consideration, you say, why
Speaker 5: would people be taking this for forty years? Right? Like,
Speaker 5: why would if they if someone you know, seventy percent
Speaker 5: of sleep apne is caused by obesity, If you have
Speaker 5: someone that's taking it and they take it for let's
Speaker 5: say sixteen months and they go from being obese to
Speaker 5: having a normal body weight, and then in all likelihood
Speaker 5: at least for like seventy percent of them, the obstructive
Speaker 5: sleep abne goes away. I mean you have to just
Speaker 5: kind of the total addressable market for a company like
Speaker 5: res med or for the c PAFT industry in general,
Speaker 5: it is going to shrink, right, It's kind of and
Speaker 5: even you know, and then when people say that you
Speaker 5: know this is a fad or you know this won't
Speaker 5: work again, you look at like like when was the
Speaker 5: last fad weight loss drug that had Intuitive Surgical talking
Speaker 5: about on the earnings call? Right, Like Intuitive Surgical they're
Speaker 5: not ready to speak to it, but they mentioned it
Speaker 5: on the earnings call. And then you have another company.
Speaker 5: I think this was my favorite one, right, and it
Speaker 5: wasn't even because of anything the company did or said.
Speaker 5: It was just because I'm reading the prepared remarks and
Speaker 5: the exact text was basically, you know, the company is
Speaker 5: called Teleflex, and it essentially it's a company that makes
Speaker 5: devices for sleeve. But sleeve gets direct to me like
Speaker 5: the bariatric surgery weight loss surgery. You get the sleeve
Speaker 5: and the thing is, you know, sleep gas tractomy. I
Speaker 5: think the average weight loss over seventy two weeks is
Speaker 5: like twenty six or twenty seven percent, And with Munjaro
Speaker 5: it's a little bit closer to depending on the dose,
Speaker 5: between like seventeen and nineteen percent. But Lily's new drug,
Speaker 5: the triple agonist red true Tide, is showing like twenty
Speaker 5: four to twenty five percent. Right, So in the prepared remarks,
Speaker 5: they're basically saying, we did see an effect from GLP
Speaker 5: ones on the demand for bariatric surgery, which affected the
Speaker 5: demand for our device, the Titan stapler. Wait, so if
Speaker 5: I ask you, Tracy, if you want to lose weight,
Speaker 5: would you rather take or get Titan staples? Like? Like,
Speaker 5: like you want to go with the Titan stapler? I
Speaker 5: don't think so.
Speaker 1: Why didn't they call it like suft staple or a
Speaker 1: gentle staple? Titan is just a terrible name for any
Speaker 1: surgical procedure. Okay, Wait, So one of the reasons talking
Speaker 1: about this is fun is because it is kind of
Speaker 1: a giant thought experiment of what a world of fewer
Speaker 1: obese people would actually mean. How far can you take it? James,
Speaker 1: like to, what's your most interesting sort of second order
Speaker 1: trade idea based on a widely available weight loss drug.
Speaker 5: Well, I think that you know, if I'm going to
Speaker 5: stretch this as you know, as far as it can go,
Speaker 5: the first thing is stretching it as far as it
Speaker 5: can go gets pretty stretched because I mean, the direct
Speaker 5: medical costs this year from obessie, they're going to be
Speaker 5: three hundred and seventy billion dollars. The indirect costs are
Speaker 5: going to be over a trillion. McKinsey in twenty twelve,
Speaker 5: when the OBCD rate was like I want to say,
Speaker 5: seven or eight percent lower, they estimated that OBESD results
Speaker 5: in an annual global an annual global economic impact that
Speaker 5: is equivalent to two point eight percent of the global GDP.
Speaker 5: So you think about like productivity six days, you know,
Speaker 5: workers comp injury, I mean life insurance, health insurance, workers
Speaker 5: comp insurance. It something like that. When you have a
Speaker 5: when you have a literal disease state that is affecting
Speaker 5: forty two percent of your population, it's kind of hard
Speaker 5: not to stretch this far, you know, like like if
Speaker 5: that gets fixed. But in terms of the one that
Speaker 5: I would share on a podcast to be entertaining, I
Speaker 5: would say, like match group or bumble as along. If
Speaker 5: you look into like just general, everyone feels.
Speaker 4: Themselves and so they get to advertise them that's in
Speaker 4: a product in the dating marketplace.
Speaker 5: And you know what's interesting about this, you know, match group.
