Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy
[00:00:00] S0: My guest today is Alex Karnal. Alex is probably the most talented bio and healthcare investor that I've ever met. And as you'll see, he has an encyclopedia of all things going on in life sciences. Alex has been teaching me this topic for more than five years, and every single one of our conversations is about as deep as this one that you'll hear today. We cover every single aspect of what makes today's life sciences world so interesting, starting with this concept of the health stack – the things that we can do both offensive and defensive to extend our life based on the evidence that he sees in the most exciting companies of today. We talk about cardiovascular disease, neurodegenerative disorders, metabolic disorders, cancers, and beyond. And finally, we finish with his remarkable personal story. I hope you enjoy this great conversation. You and I have had these conversations now for many, many years. We've been partners and friends for a long time. And so it's hard to know where to begin the conversation because I suspect we'll go for hours talking about drugs and bio and healthcare and outcomes and a million things that affect us all. You have this cockpit-like view into what's going on in the state of medicine today. How would you describe the state of the union? The daily cockpit view that you get of the whole industry? Give us a dispatch from that room. What do you see today?
· Alex Karnal
[00:00:00] S1: When I look at this moment in terms of where we are in medicine, and I look back over my 20 years of building and backing biotech companies, I would say that 2025 was probably the single most exciting year in my entire journey. So to unpack that, what we're seeing is GLP-1 medicines are showing us what happens when we get to the root of disease. These medicines have the potential to do everything from protect us from being diabetic after being pre-diabetic, all the way through lowering our risk of having a heart attack or a stroke, protecting our kidneys, and soon we're going to see the opportunity to protect us from developing addictions to alcohol and drugs. So a profoundly important single medicine. Of course, because these medicines are incredibly powerful and they can do wonders for people's long-term health, what we're seeing is that the adoption of these medicines has exceeded almost everyone's expectations, including my own, which were pretty darn high. I think it's easy now to conclude that this as a class of medicines will easily be in excess of $100 billion a year in revenue. And so what gets me fired up about that is not necessarily this once-in-a-decade $100 billion revenue opportunity that exists within GLP-1s. What gets me fired up is that it's actually the first commercial proof that we are ready for – what I think we're going to look back on in time as a once-in-a-lifetime trillion-dollar revolution in all of public health. In order for that to be true, there's going to be layers of attack that are needed to help us live our longest and best lives. I think one of the things a lot of people don't appreciate when I meet them and we start talking about where medicine is and what it can do, is that incredible scientists have already cracked the code on most of the medicines we need to protect us from most of the diseases that will claim most of our lives. That's a really important point because what that means is that there are tons and tons of people that have traveled through all different mazes to arrive at the biological target and come up with a medicine against that target that can help us to live longer and better lives. And so when we think about what is the gap that exists in the world today between the reality that – when we look at any expected lifespan charts, they haven't budged in decades.
· Alex Karnal, Patrick O'Shaughnessy
The last major advancement we had, and inflection, was decades ago on the back of antibiotics, vaccines, and better hygiene. We've gone nowhere since then. The gap is not necessarily needing more medicines. It's actually pointing those medicines at the impact that they can have. What I'm excited about about the GLP-1 opportunity is we're seeing the first commercial proof that we're ready to head in that direction. The reason that those sales have exceeded our expectations is people are taking into their own hands their future. People are basically voting with their feet saying, I'm done waiting to reactively go and treat myself for the diseases that I backward-lookingly manifest. I'm ready to go get after it and help myself to live longest and fullest. [00:00:00] S0: I wanted to zoom in on a concept that you and I have been riffing on a lot recently, which we're calling health stack. Stack is a term in technology, like your tech stack is all the various components that you use to create your overall thing. We thought this idea could be applied to health We're all interested in our own health. It's a universal interest and concern. Maybe riff a little bit to begin on this notion of the modern evolving and emerging health stack.
