Forum Topics Resmed Vs Weight loss Drug
Solvetheriddle
a month ago

The below is from Seeking alpha, and i post this article out of interest. usually, i am wary of comments from analysts i don't know or haven't been following for a while. however the below did catch my eye. hopefully not confirmation bias, i admit to being influenced by FOMO, impatience but not anchoring (that just not rational), confirmation dont know? lol

maybe the narrative is starting to even out

Weight loss drugs' impact is based on hype not reality - RBC

04:43 PM | (PFE) | By: Jonathan Block, SA News Editor

Despite recent prognostications that a class of drugs increasingly being used for weight loss is a threat to food and beverage stocks, RBC Capital Markets said the concern is largely unwarranted.

Side effects, inconsistent refill rates which indicate compliance may be an issue, and the potential for payor pushback all means that some sentiment on the impact of GLP-1 agonist drugs on the consumer sector has gone overboard.

Medications in this category include Novo Nordisk's (NVO) Wegovy (semaglutide) and Ozempic (semaglutide), and Eli Lilly's (NYSE:LLY) Mounjaro (tirzepatide).

"Unlike clinical studies, insights from real-world use of these drugs imply weight loss can be limited or short-lived as a result, making it difficult for some users to justify the treatment's lofty price tag," RBC analyst Nik Modi said. "Recent insurance claims data on 4k+ patients who started taking GLP-1s in 2021 indicate only 32% remained on therapy and just 27% adhered to treatment after 1 year, citing an increase in healthcare costs."

He mentioned one study on 3.3k subjects that found after a year on the drugs, patients saw an average of just 4.4% weight loss. That is significantly less than declines cited by Novo Nordisk (NVO) and Eli Lilly (LLY) in their studies.

Also, he said IQVIA data found that the growth in GLP-1s is due mostly to new prescriptions, not refills, "making us question its sustainability."

Given this information, "we believe GLP-1s have genuine hurdles to prolonged use that have the potential to limit their long-term societal/economic impact."

To back up his argument, Modi provided several real-life examples of drugs or products where hype that it would shake up a consumer segment ended up falling flat. One was Pfizer's (PFE) Chantix (varenicline), which was approved in 2006 and heralded as a breakthrough smoking cessation drug.

Many thought it would negatively impact tobacco stocks. It didn't. The drug was linked to several psychiatric side effects, including hallucinations, paranoia, delusions, and even suicidal ideation and attempts. Uptake of Chantix was blunted.

He also mentioned Beyond Meat (BYND) as company whose meat alternative products were seen as a threat to traditional beef and other animal products. Through hype, the stock reached an all time high of ~$235 in July 2019. The stock closed at $6.84 on Friday.

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PortfolioPlus
a month ago

I agree that Ozempic is likely to be a fad, but one shouldn’t overlook the lag in it coming to fruition, particularly when you are dealing with image/beauty issues. The long term results suggested for Ozempic also apply to Jenny Craig Weight Loss ( which folded in Oz recently, but after some 30+ years) and Weight Watchers which is still trading.

Creams, potients, Botox etc will always have a market as we humans age and as we do, we want the benefits of the fountain of youth. I’m 72, and I can remember my grandmother using bucket loads of Oil of Ulan. It’s still in the market today - not used by me, I hasten to add - happy to grow old disgracefully.

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edgescape
a month ago

Probably best to look at potential (indirect) beneficiaries of the weight loss drugs rather than seeing if market is right or wrong about Resmed? Or even trends towards healthy living that may impact the RMD thesis. Unless of course Resmed has some hidden poker card apart from sleep apnoea that we know nothing about.

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Solvetheriddle
2 months ago

Not too sure if @mikebrisy posted this or not, but this is an interview with Rob Douglas COO RMD with BoA.

covers Gm issues, as well as GP-1, which is about 30 minutes long, interesting

https://bofa.veracast.com/webcasts/bofa/globalhealthcareuk2023/idI31C8u.cfm


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mikebrisy
2 months ago

@Solvetheriddle yes this is the same presentation my last straw was based off, but my report was from the transcript, as I didn’t have a link to the webcast.

The key themes are also repeated to some extent in the recent GS research which puts some quantification around impacts and makes me very comfortable to ride this one out.

If $RMD wasn’t already a top-5 holding of mine, I’d have loaded up even more today, as I consider the good news reported from the halted CT is already well and truly baked in to the SP.

