Medicine on Philipp D. Dubach | Quantitative Finance & AI Strategy

Why Lilly's Weight Loss Pill Isn't a Peptide

me@philippdubach.com (Philipp D. Dubach) — Thu, 09 Apr 2026 00:00:00 +0000

Novo Nordisk spent decades and $1.8 billion learning how to get a peptide past the gut. Eli Lilly looked at the same problem and decided to skip it entirely.

Your gastrointestinal tract is a 30-foot disassembly line for proteins. Acid denatures them, pepsin cleaves them, trypsin finishes the job, and the mucus layer blocks whatever survives. Sean Geiger’s excellent history of oral peptides traces the full arc: the first attempt at oral insulin was in 1922. Over a hundred years and thirteen companies later, no oral insulin exists.

Novo Nordisk spent decades and $1.8 billion acquiring the technology to get around this problem. The result, approved in December 2025 as oral Wegovy for obesity, is a pill that destroys 99% of its own active ingredient before the remaining fraction reaches the bloodstream. The oral 25mg daily dose uses roughly 280x more semaglutide than the equivalent weekly injection. This is the best that peptide oral delivery can do. Eli Lilly decided to skip it entirely, building Foundayo, a small molecule oral obesity drug that isn’t a peptide at all. That divergence in approach will determine who captures the majority of a market that Goldman Sachs projects at $100+ billion by 2030 and that J.P. Morgan estimates will reach 30 million US users within five years.

Oral semaglutide

Sean Geiger’s history of oral peptides traces the science well. The technology that makes oral semaglutide possible is SNAC (salcaprozate sodium), a permeation enhancer developed by Emisphere Technologies starting in the 1990s. Novo partnered with Emisphere in 2007 and acquired the company outright in 2020. SNAC does three things simultaneously: it buffers local stomach pH to suppress pepsin, prevents semaglutide from clumping into inactive oligomers, and temporarily fluidizes gastric cell membranes so the drug can cross. The EMA’s public assessment report puts the resulting bioavailability at roughly 0.4 to 1%. The FDA label confirms: the vast majority of each dose is destroyed.

This creates a problem that’s easy to state and hard to solve. If you need 280x more API per equivalent dose, your manufacturing cost structure looks nothing like the injectable. A Yale/King’s College study published in JAMA found injectable semaglutide costs $0.89 to $4.73 per month to manufacture at the API level. Scale that by 280x and you get oral API costs somewhere in the range of $770 to $1,460 per year, according to The Medicine Maker’s January 2026 analysis. Still below the selling price. But the margin compression is real, and SNAC itself is a costly excipient.

SNAC is also oddly specific. Geiger notes that Novo tried it with liraglutide, a closely related GLP-1 analog, and it failed because liraglutide forms oligomers that SNAC can’t break apart. After over three decades of work, exactly two FDA-approved oral peptide drugs using permeation enhancers exist: Rybelsus/oral Wegovy (SNAC) and Mycapssa (oral octreotide for acromegaly, a different enhancer called TPE). That’s the entire commercial output of the field.

Foundayo: Lilly’s structural advantage

Eli Lilly’s orforglipron, approved by the FDA on April 1, 2026 under the brand name Foundayo, is not an oral peptide. It’s a non-peptide small molecule GLP-1 receptor agonist that activates the same receptor through a different mechanism. Discovered by Chugai Pharmaceutical and licensed by Lilly in 2018, orforglipron requires no SNAC, no fasting window, no cold chain storage, and is manufactured through standard chemical synthesis rather than solid-phase peptide synthesis. The bioavailability problem doesn’t apply because the molecule was designed from the ground up to survive the gut.

The clinical data backs this up. In ACHIEVE-3 (1,698 patients with type 2 diabetes, 52 weeks), orforglipron at 12mg and 36mg was superior to oral semaglutide on both HbA1c reduction and weight loss: the first head-to-head victory over Novo’s oral product. In ATTAIN-2 (obesity with type 2 diabetes), orforglipron delivered 10.5% weight loss at 72 weeks versus 2.2% on placebo. And in ATTAIN-MAINTAIN, patients who switched from injectable Wegovy or Mounjaro to oral orforglipron maintained their weight within 0.9 kg over 52 weeks. A pill that holds the gains of an injection.

