Invest Like the Best with Patrick O'Shaughnessy
· 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.
· Patrick O'Shaughnessy
[00:00:00] S0: I want to spend a little bit of time at each, maybe not all five, but at least four of the levels to let you explain what you're seeing and learning, especially from your perch as an investor. One of the things that I think makes you so unique is that ultimately you're trying to make money on all this stuff and you're doing so with extreme care and precision and a very sophisticated team and lots of data. There's money on the line here. You're not someone that is reading something and trying something. It comes out on a scoreboard. And I want to start with GLP-1s because it's obviously the thing everyone understands the most, it's visceral. Maybe to begin would be for you to tell us what specifically you're seeing in '25 and '26 that is so exciting. These things have been around for a little while. People were starting to get on them earlier than that. What is the inflection? And then I want to get into the actual mechanics of how it works. The one that's about to come out next year, which seems maybe even more revolutionary than semaglutide and tirzepatide. What happened recently that has you so extra excited about them?
· Alex Karnal
[00:00:00] S1: Maybe one of the things most people don't realize is that there are a couple of different injectable GLP-1s that are on the market today. And we have some of the first orals that are coming to the market now and more that are coming. These medicines exist at lots of different doses. And I think one of the most interesting discoveries that I made over the past year in just looking at all of the data that we get to consume as investors, I wanted to know the answer to – Wall Street is very focused on the next GLP-1 having more weight loss and more weight loss and more weight loss. And I'm sitting back and thinking to myself, I don't know if that's the right focal point. One of the most interesting findings from diving into the data is people are not solving for this massive bazooka. People are solving for something that helps them to lose some weight, stabilize and be there. I think that's really interesting because what that means to me is that what people really want is something that's going to give them a health advantage, but it's going to be incredibly tolerable. And what we find is that as you go higher and higher in doses, the unintended consequence of that is – yeah, you're going to have more weight loss, but there's going to be a whole host of other side effects that come with it. That is different than in most medicines where we're trying to maximize the efficacy of the medicine, really where the Wall Street mind typically tends to go. What people are maximizing for here is like, how do I get on these things and then stay on them? So that to me was one of the big unlocks for 2025 was this idea that people want to protect themselves. If you marry that with the next big discovery from 2025, is that typically the way medicines are commercialized is you have big pharmaceutical companies – Eli Lilly, Novo Nordisk – that have armies of sales reps that are out everywhere. Calling on doctors, making sure they know about their medicines, pitching the attributes and why they're the best in the class, and why there's no other option that their patients should be pursuing than their medicine. And as you can imagine, that's a very capital intensive exercise. It's a very human talent intensive exercise.
· Alex Karnal
And what we saw, interestingly, is that Eli Lilly, pretty early on last year pushed more aggressively into a non-traditional way to get these medicines into the hands of people. They added to their legions of salespeople a digital front end in Lilly Direct that allowed people to get a prescription from their doctor and go get the medicine direct from Eli Lilly. It was one of the first big insights that the consumers want to be able to get these medicines themselves and not have to go through traditional means to get them. As you fast forward towards the end of '25, what we started to see was that, oh my goodness, more than half of the new people joining are coming in directly. So hold that with a third point that comes from 2025, which was all sorts of theater and dramatics around compounded GLP-1s. What we learned from the compounded GLP-1s was that not only do people want something that's going to defend them and be tolerable, not only do they want something that they can get through all the frictions of the system and just hit a button and have it come to their homes – a real consumer-like product. But price matters a ton. Through most of 2025, the average monthly cost of a GLP-1 was north of $400 or $500. Thanks to our administration, those prices are coming down, and I think that's really good. And it's particularly good because what we learned from the compounded versions of GLP-1s was that there is massive price elasticity in this market. Compounded GLP-1s cost about half as much per month as the traditional approved GLP-1s by Lilly and Novo. We were collecting data that was suggesting to us somewhere between 15% to 20% of the market that you couldn't capture through scripts was actually flowing through groups like Hims and Hers and other sources where people knew they wanted the benefits and wanted to be proactive about their health. They wanted to get these GLP-1s, but they couldn't possibly afford $400 or $500 a month. But they could afford $200, $250 a month. So to me, that's profound because you've got a compounded version that hasn't gone through any clinical trials. You know nothing about the manufacturing, but you know that these medicines are so important to your health that you're willing to take the risks – not only the safety risks of the medicine, but all these risks of these unknowns of where this is even coming from.