In 2023, the Danish Pharmaceutical Company Novo Nordisk became Europe's Most Valuable company with its market cap surpassing half a trillion dollars. Since 2017, they've been selling a drug called OIC which was originally used to regulate blood sugar levels for people with type 2 diabetes, but as a side effect, it also decreases appetite and can lead to substantial body weight loss. In or around 2020, people start to realize that OIC could be used by non-diabetes patients for weight loss. It went viral on Tik Tok with people showing massive amounts of weight loss in very short periods of time.

Numerous celebrities have openly talked about their use of OIC and have seen substantial decreases in their body weight. An estimated 40% of Us adults are obese and another 30% are overweight, meaning a whopping 70% of the adult population is either overweight or obese. Obesity related medical conditions are estimated to cost $260 billion per year of direct Healthcare cost. The indirect economic costs related to early retirement and decreased work productivity are likely even greater.

In this video, we'll look at the Revolutionary impact of OIC and other weight loss drugs and how this could reshape the global economy. This video is brought to you by Differentiated Analytics, a website we created full of useful, free resources for individual investors. One strategy that many investors like to employ is merger Arbitrage where you buy shares of a company after they agree to be acquired by another company. In many cases, stock trades at a discount to the acquisition price.

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And now back to the video. The active ingredient in O PC is called Semaglutide and was developed by researchers at Noo Nordisk In 2012, Semaglutide is injected directly into the bloodstream and has a long lasting effect, so patients only have to inject it at most once per week. It was originally intended for Type 2 diabetes patients. It causes the body to release hormones which regulate insulin production, which in turn regulates blood sugar.

In 2017, the FDA finally approved Semaglutide and Noo Nordisk started selling it under the OIC brand. While it was originally intended to regulate insulin levels, researchers soon found out that one of its side effects was to reduce appetite. The same hormones it releases also slows the speed of digestion and impacts your brain to make you feel less hungry. In or around 2020, people started to figure out that this could be used for weight loss, so even people without diabetes started to use it.

This is called off Lael use because a drug is being used for something it was not intended for. Under FDA rules, doctors are allowed to prescribe drugs for off Lael use. In fact, because many drugs can treat a wide range of conditions, it's actually quite a common practice practice. In the US, One in five, prescriptions are written for off label use.

As both doctors and the general public became aware of Oic's weight loss benefits, more and more doctors started prescribing it. However, while doctors were allowed to prescribe OIC for weight loss, Novo Nordic was not allowed to Market it as a weight loss drug as it was technically only approved for diabetes. So they created a new drug called Wovi, which also uses semaglutide as its active ingredient. It's basically the same thing as OIC but with different branding.

They ran clinical trials and W to obese patients, the average body mass index of the patients was 37.9 The cut off for clinical obesity is 30 so these were extremely obese individuals. After 68 weeks, the patients given Wovi lost 177% of their body weight while patients on the placebo only saw a 2% reduction. While appetite suppressant medications have been available for a long time, never has anything been as effective as semaglutide. This could usher in a revolution in the healthcare industry.

In 2021, the FDA approved Wovi as a weight loss drug and it has skyrocketed in popularity since then. with the rise of cheap junk food and sanitary White Collar jobs. In recent decades, rates of obesity have been increasing steadily across the world. According to Oecd data, the US is the fattest major country, with over 40% of the population being clinically obese.

We can also see massive increases in developing countries where fast food only became prominent recently. For example, between 2003 and 2019, the rate of obesity in Brazil more than doubled from 12% to 26% Obesity can increase the chances of many diseases including diabetes, heart disease, sleep apnea, and many others. It's estimated that in the Us alone, over 300,000 people die of obesity related conditions and obesity related healthare costs $260 billion every year. That's not to mention numerous quality of life and productivity issues faced by people suffering from obesity.

Governments around the world have tried various initiatives to try to reduce obesity, but for the most part, these have been failures. Humans have evolved for hundreds of thousands of years to be attracted to fat and sugar. Now that these foods are easily and cheaply available, it's very difficult for people to control their desires. That's why these new appetite suppressant drugs have become such a GameChanger.

In 2020, OIC represented less than onethird of Novo Nordisk's Revenue This was when it was only being used to treat diabetes by the fourth quarter of 2023. OIC and Wovi represent over 70% of their revenue. The majority of the OIC being used today is for weight loss. The reason that people are continuing to use OIC off label is because there's supply shortages of Wovi as those production lines are newer.