Lilly submitted the NDA with a priority review voucher and received FDA approval on April 1, 2026, the fastest approval of a new molecular entity since 2002. Foundayo is available starting at $149 per month for self-pay patients, with savings card prices as low as $25 per month. The company is investing $6.5 billion in a dedicated oral manufacturing facility and $27 billion total in US manufacturing capacity.

$70 billion duopoly and its widening crack

The gap is widening. Combined GLP-1 revenue from Novo and Lilly hit roughly $70 billion in 2025. But the composition shifted. Lilly’s tirzepatide franchise (Mounjaro plus Zepbound) generated $36.5 billion, with Zepbound alone growing 175% year-over-year. Novo’s semaglutide franchise came in around $33 billion, with growth decelerating to roughly 10% in constant exchange rates. Lilly’s US market share hit 57% by mid-2025, up from 41% a year earlier. Novo’s share fell to 43%.

The stock market has been ruthless in pricing this shift. Novo trades at roughly $48 per ADR share, down 65% from its June 2024 peak of $142, a loss exceeding $350 billion in market cap. The company guided for a 5 to 13% revenue decline in 2026, driven by patent expirations in Canada, Brazil, and China, plus pricing pressure from the Trump administration’s drug pricing framework. CagriSema, Novo’s most important pipeline asset, disappointed twice: 22.7% weight loss in REDEFINE 1 (below the company’s own 25% guidance) and 15.7% in REDEFINE 2. Novo’s stock plunged 20% on the first readout alone.

Lilly, by contrast, guided 2026 revenue at $80 to $83 billion, a 25% increase, and trades near $1,044 with a market cap around $1 trillion, the first pharma company to reach that level. Forward P/E: roughly 30x versus Novo’s 12.5x. That 2.4x valuation premium reflects a simple thesis: Lilly has the better drug (Zepbound showed 47% greater weight loss than Wegovy in the SURMOUNT-5 head-to-head), the better oral pipeline, and the longer patent runway (tirzepatide patents extend into the mid-2030s versus semaglutide’s core US patent expiring December 2031, with biosimilar competition likely following shortly after).

The Hims & Hers saga sits at the chaotic edge of all this. HIMS launched a $49 per month compounded oral semaglutide pill on February 5, 2026, using unproven liposomal technology with no published bioavailability data. Within four days, HHS had referred the company to the DOJ, Novo had filed a patent infringement lawsuit, and HIMS had suspended the product. Novo’s CEO alleged independent testing of compounded samples showed impurity levels as high as 86%. What happens when the incentive to undercut $1,000-per-month pricing collides with the actual difficulty of making peptide drugs work orally.

Does Oral Delivery Commoditize GLP-1

Does oral delivery commoditize GLP-1s, or does it expand the market so dramatically that even with pricing pressure, the opportunity grows Early evidence already supports the expansion thesis: Novo’s oral Wegovy pill uptake is running roughly 10x higher than the original injectable Wegovy launch, drawing in new patients rather than converting existing injection users.

The statin precedent is the strongest data point we have. After generic atorvastatin launched in 2011, total statin use expanded from 31 million to 92 million Americans by 2019, a 197% increase. Total prescription volume grew 77%. The per-unit price collapsed, but total market volume more than compensated. Updated clinical guidelines, lower copays, and reduced patient resistance combined to pull in millions of people who would never have started therapy at the original price and delivery format.

Current penetration is absurdly low: fewer than 5% of eligible US adults are on anti-obesity medication therapy, against 104 million with obesity. At statin-like penetration rates of 35% or higher, that’s a 5 to 10x expansion. Persistence data reinforces the point: only 32% of obesity patients persist at one year and 15% at two years. Side effects account for 43.7% of discontinuation, financial barriers for 30.9%. Adherence collapses when the friction is high. An oral weight loss pill that’s cheaper, eliminates the injection barrier, and has no fasting restrictions (orforglipron) attacks all three.

