☀️☕️ Waiting for Weight Loss (NVO, LLY)

📝 Focus

• Waiting for Weight Loss (NVO, LLY)

📊 In the Markets

• Travel boom

📖 MoneyFitt Explains

🎓 US Treasury Securities

📝 Focus

Waiting for Weight Loss

Sales of Novo Nordisk’s Ozempic and Wegovy (semaglutide) and rival Eli Lilly’s Mounjaro (tirzepatide) blew past expectations in their results, driven by the global surge in demand for obesity drugs. Novo reported record profits, and both companies see soaring demand for their drugs to continue, with sales limited only by supply constraints that could last for years. 

Both face supply challenges as they strive to meet demand for their diabetes and weight-loss drugs. The situation is expected to intensify when Lilly's Mounjaro, currently approved for type 2 diabetes but increasingly used for weight loss, gains approval for obesity treatment in the US. 

Novo anticipates a significant supply increase in 2024, and Lilly plans to double last year's supply capacity by the end of 2023. The market for obesity drugs, driven by the effectiveness of medications like Wegovy and Mounjaro, could reach $100 billion by 2030. 

..... ▷ Worldwide obesity among adults has tripled since 1975; in 2016, about 40% of adults were considered overweight, and 13% had obesity, according to the World Health Organization (WHO). 42 million children under 5 were overweight or obese in 2020.

In the United States, more than 40% and 19% of adults and those aged 2-19 years, respectively, are obese, though for children and adolescents, the rate seems to have plateaued.

A number of factors contribute to the obesity epidemic, including changes in diet and physical activity patterns, the availability of unhealthy foods and drinks, and social and economic factors. Medication might help when lifestyle changes aren’t enough.

With extra weight often comes a heightened risk of health conditions such as type 2 diabetes, heart disease, several cancers, gallbladder disease, coronary artery disease and stroke.

..... ▷ Two new obesity drugs, orforglipron and retatrutide, offer advantages over Novo and Lilly’s current blockbuster drugs and are expected to hit the market in the next few years.

Orforglipron is easier to use and to produce (but harder to pronounce) and should be cheaper than existing treatments, while retatrutide, has much higher efficacy, with an average of 24.2% of body weight lost over 11 months vs 15-20% from the current crop.

All these drugs mimic hormones known as incretins, which slow digestion, lower blood sugar and curb appetite. They are part of a class called GLP-1 receptor agonists, which were first created to treat diabetes, with weight loss appearing as a side benefit.

Both orforglipron and retatrutide are being developed by Eli Lilly. Novo Nordisk is not involved in either but does have its own drugs in the same class. Orforglipron was originally discovered by Chugai Pharmaceutical of Japan and later licensed by Lilly in 2018.

..... ▷ In the past, scientists and the public often thought that those with obesity simply lacked the willpower to lose weight, but the ability of these new drugs to dramatically reduce weight by affecting human biology supports the idea that obesity is a disease. 

Unfortunately, these drugs may also play into many societies’ obsession with being thin and reinforce views that thinness is the only acceptable body type. This can lead to weight stigma and discrimination, which can have a negative impact on people's mental and physical health.

Body size isn’t always a good predictor of health. The Health at Every Size (HAES) movement challenges the traditional weight-centric approach to health, which focuses on weight loss as the primary goal and argues that people of all sizes can be healthy. 

Besides a focus on healthy behaviours, such as eating a balanced diet, exercising regularly and getting enough sleep, the movement emphasises the importance of body acceptance and self-compassion.

What We’re Reading 📚

📊 In the Markets

On Thursday, US stock indexes surged by nearly 2%, buoyed by optimism that the U.S. Federal Reserve may have concluded its interest rate hikes. 

The Fed, under Chair Jerome Powell, maintained interest rates as anticipated but hinted at a pause in tightening, citing (as he and his colleagues have already been saying for several weeks) the impact of rising bond yields, driving longer-term US Treasury bond🎓 prices up and yields, therefore, down. 

The S&P 500 and Nasdaq posted their biggest one-day gains since April and July ahead of the week's key economic data release, the October non-farm payrolls report on Friday.

A New York jury very quickly found former FTX CEO Sam Bankman-Fried guilty of all seven criminal counts which he was charged with, including wire fraud, securities fraud and money laundering. 

Key witnesses included his ex-girlfriend and the former head of Alameda, Caroline Ellison, and FTX co-founder Gary Wang. Both had pleaded guilty to multiple charges last December and cooperated as witnesses for the prosecution. 

The central issue was whether Bankman-Fried knowingly misused $10 billion in customer funds for various expenses. He faces a maximum sentence of 115 years in prison.

Apple’s fiscal fourth-quarter (July to September) sales and earnings beat analyst expectations. While overall sales fell for the fourth consecutive quarter, a strong performance in the services business and a return to growth for the iPhone mitigated the impact of weaker consumer demand. 

Revenue dipped by 1% to $89.5 billion, mainly due to declining demand for Macs and iPads. iPhone sales met expectations and increased by over 2%. Supply constraints affected the more expensive Pro and Pro Max models due to high demand. 

However, Apple's earnings per share grew by 13% to $1.46, primarily driven by higher-margin services like App Store commissions and revenue from Google search advertising.

Travel boom

The travel industry has experienced a resurgence in international travel, supported by pent-up demand as well as flexible work arrangements (... such as “digital nomads”?)

Booking Holdings announced strong third-quarter profits that beat expectations, driven by robust travel demand during the summer. Gross travel bookings reached $39.8 billion, up 24% from the previous year, with room nights booked rising by 15%. Pent-up demand helped to mitigate rising expenses, which rose 22% in the quarter due to higher marketing and personnel spending.

Expedia Group also reported better-than-expected profits for its third quarter, benefiting from resilient demand and higher rates through its properties, which include Expedia.com, Hotels.com, Vrbo, Travelocity, Hotwire.com, Orbitz, Ebookers, CheapTickets, CarRentals.com, Wotif and Trivago. Total gross bookings reached $25.69 billion, 7% up from the previous year. The company also announced a new share buyback plan of $5 billion.