Speaker 5: I already think that the fundamentals look good here, but
Speaker 5: you know, if we're going to like stretch it super far,
Speaker 5: you look at like match groups last earnings and like
Speaker 5: payers were flat or decreased a little bit for tender,
Speaker 5: but they increase significantly for hinge. And if you look
Speaker 5: at like there are like, you know, social sciences studies
Speaker 5: about like the effects of obesity on like your how
Speaker 5: happy you are and how satisfied you are with your
Speaker 5: dating life and stuff, And I think, I don't want
Speaker 5: to butcher the results or something, but it was basically
Speaker 5: across genders, right, like if you are female or male,
Speaker 5: the effect of losing ten or twenty pounds on your
Speaker 5: average you know, satisfaction with your dating life and with
Speaker 5: just generally how happy you are. It's a lot more
Speaker 5: significant in females. So you know, maybe if you want
Speaker 5: to like be super early and stretch it super far.
Speaker 5: Maybe the reason that like hinge is getting more popular
Speaker 5: than tendered. Maybe it's because it's easier to lose weight.
Speaker 5: I don't I would not say that in like an
Speaker 5: authoritative way, but you know, I just say, yeah, that's
Speaker 5: that's the thing. I'm going to get quoted a like, No,
Speaker 5: this is a crazy guy thinks that, like match group
Speaker 5: is going to moon because of you know, No, I
Speaker 5: guess I just say I get, I get how the
Speaker 5: internet works, though this is I know, I know it's funny.
Speaker 4: I keep reading through conference calls after you mentioned them.
Speaker 4: I'm looking at the res mid one and did you
Speaker 4: look at Titan State, But they're talking about They're like, well,
Speaker 4: they're like because clearly this is a source of anxiety
Speaker 4: for them. So they're like, oh, well, like uptake and
Speaker 4: like endherance is not really that good. And then a
Speaker 4: very funny thing they say, because Biden had that mark
Speaker 4: on his face is our biggest side effect is President
Speaker 4: Biden had a little mark on his face and he
Speaker 4: was asked about it and it was from his CEPAP.
Speaker 5: Look.
Speaker 4: I think it's a good long road to play out here.
Speaker 4: I think it's frankly good marketing. So President Biden, because
Speaker 4: he had to put a device on his face for
Speaker 4: his sleep problems.
Speaker 5: The company is setting it market, did we just I mean,
Speaker 5: I saw I saw a photo of Justin Trudeau at Imax,
Speaker 5: so maybe I should get long Imax.
Speaker 4: You know, it seems like a big deal, like just
Speaker 4: zooming out. It seems like a big deal. Even if
Speaker 4: we like set aside what it's going to do to
Speaker 4: PEPSI or what it's going to do to like freedom
Speaker 4: lay or that's the same, you know, what it's going
Speaker 4: to do to all these consumer companies, you know, health insurance.
Speaker 4: You mentioned that like obesity plus obesity related diseases are huge,
Speaker 4: and so if they were to go down and you
Speaker 4: see maybe you see some of that in the sort
Speaker 4: of weak stock price of res med anxiety about this?
Speaker 4: What does it mean just like for like health insurers
Speaker 4: and also just like healthcare utilization in general, Like you know,
Speaker 4: generally we think of like healthcare as like a line
Speaker 4: that only goes up that if you're a healthcare professional,
Speaker 4: you're like gonna do very probably likely very well guaranteed demand.
Speaker 4: What is the effect on just sort of like the
Speaker 4: broader healthcare institutional healthcare industry.
Speaker 5: Since you've already got documents search slouded up, why don't
Speaker 5: you check out Insparity. The ticker is a NSP.
Speaker 2: This is a fun guy.
Speaker 4: I was like just hearing different names and then I
Speaker 4: look at looked them up during the answer.
Speaker 2: But yeah, keep going.
Speaker 5: Welcome to my life during earning season. Document search is
Speaker 5: my favorite feature. But you know, if you look at Inspirity,
Speaker 5: you can kind of see. I don't want to misquote anyone,
Speaker 5: so I'll just put it up very quickly.
Speaker 3: Look at the share price.
Speaker 4: Hey, this is the company offers recruiting, employment screen and
Speaker 4: retirement business insurance.
Speaker 2: Yeah, what is this company?
Speaker 1: It's down about sixteen percent.
Speaker 2: That's what matters. I can't figure out what they do
Speaker 2: and what their connection is here.
Speaker 5: So we're going to.
Speaker 1: Find out human resources and business optimizations.
Speaker 2: No, no, no, yeah, but I don't so what's the here.