Oral GLP-1 pipeline

The rest of the oral GLP-1 pipeline is worth tracking but the outcomes are uncertain. Viking’s oral VK2735 showed rapid weight loss in Phase 2 (up to 12.2% at 13 weeks) but a 38% discontinuation rate at the highest dose sent the stock down 37%. Structure Therapeutics’ aleniglipron posted 15.3% placebo-adjusted weight loss at 36 weeks in Phase 2b, competitive numbers with no plateau, and has $786 million in cash to fund Phase 3. Pfizer’s danuglipron was killed by liver toxicity in April 2025, the second Pfizer oral GLP-1 failure. Terns Pharmaceuticals also exited after weak Phase 2 data and liver enzyme elevations. Behind them, Novo’s oral amycretin, a GLP-1/amylin dual agonist, enters Phase 3 in 2026 and could offer best-in-class weight loss if the oral formulation holds up. Oral small molecule GLP-1 development has a meaningful failure rate, and Foundayo’s clean safety profile across multiple Phase 3 trials is not something I’d assume the next entrant can replicate.

The thing that makes this market so interesting is that almost every important variable is in motion at the same time: form factor (injection to pill), pricing structure ($1,000 per month to $149 to potentially lower), patent protection (expiring internationally, holding domestically), competitive dynamics (Novo decelerating, Lilly sprinting with Foundayo, Hims imploding), and the macro question of Medicare coverage. I’m more confident in the structural thesis, that oral GLP-1s expand the market through a Jevons-like dynamic, than I am in picking the right entry point for any individual stock. But if forced to bet on which company is best positioned for that expansion, the answer seems clear. Lilly built the molecule that doesn’t need to fight the gut. Novo built one that fights and mostly loses.

At 30x forward earnings for Lilly and 12.5x for Novo, there’s a version of this where Novo is the contrarian value play and Lilly is priced for perfection. I don’t think that’s the right framing. I think Novo is cheap because it has structural problems, the worst kind of cheap, and Lilly is expensive because it has structural advantages, the best kind of expensive.

AI Can Now Design Drugs in Seconds; We Still Can't Tell You If They Work.

me@philippdubach.com (Philipp D. Dubach) — Wed, 18 Mar 2026 00:00:00 +0000

No AI-discovered drug has ever received FDA approval. That sentence should sit uncomfortably next to every headline about Alphabet’s drug discovery spinoff.

On February 10, Isomorphic Labs, the Google DeepMind spinoff focused on computational drug design, released IsoDDE: its Drug Design Engine. This isn’t a model or an AlphaFold upgrade. IsoDDE is a unified in silico drug discovery system that runs protein structure prediction, ligand binding, affinity estimation, and pocket identification in concert, generating in seconds what used to take days of physics-based simulation. On the hardest molecular prediction tasks, the “Runs N’ Poses” benchmark designed to test generalization to unfamiliar proteins, IsoDDE hits a 50% success rate. AlphaFold 3 manages roughly 23%. On antibody-antigen modeling, IsoDDE beats AlphaFold 3 by 2.3× and the open-source Boltz-2 by 19.8×. On binding affinity prediction, it achieves a Pearson correlation of 0.85, beating the physics-based gold standard FEP+ at 0.78.

I would assume that these are large enough improvements that the computational bottleneck in drug design may no longer be the binding question.

What pharma believes

Isomorphic has signed partnerships with Eli Lilly, Novartis, and Johnson & Johnson worth a combined $4 billion+ in potential value. But look at the structure. Lilly paid $45 million upfront against $1.7 billion in milestones. Novartis paid $37.5 million upfront against $1.2 billion. That’s a 50:1 ratio between what pharma promises in biobucks and what it actually wires.

This ratio is standard across AI drug discovery deals in 2025. Pharma is enthusiastic enough to sign but cautious enough to make nearly all the economics contingent on clinical results that don’t exist yet. The upfront payments fund research. The milestone payments are structured so that pharma loses almost nothing if the drugs fail. The royalties only matter if a drug reaches blockbuster status, which for an AI-designed molecule has never happened.