But as they're being mostly used for the same purpose, we can consider these two drugs as essentially the same. In fact, if we look at Google search interests and obesity by state, we can see a pretty high correlation between OIC searches and obesity. One of the major issues with Wovi is its cost. Because of Nova Nordis Monopoly position, they're able to price it at about $1,000 per month if you use one shot per week.

Of course, it can be cheaper if you take the shots less often in the US About 80% of health insurance plans cover Wovi, so patients only pay less than $25 per month out of pocket. From the perspective of insurance companies, they make back some of the cost because obese people incur on average $2,500 in higher annual healthcare costs compared to people of normal weight. But from a purely Financial perspective, it doesn't pay for itself as Wovi costs about $112,000 per year on a full dosage. Another thing that makes Wovi so expensive is that if you want to remain at a healthy weight, you have to use it almost indefinitely.

In Nova Nordisk's trial, some patients were taken off with GOI After 20 weeks, over the next 48 weeks, they regained about half of the weight they had lost. This is great for Novo Nordis because people could end up buying W GOI for their whole lives. but this is an extremely expensive proposition for patients. With that being said, there are reasons to be optimistic about price reductions in the long term.

Noo Nordis patent expires in 2031, at which point generic drug manufacturers will be able to sell it for a fraction of the cost. Additionally, rival pharmaceutical giant Eli Lily recently gained approval for for its own weight loss drug called Zep Bound. Zep Bound uses a different active ingredient called Tepati, which has a similar effect as Semaglutide in clinical trials, it appears that Zound may be even more effective than Wovi. at high doses, it achieves weight loss in excess of 20% compared to 17% for Wovi.

Zound is currently priced at about $1,000 per month, roughly the same price as Wovi. Noo. Nordis may be forced to reduce the price of Wovi to compete given that its drug appears to be slightly less effective. With that being said, we're not liky to see any price reductions for at least the next couple years.

Demand has been so great for these weight loss drugs that both Nova Nordisk and Eli Lily are expected to be Supply constrainted in the short to medium term. So how big could this Market potentially become? According to a Ugv poll conducted in March of 2023, 12% of Us adults said they have tried prescription weight loss drugs. This could include drugs other than Wovi or AIC. Given how much more effective Wovi is than previous weight loss drugs, it's probably safe to assume that many if not most people using using older drugs will switch to Wovi or Zep bound.

It's important to know that for the past 2 years, Wovi has been Supply constrainted. so there are many people who want to use Wovi but can't get their hands on it. As Supply ramps up, we can expect usage rates to increase dramatically. according to a recent PLL By CNN 45% of American adults said that they were interested in taking semaglutide, including 51% of women and 38% of men.

This is despite the fact that men actually have slightly higher obesity rates than women. This may be due to societal and Body Image issues which impact men and women differently. If most insurance providers continue to cover with GOI and Z bound, it's not unreasonable to assume that 30 or even 40% of the population could end up taking it. This could have major implications for the economy going far beyond the healthcare sector.

According to a survey by Morgan Stanley people using semaglutide consume 20 to 30% less calories per day and significantly reduce their consumption of junk food in the Fall of 2023. Walmart's CEO said the retailer had seen a noticeable pullback in sales of some of their food products due to many of their customers using semaglutide. According to a Morgan Stanley survey of 300 Semaglutide users, over 70% of them said they consumed less confectionary and sugary drinks after beginning treatment. Over 60% of them said they consumed less preserved Meats salty snacks, alcohol, cookies, and baked goods.

Basically, they're eating less junk food. 77% of them said they went to fast food restaurants less often, and there are also significant declines for all other types of restaurants over the coming years. This could be disastrous for fast food compan like McDonald's Etc obese people have historically been their best customers. If a significant portion of them start using Wovi or Z bound, they could see a meaningful decrease in sales volumes.

While this could hurt the bottom line of some junk food companies, for the broader, Society the Advent of these new drugs is a great thing. Obesity is one of the most significant public health challenges facing. Humanity Until recently, there were no realistic Solutions Especially once the patents expire in 2031 and generic versions become cheaply available. This new class of weight lost drugs could literally save millions of lives.

All right guys, that wraps it up for this video. What do you think about Wovi? Have you or anyone you know tried it? Let us know in the comments section below. As always, thank you so much for watching and we'll see you in the next one. Wall Street Millennial Signing out.