· Alex Karnal
[00:00:00] S1: What a health stack looks like has a couple of different elements to it. It has elements of offense and defense, and on the offensive side of the equation are some of the basics that we all know about. It's everything from proper nutrition, strength training, proper monitoring and testing, and doing those activities in a systematic way and tracking that data and building off of it over time. Later on, we can talk about how AI can play a big role in enabling that to reach its final chapter of what it takes for impact. What I find most interesting about it is, if we think about five core dimensions, not only are they within our hands to be able to be proactive about protecting ourselves, but we have the medicines to do that. To me, the five key layers are lipid optimization, it's cardiometabolic health, it is neurocognitive health, it is inflammatory health, and our blood pressure. When we think about the lipid optimization, we have – and our bodies produce – cholesterol. And there's a type of cholesterol called your LDL cholesterol that's really dangerous. And it's dangerous because this cholesterol builds up in our bodies over time, and it's slowly accumulating in our vasculature, and as it accumulates, it gets to a point where it causes a blockage. That's a heart attack and a stroke. And we have medicines today, whether they're statins, the PCSK9 inhibitors, that can do wonders to reduce our level of cholesterol. And most middle-aged men and women walking around have somewhere between a 30 and a 50% probability of having a heart attack and a stroke sometime between the time that they turn 40 and the time that they turn 80. And to me, that's tragic because we have the medicines that exist that can help us to dramatically lower that risk to sub-10%. Looking at the next layer in cardiometabolic health, what we're talking about is the glycemic environment in our bodies combined with visceral fat. These are two major drivers or impediments to our long-term health. To give you an intuition for these – basically, the higher the level of glucose in our bodies – think about it, the more brittle it's making our vasculature. And so if you are both having lipids accumulate in your body and your vasculature is getting more brittle, you're only force-multiplying the risk that you ultimately have one of those horrific heart attacks or strokes.
· Alex Karnal
But we can do something about that. We've got amazing GLP-1 medicines that I started with that, from clear data out of Eli Lilly, show a 94% reduction in your risk of moving from being pre-diabetic to diabetic. We see amazing data in terms of what it does to both help us to lose weight and have category shifts – going from obese to overweight, from overweight to normal weight. It's a game changer in terms of our long-term health. Moving down to neurocognitive health – the data is not out yet, but later on this year, we're going to see the next step for what are called anti-amyloid medicines, medicines that can go right at the heart of the accumulation of plaques, this time, not in our vasculature, but in our brains, that lead to all sorts of damage and cognitive decline. And we've got medicines today that can go right at those plaques and bust them. And what Lilly is going to probably show later on this year – it's my guess, but I think the data really supports it, and we'll see. What they're going to show is that getting at those plaques earlier, before they accumulate significantly, is going to show dramatic effects on protecting us from developing Alzheimer's. Moving on to inflammatory health, one of the things I think people don't appreciate is that the food we eat is actually quite inflammatory. And because we have over time moved from being hunters and gatherers to being able to have as much access to Pop-Tarts as we want – and I love them too. Don't get one, you get two. We overeat to a point where it drives an inflammatory response in our bodies. You can think about that whole equation of if we have both lipids accumulating, and our body has a high glycemic environment making our vasculature brittle, and the same food that we're eating is driving an inflammatory environment around it – oh my goodness, it's like a ticking time bomb for all of that to go off. And not only is the inflammatory environment of our body implicated in driving an increase in cardiovascular events, strokes, and heart attacks, but also a whole set of inflammatory diseases that span everything from atopic dermatitis to ulcerative colitis and Crohn's disease. Finally, blood pressure.
· Alex Karnal
And maybe this one's very intuitive to people, but you can imagine that both if we are living high-stress lives, if we're not working out, if we are developing obesity, we have this high glycemic environment, so our vasculature is brittle, our LDL is mounting. And on top of that, the pressure going through that system is going higher and higher as we're aging and doing nothing about it. Oh my God, that's just another force multiplier. So all of these axes that I define as the five key layers to the defensive side of a health stack, each of them has medicines available to help us control our fate. Each of them has medicines available that if we could get on them early and be proactive about where we're going with our health, they will undoubtedly add an extra decade of life to our expected lifespan and have the potential to take curves that have been dead flat for decades and drive one of the first inflections ever.