Novartis expanded its partnership in February 2025, doubling the number of programs to six, targeting what Novartis described as “particularly challenging” and previously undruggable targets, on the same financial terms. That’s a positive signal: it means internal results impressed Novartis scientists enough to commit more targets. The J&J deal, announced January 2026, goes further, covering small molecules, antibodies, peptides, and molecular glues. But “expanded partnerships” and “approved drugs” remain separated by the most unforgiving filter in business: human biology.

Phase II wall

Most commentary on AI drug discovery stops too early. Jayatunga et al. (2024), in the first systematic analysis of AI-discovered drugs in clinical trials, showed AI-discovered molecules achieving 80-90% success rates in Phase I trials, well above the historical 40-65% average. AI is good at designing molecules that are safe and have decent pharmacokinetic properties: they get absorbed, distributed, metabolized, and excreted the way you’d want. Phase I is mostly about safety. AI passes it.

But Phase II is about efficacy. Does the drug actually treat the disease? And here the numbers are sobering: AI-discovered drugs show roughly 40% Phase II success rates, which is about the same as traditionally discovered drugs. AI has not yet demonstrated it can predict whether a molecule will work in a patient, only that it can predict whether a molecule will be tolerable in a patient.

If both trends hold, end-to-end success rates could rise from the historical 5-10% to something like 9-18%. That would roughly double R&D productivity, which in a trillion-dollar industry is worth an enormous amount. McKinsey estimates generative AI could generate $60-110 billion annually in economic value for pharma and medical products. But it’s a far cry from the narrative that generative AI will “solve” drug discovery. It would make drug development somewhat cheaper and faster. An improvement, not a revolution.

The counterargument, and it’s a reasonable one, is that IsoDDE represents a qualitative leap that could crack the efficacy problem. Its ability to model induced fits, where proteins reshape to accommodate a drug, and to identify cryptic binding pockets, like the cereblon site that took experimentalists 15 years to find, means it’s capturing biological dynamics that earlier AI systems missed entirely. If better structural understanding translates to better efficacy prediction, the Phase II wall might eventually come down.

I find this plausible but unproven. We’ll know more when Isomorphic’s first candidates enter trials, targeted for late 2026.

Where Isomorphic fits in the competitive stack

Isomorphic’s competitive position is unusual. It leads on computational benchmarks but trails on clinical progress. Insilico Medicine has the most advanced clinical portfolio: its IPF drug ISM001-055 (now called rentosertib) reached Phase IIa with positive results published in Nature Medicine in June 2025, and Insilico has 10+ IND approvals across 31 programs. Recursion Pharmaceuticals, which absorbed Exscientia in a $688 million merger, takes a different approach entirely, running millions of phenomics experiments weekly on 65 petabytes of biological imaging data. Both companies own wet-lab infrastructure that Isomorphic lacks.

What Isomorphic has: the AlphaFold lineage, Alphabet-scale compute, and a unified architecture where each prediction task informs the others. On talent, the company appears to be doing well: 4.7/5 on Glassdoor, 100% CEO approval. They hired Dr. Ben Wolf as CMO in June 2025, formerly at Relay Therapeutics with FDA approval experience for Ayvakit and Gavreto. They opened a Cambridge, Massachusetts office. These are the moves of a company staffing up for clinical reality, not just publishing papers.

The open-source threat is real but manageable in the near term. Chai Discovery (backed by OpenAI at a $1.3 billion valuation, now partnered with Lilly on biologics) and Boltz (partnered with Pfizer) are both making progress. But the gap between IsoDDE’s numbers and the best open-source alternatives is wide enough that Isomorphic has time, maybe 18-24 months, to convert its computational lead into clinical evidence before the field catches up.

Alphabet’s asymmetric position

For Alphabet, Isomorphic is a rounding error that could become a franchise. The Other Bets segment posted a $3.6 billion operating loss in 2025. Alphabet’s net income was $132 billion. The $600 million funding round led by Thrive Capital in March 2025 suggests the company understands the urgency of getting to the clinic, but Alphabet can sustain this bet indefinitely while the underlying science matures, and that patience is itself a competitive advantage most biotech startups don’t have. But does better computation translate to better medicine? IsoDDE’s benchmarks are the best evidence so far that AI can model molecular interactions at this resolution. But Demis Hassabis said it himself:

We know we’re never going to solve drug design with AlphaFold alone. We’ll need half a dozen more breakthroughs of that magnitude.

