This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
A lot of investors missed the initial gold rush vis-a-vis the GLP-1 weight loss drugs in 2022/2023. Now, however, there is an opportunity to capture the second-order derivative tailwinds from these drugs by going long on stocks that are focused on cosmetic/aesthetic procedures, including Evolus (NASDAQ: EOLS), Inmode (NASDAQ: INMD), and AbbVie (NYSE: ABBV).
A Primer on GLP-1 Weight Loss Drugs
GLP-1 drugs can induce significant weight loss by suppressing hunger and regulating the production of insulin and glucose. A lot of these drugs currently on the market are in the injectable form.
Novo Nordisk uses Semaglutide as its proprietary GLP-1 agonist in injectable drugs that are marketed under Ozempic and Wegovy labels, with the former geared toward type-2 diabetes and the latter marketed as a treatment for obesity.
Similarly, Eli Lilly and Company currently offers Tirzepatide as one of its proprietary anti-obesity drugs, leveraging both GLP-1 and Glucose-dependent Insulinotropic Polypeptide (GIP) agonists to offer better efficacy. Eli Lilly markets Tirzepatide under the injectable Mounjaro and Zepbound labels, with the former geared toward diabetes and the latter billed as a treatment for obesity.
For the benefit of those who might not be aware, an agonist is a substance that mimics the actions of a neurotransmitter or hormone to produce a response when it binds to a specific receptor in the brain.
Do note that orally administered GLP-1 drugs remain the proverbial holy grail for the industry. Novo Nordisk is currently working on its own oral GLP-1 offering called CagriSema. Similarly, Eli Lilly and Company's oral GLP-1 offering, Orforglipron, is set to undergo phase three trials in 2025.
The industry is also experimenting with a lot of combo weight loss drugs. Consider Viking Therapeutics' VK2735 under-trial drug - a dual agonist that leverages both GLP-1 and GIP.
On a similar note, Eli Lilly and Company's injectable Retatutide offering has been creating a lot of buzz in the market lately. The drug targets three different hunger-regulating hormones to offer better efficacy: GLP-1, GIP, and Glucagon.
Then we have non-GLP-1 weight loss drugs, such as Zealand's Amylin, which works solely by increasing the feeling of satiation to reduce the overall intake of food, thereby inducing weight loss.
Recently, Novo Nordisk reported the phase 1 clinical trial results of the Amycretin drug candidate, an orally administered drug that combines the GLP-1 agonist with Amylin to offer a weight loss of around 13.1 percent of the body weight after just 12 weeks of treatment. This drug is set to form the bedrock of Novo Nordisk's future trajectory for weight loss drugs.
The Soaring Demand for GLP-1 Drugs is Now Boosting Demand for Cosmetic Procedures
GLP-1 drugs are producing real-world economic tailwinds and challenges. For example, Denmark's pharmaceutical industry single-handedly prevented the country's economy from shrinking in 2023, all thanks to the rip-roaring demand for these anti-obesity drugs.
On the opposite side, some financial analysts have already started to downgrade the long-term demand outlook for fast food giants such as McDonald's, based on assumptions that 7 percent of the total population in the US would be using GLP-1 drugs in the next 10 years, with the average caloric consumption of those users declining by around 20 percent.
High end Restaurants seeing less buying as well. Client in the space said check sizes are down as people order less stuff.... Sounds like money to be spent elsewhere https://t.co/5fvb7A25Cz
— Allbullnobear (@allbullnobear8) February 20, 2024
Next, high-end restaurants are already feeling a pinch. This is not surprising given the high ex-insurance retail price of these GLP-1 drugs, which means that the affluent are currently much more likely to adopt these drugs.
In a recent survey (done by Needham) of users of GLP-1 drugs, 62% of the respondents said they are now more likely to get aesthetic/cosmetic procedures (to help with skin tightening) and/or begin using injectables like Botox and $EOLS Jeuveau as well as fillers to help with…
— Jonah Lupton (@JonahLupton) March 18, 2024
Now it seems that the GLP-1 tailwinds are headed toward the aesthetic/cosmetic surgery segment. As per a recent survey by Needham, a whopping 62 percent of respondents have shown willingness to go for cosmetic procedures such as skin tightening, Botox, and injectable fillers to improve their overall appearance after losing significant body weight via the GLP-1 drugs.
👀 Love this kind of thinking.
Similar to buying Zoom stock during COVID https://t.co/teBW59DxkS
— BowTiedBiotech 🧪🔬🧬 (@BowTiedBiotech) March 18, 2024
This emerging gold rush is likely to benefit stocks such as the manufacturer of injectable fillers, Evolus, the body toning service provider, Inmode, and the manufacturer of Botox, AbbVie, akin to how savvy investors played the COVID-19 pandemic by going long on Zoom.