As I’ve said before, various CT results and registrations for GLH-1s can be expected to drive volatility for the foreseeable future. The ship will be steadies over time based on evidence of $RMD results, but I expect considerable evidence will be required for multiple restoration. Potentially years.

Looks like we are also going to see the same at $CSL. As @Strawman ‘s note details clearly, $CSL’s multiple was priced for strong, uninterrupted growth. Having 8% of revenue exposed to GLP-1 success in CKD has an immediate effect on multiple contraction, even if we don’t see any material impact on results or guidance (which was unchanged at AGM cf. FY23).

I also hold a large RL position in CSL and am not moving.

The following numbers are from memory, and therefore directional only:

  • pre Vifor announcement, $CSL SP was almost $300
  • Today, it’s less than $240
  • Todays SP fall was c, -A$8bn … Vifor was acquired for A18.8bn/$US$11.7 (corrected from $10-11bn which I wrote last night from memory) when interest rates were near zero


I’m highly skeptical that GLP-1 impact on CKD wipes out the lion’s share of Vifor’s total value. It’s way too early for that. (I’m going to correct this statement too: I’m somewhat sceptical that the CT trial result justifies wiping off $40% of the value of Vifor. Moreover, were Vifor to be acquired in today’s interest rate environment, the starting value might be more like $14-15bn, so the markdown is over 50%. Hard to see a 6% SP correction from already depressed levels when it’s only 8% of CSL revenue that’s at risk.)

So, it’s all about multiple contraction, because the quality of growth is in question and, as with $RMD, it will take time (years) for that question to be answered.

This is where you find out if you really are a long term investor. Don’t expect relief any time soon.

25
steno
2 months ago

This is a great article. Author is very bearish RMD

https://www.citriniresearch.com/p/upgrading-from-overweight-the-effects?utm_campaign=post&utm_medium=web

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Solvetheriddle
2 months ago

@steno author is certainly a true believer, gives the bull case for the weight loss drug use the full blast. i did think of another short for him CCX lol.


also i noticed the PE he had for RMD was incorrect, then i realised the RMD SP is down 37% since this article was written, although if he is correct and the full bear case evolves then there is further to go

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Solvetheriddle
2 months ago

I dont listen to too many fund managers, but i do listen to Airlie (dont always agree with them)

Emma Fisher gives a pretty good assessment of RMD in this podcast around the 25 minute mark.

https://www.livewiremarkets.com/wires/emma-fisher-why-it-pays-to-be-bullish-and-the-most-outstanding-idea-on-the-asx-today?utm_medium=email&utm_campaign=Trending on Livewire - Saturday 7 October 2023&utm_content=Trending on Livewire - Saturday 7 October 2023+CID_1b5302dacb2ff9d56c5a3b482f6dcac9&utm_source=campaign monitor

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GazD
2 months ago

This was a great listen agree. I have to say I was impressed as a medico on the handle that Emma had on the medical side of it all. To go into AHI in understanding severity of OSA and likely response to weight loss was more than I would have expected

15
Daniel87
2 months ago

Thanks for sharing !

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thunderhead
2 months ago

I came across this and parked it to a side, but will prioritise it now :)

4
Slomo
2 months ago

Interesting article @Daniel87, thanks for the share.

In summary it sounds like this stuff makes you as sick as a parrot but is this really a side effect - or just the high price of a silver bullet to the gullet that magically loses you weight without doing what your biology requires of you?

If these drugs make you sick / paralysed / obstructed enough to lose as much weight as is being reported, I think this level of illness may be a feature, not a bug?

Sounds like the fine print on this latest miracle cure is coming into sharp focus. If this causes the short sellers to start losing their appetite the squeeze could be very bouncy indeed!

On a separate but related note, I just finished Michael Easter's "The Comfort Crisis" (highly recommended) which among other things suggests we get used to being hungry again, just like all of our ancestors were intermittently prior to industrialised food production taking hold. It turns out being hungry from time to time is natural, easing processed food is not.

Disc: RMD held, GLP-1 not tried it yet...

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Daniel87
2 months ago

Yes I agree with you 100 percent. I am looking forward to this quarter to see the update from RMD.

thanks for the book share !

i haven’t tried it either but I know a lot of people who have used CPAP. ;)

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