Speaker 5: So here's the deal, right. They also offer you know,
Speaker 5: employed benefit administration, which you know, like like health and
Speaker 5: so if you want to boil it down to two things, like,
Speaker 5: Insparity got hit on the fact that like people want
Speaker 5: these drugs because they don't want to be fat and
Speaker 5: the drugs make them not fat, and Insparity apparently thinks
Speaker 5: that you know, that is a fad. They were saying
Speaker 5: something that was like, oh, you know, the effects are
Speaker 5: going to wane because of the side effects. And when
Speaker 5: you think about it, like these drugs were originally developed
Speaker 5: for type two diabetes, and it's like, oh, you know,
Speaker 5: there's never been a drug before that was developed for
Speaker 5: one thing and then ended up being really good for
Speaker 5: the other, you know, just like Tracy said with Viagra.
Speaker 5: And basically they said, you know, large claim activity accounted
Speaker 5: for approximately seventy five percent of the higher costs with
Speaker 5: claims over seven hundred and fifty thousand dollars, and the
Speaker 5: remaining twenty five percent is related to higher than expected
Speaker 5: pharmacy costs. As for higher pharmacy costs, we experienced an
Speaker 5: in increase and utilization of the specialty drugs, including a
Speaker 5: significant step up in the use of diabetes and weight
Speaker 5: loss drugs. And then they talk about behavioral health drugs
Speaker 5: to behavioral health drugs too, which is probably you know,
Speaker 5: I mean, I don't know, that's a whole different conversation
Speaker 5: with COVID and behavioral health drugs. And you know, like
Speaker 5: how people have emotionally reacted to the last three years.
Speaker 5: But when you look at it, for insparity. It's probably
Speaker 5: bad right now because you know, as long as these
Speaker 5: companies have a duopoly on these drugs, the cost will
Speaker 5: probably be hot. But that can only last for so long.
Speaker 5: You know that eventually there will be competition. Eventually the
Speaker 5: cost will go down. Eventually it'll be like Biagra, where
Speaker 5: it goes from you know, eighty eight dollars pill to
Speaker 5: whatever two dollars a pill. Maybe it was bad quarter
Speaker 5: for insparity. Maybe that continues for a little bit while
Speaker 5: they're still expensive, and then eventually it'll get better. But
Speaker 5: when you think of it from let's say Signa or
Speaker 5: United Healthcare Signa on their earnings called they said, you know,
Speaker 5: GLP ones are definitely top of mind for many of
Speaker 5: our clients. There's been a meaningful upticking utils station. And
Speaker 5: essentially what they said was, you know, there's a continued
Speaker 5: interest in behavioral solutions. You know, these insurance companies they
Speaker 5: will like pay for you to get a gym membership,
Speaker 5: or they'll pay for you to get a meal plan
Speaker 5: or something, and the success rates of those things are dismal,
Speaker 5: like absolutely awful, right and you know it doesn't work.
Speaker 5: And insurance companies are stakeholders in global health, right, and
Speaker 5: they're really good and anticipating how much it's going to
Speaker 5: cost and making sure, you know that they make more
Speaker 5: money than what it's going to cost. But as an epidemic,
Speaker 5: this is still like a relatively new thing. The obesity
Speaker 5: rate has never been forty two percent before, and so
Speaker 5: what do how can we really accurately model what that's
Speaker 5: going to look like in fifty years? I mean, you know,
Speaker 5: maybe if it continues the way that it's going unobated,
Speaker 5: I think that ultimately, you know, health insurance that it's
Speaker 5: going to be a significant hit. So what you're seeing
Speaker 5: is these drug drug companies essentially going on these data campaigns,
Speaker 5: which is, you know, we're going to show you not
Speaker 5: just that it results in weight loss. We're going to
Speaker 5: do a study and a clinical trial on every single
Speaker 5: one of the beneficial effects of losing weight. Right, We're
Speaker 5: going to say, oh, obstructive sleep, at hyper lipidemia, hypertension,
Speaker 5: heart disease, type two diabetes, knee replacements, all of this stuff.
Speaker 5: And then eventually it is for Signa or for United Healthcare,
Speaker 5: it is going to be They're they're going to do
Speaker 5: what insurance companies do. They're going to negotiate. They're going
Speaker 5: to push down the price. They're gonna you know, they're
Speaker 5: gonna there's going to be pushback. There's going to be
Speaker 5: what cut gets covered and what doesn't, especially after Munjara
Speaker 5: gets approved for OBCD. But at the end of the day,
Speaker 5: the thing is they are basically going to have to
Speaker 5: do a cost benefit analysis, and there is no way
Speaker 5: in my mind, I think really even if they were
Speaker 5: paying one hundred and fifty percent of what Lily's charging
Speaker 5: and didn't negotiate at all, over the course of the
Speaker 5: next twenty or thirty years, they would probably make money.
