Obesity Research Investors Might Not Get It
It’s just possible that obesity research investors don’t fully understand what they’re investing in. Recent financial news headlines like “Is This an Obesity-Drug Success or Failure” give you a peek at how clueless investors are about what to expect from the market for obesity treatment. In this recent video from The Motley Fool, Domenica Rubino does a great job of explaining some of the fundamentals. Rubino is an expert obesity medicine clinician and researcher speaking on behalf of The Obesity Society.
It’s tough to miss the fact that obesity is a huge health problem for Americans, and in fact, for the whole system of American healthcare. And America seems to be exporting its obesity epidemic all over the world. But the problem for investors is understanding where the business opportunities are.
Analysis of the need for obesity treatment and the investment opportunity seems stuck between an optimistic quest for a miracle weight loss pill and despair because a new treatment has only modest efficacy. It sounds very much like people who once hoped to cash in on a cure for cancer or the common cold.
When Novo Nordisk announced phase 3 results for liraglutide that met FDA efficacy hurdles, investors were unimpressed and the stock immediately fell by 4‰. As the sales for the new obesity drug Qsymia grow steadily, but slowly, and reimbursement rates improve, investors wonder if it’s going to “fizzle,” and some threaten a board takeover. Meanwhile other headlines suggest that the next obesity drug to be launched might be “A Breakthrough for Obesity.”
Looking at what happened in the market for cancer treatment might be instructive. Early research yielded only modestly effective treatments with a great deal of toxicity. But as time passed, understanding grew that cancer is not a single, simple diagnosis. And so clinicians made remarkable progress in treating particular forms of cancer with evidence-based protocols. Bristol Myers built a profitable oncology business by developing a portfolio of drugs that fit well with these protocols. Further research added more sophisticated tools to the treatment toolbox, and bigger commercial successes for the developers of those drugs and biological agents. But miracle cures were nowhere to be seen.
Expect a similar evolution for obesity research and treatment. No miracles, just steady progress punctuated with occasional leaps forward. And the need is not going to go away. We’ll have to get serious about treating obesity as the serious and complex chronic disease that it is.
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Future by Robert Aitken, image © AgnosticPreachersKid / Wikimedia
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