Invest Like the Best with Patrick O'Shaughnessy
· 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.
· Alex Karnal
And because you can afford it, go take it. So I left 2025 thinking to myself, oh my goodness, we're finally starting to see people step up and vote with their feet. They said, I want the benefits of these medicines. And now you get to 2026 – and this is the absolute game changer. In 2026, we now have an oral version of Wegovy, and this medicine has launched over the last couple months. We are seeing every week the oral version of Wegovy is setting record after record after record. And you might think, yeah, of course, who wants to inject themselves once a week for the rest of their life? I don't really think that's what's driving an almost 4x relative launch cycle for the oral Wegovy versus the most recent injectable launch, Zepbound. People that want these medicines, at the lowest end of the curve, that doesn't cost 500 a month, it doesn't cost 250 a month, it costs $150 a month. And so now we've seen at the lower end of the curve, if we get to an $1,800 a year cost, these medicines fly off the shelves. And to put that in context, prior to the launch of the oral Wegovy – just a few months ago, the GLP-1 market was moving at about 200,000 reported new scripts per week. 200,000 new people getting on these medicines per week. The most recent data that I looked at this past Friday says that that has now moved from 200,000 a week to 300,000 a week in just a few months time. We have to take these incredible learnings from the commercialization of GLP-1s, and the most logical conclusion is that people are ready and people do want to go and be proactive. And arming them with the stack that can help us to all live an extra decade, really focusing hard on what does it take to close that gap between invention and impact. When I say this trillion-dollar revolution, what that means is this trillion-dollar reduction in our annual healthcare spend. And I think that that's really possible now.
· Patrick O'Shaughnessy
[00:00:00] S0: I want to spend some time explaining what is actually going on with this class of drugs. Starting with semaglutide, sort of the single-acting, going to tirzepatide, the dual-acting, going to the triple-acting one that will be coming out this year or next year. Can you do your best to explain what this thing is and what it does? I think people's original conception was, it's a drug I take and I lose weight. I think you have a really interesting way of explaining and understanding these things as maybe the most important modern drug. So it seems worth spending some time just explaining literally what it is and what the science progression has been and where you see it continuing to go. This isn't static.
· Alex Karnal
[00:00:00] S1: A lot of people don't realize these medicines have actually been around for 20 years. Some of my first exposure to GLP-1 as a drug class actually happened in my early days entering the industry as a young biotech investor back in 2005 with Amylin Pharmaceuticals, having what we thought at the time was the most miraculous breakthrough. GLP-1 is a hormone that our bodies naturally produce. The problem with this naturally produced hormone is that once it's produced by our bodies, it only lasts for about two minutes before it's gone. So if you just pause there, what does that mean practically? Okay, if you were to take human GLP-1 and we would be injecting it, we'd have to inject ourselves 30 times an hour for the rest of our lives to get the benefit of what we can today with either one pill a day or one injection a week. The science behind moving from a protein that lasts for two minutes to a protein that can last over a week is a dramatic transformation. So what's good about that is it is a hormone that's already in our bodies and it's a medicine that we've got data on for over 20 years. And so we know a remarkable amount about it, not just because it's been around for 20 years, but it's now been in millions and millions of people. What happens is when we eat food, at some point that food makes its way to our small intestine. And when food gets to our small intestine, it's what triggers the release of GLP-1 in our bodies naturally. That GLP-1 molecule travels all over our bodies. It interacts with receptors in our stomachs that helps to slow the digestion of food. It also interacts with receptors in our brains that help us to feel fuller longer, to feel satiated. The combination of those two mechanisms of action are what allow us to turn off the food noise. It allows us to seek out and consume far fewer calories than we've ever done before. In addition to that, it does an important role in regulating the production of our insulin. It interacts with receptors on our pancreas that triggers the release of insulin. It plays a big role, in not just having that sugar not affect our vasculature, but also making sure that that sugar is not destroying our kidneys. The mechanism and the science behind it is actually pretty well elucidated. Biologically, we know how it's produced. We understand all the different places in the body that it interacts.
· Alex Karnal
And when you think about all the places in the body that it interacts, it then becomes no surprise that it's had such an incredible range of effects, both from protecting us from becoming diabetic, to reducing the risk of having heart attacks and strokes, to lowering our level of inflammation because we're consuming less food, and so we're having less of an inflammatory response to that. All the way through to helping us to lose weight, which is a bit of a virtuous cycle in terms of lowering our blood pressure. So when you look across the five axes – the five layers of defense that are mission critical for maximizing the number of years that we can live and having the most life in those years – I fundamentally believe there's no molecule that's more important than GLP-1 across that entire axis. When we think about the different forms that it's available to us in, we've already cracked the most important code, which is moving from something impractical – 30 shots an hour – to the early days with Amylin Pharmaceuticals of a twice a day shot. To where we are today, which is not just longer acting, once a week versions, but far more potent. Meaning we need far less of it and it actually starts to get to levels that we can inject that have incredible pharmaceutical properties to them. The next axis to think about is not just the form by which you get it – oral or injectable – and not just the duration of the dosing – orals we take every day. Today, we take injectables once a week. There's some amazing ones that Pfizer just acquired that look like it might be a once a month. Amgen's also working on once a month, might be once a quarter. The duration of time between those doses is really important, because the easier it is to take a medicine, the more likely we'll be to stay on these medicines and have the longest-term benefit from them. The next important axis to then focus in on is how do we think about dose, and the trade-offs between semaglutide and tirzepatide. Semaglutide being Ozempic and Wegovy, tirzapatide being Zepbound and Mounjaro. Our team's fundamental perspective is that they all achieve the same goals. They were just novel IP strategies to achieve those same goals. They're all pretty much interchangeable. That leads to the question of, and how do we think about them from an investment perspective and a human impact perspective?
· Alex Karnal
Both of those perspectives come together because when we think about investing in medicine, the key question that we're focused on is why does a medicine have a right to win? And of course, for a medicine to have a right to win, what we're essentially saying is that – this medicine is going to really have a differential impact for people, such that people should choose it. The right to win analysis also comes down to the different segments of the market that we're thinking about. To put a framework around this, we always think about the obesity market as having three main segments. People that are overweight, which are basically BMIs between normal – roughly 25 – and 30. Obese, which is between 30 and 40. And morbidly obese, which is north of 40. When we look at the aperture from a BMI of 25 up to a BMI of just under 40, that's where most of the patients are today that require reactive treatment. I would argue in the future, we could talk about why GLP-1s might be appropriate for just about everyone. And that's because the reality of it is as you go from your adolescence to your 50s and 60s, on average, people are going to pick up about five BMI points. Being able to take a medicine, even at low doses, even though they haven't been tested in those populations, I'm willing to bet, would help protect people from that five-point increase that puts them in harm's way, and puts that to bed. But when we look at the market today, pretty much from that BMI of 25 to 39, they are well-served with any of the available options on the market. I think where we still need some help, and I think where there's a right to win, is really in that BMI zone of 40 and above. Sadly, these people are at a level of body weight that requires incredibly long titration to get up to these high levels of the hormone. And they need to have much more dramatic reduction in their food noise to be able to bring their weights down from a zone that is incredibly dangerous – just given the amounts of visceral fat that they're carrying around – down to levels that are going to give them much more sustainable life.