General Industry Update

While the big story in healthcare and pharmaceuticals for many months has been the promise of weight loss drugs like Ozempic and Wegovy, results published in August show that this class of GLP-1 medications continue to have promising and remarkable applications beyond weight loss.

There’s growing evidence that drugs like Ozempic from manufacturer Novo Nordisk (held by the Fund) might also curb nicotine cravings. Patients have reported reduced desires for addictive substances since the introduction of GLP-1 drugs, but proving this scientifically has been difficult due to pharmaceutical companies’ hesitancy in funding studies.

Researchers from Case Western Reserve University, however, found a new way to assess the impact: electronic health records. In two recent studies, they linked semaglutide—the active ingredient in both Ozempic and Wegovy—to lower rates of alcohol use disorder and smoking. One study found a 50% reduction in alcohol use disorder risk, while another showed semaglutide users with diabetes were 30% less likely to need help quitting smoking compared to those on insulin.

Although the smoking data used medical visits for anti-smoking treatment as a proxy, experts believe further clinical trials are needed. Researchers are now exploring whether semaglutide reduces smoking and are investigating its potential to treat opioid addiction. Results from these trials are expected next year.¹

Likewise, Eli Lilly’s weight-loss drug tirzepatide, marketed as Zepbound and Mounjaro, slashed the risk of prediabetics developing full Type 2 diabetes by 94%, according to early results from a long-term study. The same late-stage trial also showed that patients taking the highest dose of tirzepatide experienced a 22.9% average weight reduction over nearly three years, compared to just 2.1% for those on a placebo.

The study underscores the potential for tirzepatide to delay Type 2 diabetes diagnoses in the over one-third of Americans with prediabetes. While lifestyle changes like diet and exercise can help, the drug’s ability to manage blood sugar and weight positions it as a game-changer in diabetes prevention. Eli Lilly’s CEO, David Ricks, highlighted the drug’s broader health benefits, including its potential in treating heart failure and sleep apnea. Eli Lilly plans to present the full results at a medical conference in November.²

For investors, the expanding potential of GLP-1 drugs beyond their current applications in weight loss suggests that the market for these drugs could grow substantially. With regulatory approval and expanded clinical use, the companies behind these drugs stand to capture more of the growing chronic disease management sector, making them an attractive option for long-term growth in the pharmaceutical space.

Company Specific Updates

Eli Lilly & Co

Eli Lilly is intensifying efforts to end a regulatory loophole that has allowed compounding pharmacies to create their own versions of weight loss drugs Mounjaro and Zepbound. Eli Lilly’s lawyers have notified healthcare providers that shortages of Mounjaro and Zepbound are effectively resolved, even though the U.S. Food and Drug Administration (FDA) has yet to officially declare the end of the shortage, which it first designated in 2022. Eli Lilly further argues that these alternatives, which aren’t FDA-approved, pose safety risks.³

In response to the growing market for compounded alternatives, Eli Lilly cut prices for Zepbound after less than a year on the market and announced that Zepbound will now come in single-dose vials (rather than auto-injector pens), which will help speed supplies to consumers.⁴

Despite this, Eli Lilly significantly exceeded its Q2 earnings and revenue expectations, driven by surging demand for Mounjaro and Zepbound. The company raised its full-year revenue forecast by $3 billion, now anticipating between $45.4 billion and $46.6 billion in sales. Eli Lilly reported a net income of $2.97 billion in Q2, up from $1.76 billion last year. Revenue for the quarter reached $11.3 billion, marking a 36% increase year-over-year, largely attributed to the growing demand and improved supply of Mounjaro and Zepbound in the U.S. CEO David Ricks noted that six new manufacturing plants have come online, boosting capacity. In the second half of 2024, Eli Lilly expects to increase production of incretin drugs by 50% compared to the previous year.⁵

AstraZeneca plc

AstraZeneca’s Imfinzi (durvalumab) has been granted both Priority Review and Breakthrough Therapy Designation by the U.S. Food and Drug Administration (FDA) for patients with limited-stage small cell lung cancer (LS-SCLC). This designation reflects the drug’s potential to significantly enhance treatment options for this aggressive cancer. Imfinzi reduced the risk of death by 27% and the risk of disease progression or death by 24% compared to placebo.