Speaker 5: Like they would probably be a better situation than it
Speaker 5: would be without it, you know, not to get too
Speaker 5: like insanely off the rails. But again, it's a podcast, so.
Speaker 1: This thing is experiment, So let's do it.
Speaker 5: Let's entertain some people. Right, why shouldn't the government pay
Speaker 5: for this?
Speaker 4: Well, you mentioned that the Inflation Reduction Act is going
Speaker 4: to reduce the cost. This should be Biden's re election.
Speaker 4: He's like, hey, I signed the bill that's given.
Speaker 5: Yeah, let's look, let's look at this. Right. We just
Speaker 5: had like the biggest public health experiment ever. You know,
Speaker 5: we had COVID. Right, Like, how many does anyone know
Speaker 5: off the top of their head how many people COVID?
Speaker 5: I don't, that's not a fact that I have handy,
Speaker 5: but right, but and how many people? What was the
Speaker 5: all cause mortality of like COVID in like annually during
Speaker 5: like the peak of the epidemic. It was probably high.
Speaker 5: But what I'll tell you is it probably was similar
Speaker 5: to how many people are going to dive over city
Speaker 5: this year. You know, I don't want to like speak
Speaker 5: without facts in front of me, but I would say,
Speaker 5: you know, if if someone wants to go look that
Speaker 5: up and you know, whether it's how many people divebcity
Speaker 5: this year or how many and five years, I would
Speaker 5: say that they are probably comparable public health crises. And
Speaker 5: also in terms of the impact on the economy. Obviously,
Speaker 5: nothing can rival shutting down the entire economy and you know,
Speaker 5: having a lockdown. But if you look at it from
Speaker 5: a cube versus chronic perspective, you know, if obesity is
Speaker 5: going to cost us a trillion dollars this year in
Speaker 5: indirect costs, and we're running it a trillion dollars a year,
Speaker 5: I mean over the next ten years, like what it
Speaker 5: just seems like something where it let's say that you know,
Speaker 5: Lily and Novo and all the other companies that eventually
Speaker 5: join the FRAY that they're effective in proving that the
Speaker 5: side effects are moderate and that the overall benefit is sustained,
Speaker 5: and it's good. Why would the government not cover it? Right? Like,
Speaker 5: if they're if they'll cover COVID vaccine, should probably cover
Speaker 5: this too, especially if it has a twenty percent production
Speaker 5: like heart attacks.
Speaker 1: I mean, well, I would never overestimate America's ability to
Speaker 1: make bad decisions when it comes to public health care.
Speaker 5: But that's a good point.
Speaker 1: But James, that was a really fun conversation. Absolutely a
Speaker 1: blast to have you on and go through the transcript
Speaker 1: sort of in real time while we're talking to you.
Speaker 3: That was great.
Speaker 5: Absolutely, And you know, if you want to learn more,
Speaker 5: you know, I've been writing about this since June on
Speaker 5: is suctriniresearch dot com. I go pretty deep into these
Speaker 5: I did want on a yeah, oh you you read it,
Speaker 5: Come on, we do a little.
Speaker 1: There's much believe it or not.
Speaker 2: There is something that I read it.
Speaker 4: On the subway this morning while coming in. I do
Speaker 4: real prep for this job.
Speaker 5: I send it to you like twelve hours beforehand, and
Speaker 5: I know it's like, you know, twenty pages long, so
Speaker 5: I would have forgived you.
Speaker 1: All right, well, James, thanks so much for coming on
Speaker 1: all thoughts. Appreciate it.
Speaker 5: Thank you so much for having me guys.
Speaker 2: Thanks James, that was a blast.
Speaker 1: All right, well, Joe, I for one look forward to
Speaker 1: the spelt future of publicly funded weight loss drugs.
Speaker 4: I mean, I totally like, why not if all the
Speaker 4: things seem to be true about this what many people
Speaker 4: seem to believe. And you know, it's like James is
Speaker 4: like totally right, Like you see a lot of people
Speaker 4: like poking there, like there must be some catch here, right,
Speaker 4: there must be just gonna melt your insides or it's
Speaker 4: gonna do something. Maybe one day, you never know, but
Speaker 4: right now, anything I read about the side effects never
Speaker 4: seemed like that compelling or anything.