IsoDDE might be one of those breakthroughs. The clinical data, when it arrives, will tell us whether it’s the kind that matters.

Novo Was Europe's Most Valuable Company

me@philippdubach.com (Philipp D. Dubach) — Mon, 23 Feb 2026 00:00:00 +0000

Novo Nordisk was Europe’s most valuable company 20 months ago. Today its market capitalization falls behind ASML, LVMH, Hermès, L’Oréal, SAP, Prosus, Siemens, Inditex, Deutsche Telekom, and Santander.

The stock has lost roughly 75% since its June 2024 peak of $142.44, falling from a $640 billion market cap to under $160 billion. Shares dropped another 16% this morning after CagriSema, the follow-on obesity drug that was supposed to restore Novo’s competitive story, failed its head-to-head trial against Eli Lilly’s Zepbound. The REDEFINE 4 results confirm what a former Novo advisor told AlphaSense back in December: CagriSema is “not particularly impressive.”

I like this stock over the long term. The GLP-1 market is real, the addressable population is enormous, and Novo still sells more semaglutide than anyone. But liking a stock and holding on to it no matter the outlook are not the same thing. Or as Warren Buffett would say:

The most important thing to do if you find yourself in a hole is to stop digging

The problems are compounding. US pricing is resetting structurally lower through MFN and IRA. The pipeline just lost its best competitive argument. International patents are falling away faster than expected. Eli Lilly is pulling ahead on every axis. And Novo guided for its first revenue decline in modern history in 2026: adjusted sales down 5-13%. A former senior district sales manager at Novo described that guidance as “very tepid,” and added that the severity of the market reaction suggests investors may be pricing in further downside beyond what management disclosed.

Stock collapse

The speed of the decline matters. In June 2024, NVO hit $142.44. Then, in sequence: a July 2025 guidance cut after Q2 results showed US pricing headwinds worse than expected (shares dropped roughly 22% in a session). A September 2025 announcement of 9,000 job cuts and DKK 8 billion in restructuring charges under new CEO Maziar Mike Doustdar, read not as efficiency but as admission of trouble. February 4, 2026 full-year results guiding adjusted sales growth at -5% to -13% (the stock cratered 18% in Copenhagen). And today, REDEFINE 4.

The 52-week range was $43.08 to $93.80 before today’s open. NVO is now trading around $40, a new low. The all-time high was less than two years ago.

Novo now trades at a lower forward multiple than Merck and below Pfizer, which is dealing with its own post-COVID structural decline. Whether that valuation is justified is the real question.

2026 guidance

It is rare to see a company of Novo’s stature guide for a sales decline. This is not a biotech that lost a coin-flip Phase 3. This is the global leader in GLP-1s telling investors that revenue will shrink.

Three structural forces are driving the decline, each on a different timeline.

The November 2025 MFN deal with the Trump Administration cut Wegovy’s government price to $349/month and set Medicare/Medicaid rates at roughly $245/month, a 60-80% reduction from prior list prices. Insulin was capped at $35/month. Lilly took a similar deal (Zepbound at $346/month), so neither company gained competitive advantage, but both lost pricing power permanently in the government channel. The commercial channel is following. Payers who previously paid $800-1,000 per month for Wegovy are now pointing at the government rate and demanding comparable terms.

Internationally, the patent picture is worse than most investors realize. Semaglutide’s compound patent lapsed in Canada in January 2026 after Novo failed to pay a maintenance fee of roughly CAD 250 (on a self reflective note, maybe this story alone should have made me leave). Sandoz and Apotex are preparing generic launches. Dr. Reddy’s has filed in 87 countries. In China, at least 15 manufacturers are in development. Brazil’s federal court denied a patent extension. The US patent thicket (320 applications, 154 granted, settlements pushing generics to roughly 2031-32) provides breathing room domestically, but international operations generated DKK 112 billion in 2025 revenue, and the erosion has started.