The FDA’s Priority Review status, expected to culminate in a decision by Q4 2024, accelerates the approval process for drugs demonstrating substantial improvements over existing treatments. The Breakthrough Therapy Designation further expedites Imfinzi’s development due to its potential to address an unmet medical need.⁶

Imfinzi (in combination with chemotherapy) also received FDA approval in August for treating resectable early-stage non-small cell lung cancer (NSCLC). Imfinzi is administered both before and after surgery, enhancing outcomes for patients. A Phase III trial demonstrated a 32% reduction in the risk of recurrence, progression, or death compared to chemotherapy alone. Imfinzi addresses a significant need in early-stage NSCLC, where high recurrence rates persist despite surgery and chemotherapy.

The approval expands Imfinzi’s role beyond unresectable Stage III NSCLC, where it is already a global standard of care. The drug is also approved in the U.K., Switzerland, and Taiwan, with regulatory reviews ongoing in the E.U., China, and other regions.⁷

LIFE ETF: An Easy Way to Invest in Global Healthcare

Investing in ETFs can be one way to add cutting-edge healthcare to your portfolio.

Evolve Global Healthcare Enhanced Yield Fund (LIFE ETF) provides investors with exposure to twenty global blue-chip companies in the healthcare industry, with a covered call strategy that is actively managed to provide increased yield potential while helping mitigate risk. For more information about the Evolve Global Healthcare Enhanced Yield Fund or any of Evolve ETF’s lineup of exchange-traded funds, please visit our website or contact us.

Portfolio Strategy and Activity

For the month, Eli Lilly & Co made the largest contribution to the Fund, followed by AstraZeneca plc and Intuitive Surgical Inc. The largest detractors to performance for the month were Pfizer Inc, followed by Danaher Corporation.

 

Sources

1. Kresge, N., “Ozempic and Wegovy Could Help Smokers Kick the Habit,” Bloomberg, August 16, 2024; https://www.bloomberg.com/news/newsletters/2024-08-16/ozempic-wegovy-could-help-you-quit-smoking
2. Constantino, A.K., “Eli Lilly’s weight loss drug slashes the risk of developing diabetes in long-term trial,” CNBC, August 20, 2024; https://www.cnbc.com/2024/08/20/eli-lilly-weight-loss-drug-cuts-risk-of-developing-diabetes-in-trial.html
3. Gilbert, D., “Eli Lilly ramps up its fight against imitation weight-loss drugs,” The Washington Post, August 30, 2024; https://www.washingtonpost.com/business/2024/08/30/mounjaro-zepbound-eli-lilly-weight-loss-drugs/
4. Khemlani, A., “Eli Lilly slashes Zepbound prices for self-pay patients,” Yahoo Finance, August 27, 2024; https://finance.yahoo.com/news/eli-lilly-slashes-zepbound-prices-for-self-pay-patients-140846671.html
5. Constantino, A.K., “Eli Lilly blows past estimates, hikes guidance as Zepbound, Mounjaro sales soar,” CNBC, August 8, 2024; https://www.cnbc.com/2024/08/08/eli-lilly-lly-earnings-q2-2024.html
6. “Imfinzi granted Priority Review and Breakthrough Therapy Designation for patients with limited-stage small cell lung cancer in the US,” AstraZeneca, August 15, 2024; https://www.astrazeneca.com/media-centre/press-releases/2024/imfinzi-granted-priority-review-and-breakthrough-therapy-designation-for-patients-with-limited-stage-small-cell-lung-cancer-in-the-us.html
7. “Imfinzi approved in the US for the treatment of resectable non-small cell lung cancer before and after surgery,” AstraZeneca, August 16, 2024; https://www.astrazeneca.com/media-centre/press-releases/2024/imfinzi-approved-in-us-for-resectable-lung-cancer.html

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