Speaker 2: And he just point out the classic drugs for a while,
Speaker 2: it kind.
Speaker 4: Of feels like potentially like a legit miracle drug, right,
Speaker 4: Like it's kind of wild.
Speaker 1: Well, I think he makes an excellent point about the
Speaker 1: trade offs, right, and at some point it might be
Speaker 1: cheaper for an insurance company to just provide this drug
Speaker 1: rather than treat someone for diabetes or heart problems or
Speaker 1: sleep apnea or whatever else for the rest of their lives.
Speaker 1: The other thing I was thinking throughout all of that,
Speaker 1: you know, I initially came into the conversation thinking like,
Speaker 1: oh wow, if everyone's consuming less, yeah, maybe that's deflationary.
Speaker 1: But now I'm going back to that price over volume
Speaker 1: oh theme. And James brought it up as well, which is, well,
Speaker 1: if you're Wendy's and people just aren't buying as many cheeseburgers,
Speaker 1: then maybe you just raise your prices to offset it.
Speaker 4: Could be the I am cures. I mean, there's all
Speaker 4: kinds of like other things that we could get into. Yeah,
Speaker 4: and so another thing, and I saw someone on Twitter
Speaker 4: say this, They're like, well, well, the snack companies put
Speaker 4: even more salt.
Speaker 2: And other addicting type of.
Speaker 4: Like ingredients to counter setting the people who aren't taking
Speaker 4: the drugs buy even more in the future, Like they're
Speaker 4: not going to give up without a fight if there's
Speaker 4: some drug that causes people, you know, like everyone's gonna
Speaker 4: like try to like find some way. We didn't talk
Speaker 4: about gyms really, but I wonder like, like one way
Speaker 4: of thinking is maybe it's bad for gyms. But on
Speaker 4: the other hand, like if maybe one to show off,
Speaker 4: that's exactly right. If you feel more confident, then maybe,
Speaker 4: like you know what, I'm ready to I don't mind
Speaker 4: being seen at the gym. All kinds of interesting questions,
Speaker 4: Like I like the idea of like, you know, Madge
Speaker 4: or Hinge is a bye or is like a winner here?
Speaker 4: So that was a very fun thought insperiment, and it
Speaker 4: was fun in the context that he knew so many details,
Speaker 4: so it was like also kind of real nudges.
Speaker 1: Yeah, and I'm going to spend I think the next
Speaker 1: like two hours or so just going through some of
Speaker 1: the Earnings transcripts and saying what people are saying about this,
Speaker 1: because I hadn't realized that people were already actually talking
Speaker 1: about it.
Speaker 4: Well, so I think the reason I didn't realize it
Speaker 4: is because I was searching azimbic. It's just like the
Speaker 4: thing all searching. You just search GLP and then tons
Speaker 4: come up, and so it's really interesting. I mean, it's
Speaker 4: a huge focus on a lot of these calls just
Speaker 4: from looking it up.
Speaker 1: All right, well, fun conversation. Shall we leave it there,
Speaker 1: Let's leave it there? Okay, this has been another episode
Speaker 1: of the All Thoughts podcast. I'm Tracy Alloway. You can
Speaker 1: follow me on Twitter at Tracy Alloway.
Speaker 4: And I'm Jill Wisenthal. You can follow me on Twitter
Speaker 4: at The Stalwart. You can follow Hello James Van Galen
Speaker 4: on Twitter at sutrini seven. Also check out his research.
Speaker 4: Follow our producers Carmen Rodriguez at Carman Arman and dash
Speaker 4: O Bennett at dashbot and all of the Bloomberg podcasts
Speaker 4: can be found under the handle at podcasts. And for
Speaker 4: more odd Loots content, go to Bloomberg dot com slash
Speaker 4: odd Lots where we have a transcript.
Speaker 2: Blog in a newsletter and we don't have.
Speaker 4: A pharmaceutical channel and there maybe we've got to add
Speaker 4: a medicine and health one. But check out the discord,
Speaker 4: one of my favorite places to hang out on the internet.
Speaker 4: Other odd Lots listeners are there talking twenty four to seven,
Speaker 4: Discord dot g slash on.
Speaker 1: And if you enjoy odd Lots, if you like listening
Speaker 1: to these types of conversations imagining a world without obesity,
Speaker 1: then do leave us a positive review on your favorite
Speaker 1: podcast platform.
Speaker 3: Thanks for listening. In a