Meanwhile, several states have dropped Medicaid coverage for GLP-1 obesity drugs since late 2025: California, Pennsylvania, New Hampshire, South Carolina. Only 13 states still cover them. The IRA’s Round 2 negotiations, effective January 2027, set Ozempic at $274/month (71% below list) and Wegovy at $385/month. With 2.3 million Medicare semaglutide users, that is a massive revenue compression event arriving in twelve months.

A former director at Novo anticipates strong GLP-1 growth for at least five to seven years but warns that pricing pressures from biosimilars and generics will force significant price cuts in that period. Long-term share, in this person’s view, depends on real-world efficacy and the ability to secure additional indications, not on the brand franchise alone.

CagriSema: a pipeline crisis

I want to push back on the framing already circulating in some analyst notes, which is that REDEFINE 4 is “disappointing but manageable.” It is not manageable. This was the trial that was supposed to prove Novo could compete with Lilly on superior efficacy. It proved the opposite.

The 2.5 percentage point gap on the on-treatment estimand is bad enough. The 3.4 point gap on intention-to-treat is worse, because it suggests CagriSema also has a tolerability or adherence problem relative to tirzepatide. Only 57% of REDEFINE 1 patients reached the highest CagriSema dose, hinting at a ceiling.

A former senior director at Novo expressed disappointment with the REDEFINE trial designs, which allowed for patient down-titration, potentially diluting the efficacy signal. This person regards the asset as safe but questions its commercial strength against aggressive competition. A former Novo advisor was blunter: if Lilly’s retatrutide launches before CagriSema gains traction, it would be a “marketing car crash” for Novo, potentially relegating CagriSema to “second best” status.

Novo’s management pointed to the blinded REDEFINE 11 trial (flexible dosing) and a planned higher-dose CagriSema study as paths to demonstrating “full weight-loss potential.” Maybe. But REDEFINE 11 results won’t arrive until the first half of 2027, and by then Lilly will likely have retatrutide data showing roughly 29% weight loss, plus an approved orforglipron pill without the fasting restrictions.

CagriSema will still probably get FDA approval in late 2026, based on the REDEFINE 1 and 2 placebo data. But launching a drug with clinical proof of inferiority to the market leader is a very different commercial proposition than launching one with a credible superiority story. Pricing, formulary positioning, and physician adoption all get harder. A former director at Eli Lilly told AlphaSense that Lilly’s retatrutide appears superior to both Zepbound and CagriSema based on available data, and that CagriSema lacks a compelling differentiation story, particularly on muscle preservation. The obesity market, this person believes, will double or triple over the next decade, but price reductions will be the primary driver of that expansion.

Eli Lilly is pulling ahead

This is the part I think the Novo bull case underweights. Lilly is pulling ahead on efficacy, pipeline breadth, oral convenience, manufacturing capacity, and patent duration, all at once.

By end of Q3 2025, Lilly held 63% of US branded anti-obesity prescription share and 57% of total US GLP-1 scripts. Zepbound’s Q4 US revenue was $4.2 billion (+122% YoY). Full-year 2025 tirzepatide revenue reached $36.5 billion, making it the world’s best-selling drug molecule. Lilly guided 2026 revenue at $80-83 billion, implying roughly 25% growth. Novo guided for a decline.

Three pipeline assets make the gap worse over time.

Orforglipron, Lilly’s oral non-peptide GLP-1, has an FDA decision expected April-May 2026. No food restrictions, no fasting window. It beat oral semaglutide head-to-head in the ACHIEVE-3 diabetes trial. Goldman Sachs projects 60% oral GLP-1 market share by 2030. An obesity physician familiar with both compounds views the orforglipron launch as a turning point precisely because it lacks the “strict rules” associated with oral Wegovy: fasting, water restrictions, the administration burden that limits real-world compliance. If efficacy is comparable, this person argues, the lower-friction option wins.

Retatrutide, the triple agonist (GLP-1/GIP/glucagon), showed 28.7% weight loss at 68 weeks in TRIUMPH-4. That is 5+ points above CagriSema’s best showing. NDA filing is projected for late 2026. GlobalData forecasts $15.6 billion in 2031 sales.

Manufacturing: Lilly has committed $50 billion+ in investment since 2020, including a $6.5 billion Texas oral pill facility. Tirzepatide patents extend through the back half of the 2030s, giving Lilly 5-7 more years of US exclusivity than semaglutide.

Truist estimates Lilly’s obesity/diabetes trio could reach $101 billion in combined peak sales worldwide, before retatrutide even enters the market.

The Wegovy pill: one bright spot

Credit where it’s due. Oral Wegovy, approved December 22, 2025 and launched January 5, 2026, reached over 170,000 patients within four weeks. Weekly prescriptions hit roughly 50,000 by late January. TD Cowen noted it generated roughly 15x more prescriptions than injectable Wegovy at the same post-launch stage, and double Zepbound’s trajectory.

But about 90% of those prescriptions are self-pay at $149/month, because formulary coverage for the new formulation is limited. That is great for patient access and terrible for revenue per patient compared to the injectable franchise. CEO Doustdar acknowledged the tension: the pill launch is strong, but “the price hit on the existing business trumps the great pill launch.”

Clinically, oral semaglutide 25mg delivers roughly 13.6% weight loss in all-comers, well below injectable Wegovy (roughly 15%) and further below Zepbound (20%+). A former senior diabetes care specialist at Novo expressed skepticism about the oral format’s long-term success, noting the challenging administration requirements contrast poorly with Lilly’s track record of marketing easier-to-take products. A second former specialist at Novo offered the counterpoint: if Novo prices the Wegovy pill aggressively enough, it could capture share despite the convenience gap. The pricing lever is there. Whether management pulls it hard enough, fast enough, is the question.

When orforglipron arrives with comparable efficacy and no fasting requirement, the Wegovy pill’s competitive position narrows. The window is months, not years.

Where I come out

I keep going back and forth on this one, and I think that ambivalence is the right response.

The case for buying: Novo at 11x earnings is pricing in a catastrophe. The GLP-1 market is projected to reach $100-150 billion by 2030. Novo still has the most prescribed semaglutide franchise on the planet. The Wegovy pill launch is legitimately strong. The balance sheet is healthy (debt/equity roughly 0.67x post-Catalent, free cash flow guided at DKK 35-45 billion). The dividend yield is approaching 4%. If the obesity treatment market is multi-winner rather than winner-take-all, Novo at these levels could compound nicely over 5+ years.

The case for waiting: there is no positive catalyst before May at the earliest. Orforglipron approval could arrive any day and further pressure the oral franchise. Post-CagriSema analyst target revisions haven’t happened yet. European institutional selling may have further to run. Short interest is under 1% of shares outstanding, meaning the 75% decline has been driven overwhelmingly by longs selling, not shorts pressing, with the implication that forced selling from funds that haven’t yet adjusted positions could continue. And the fundamental problem remains: Lilly has proven clinical superiority in injectables, will likely have a better oral, and has a triple agonist coming that makes both companies’ current drugs look modest.

My instinct is that the stock is closer to a bottom than a top, but that the bottom may not be in yet. Forced selling, analyst downgrades from today’s CagriSema miss, and the looming orforglipron approval create a window where further downside is plausible. Barclays noted that some will call the 2026 guide a “kitchen sink” that management will beat, but as they pointed out, the same was said last year and it proved wrong.

For investors with a 3-5 year horizon who can tolerate further near-term downside, this is getting interesting. For anyone who needs to see improving fundamentals before committing capital, there is no rush. The problems I’ve laid out here are structural, and structural takes quarters to fix, not days.

Ozempic is Reshaping the Fast Food Industry

me@philippdubach.com (Philipp D. Dubach) — Fri, 16 Jan 2026 00:00:00 +0000

Something strange is happening in the food industry. New US dietary guidelines call for more protein and less sugar. Greggs, the UK bakery chain, just warned of “flatlining profits” in the food-to-go market. Food companies are racing to overhaul their brands, ditching artificial dyes and packing protein into products. Earnings calls across the sector blame “inflation” and “subdued consumer confidence.” Nobody mentions the elephant in the room: GLP-1 medications.

New research from Cornell finally puts numbers to what the food industry doesn’t want to discuss. Using transaction data from 150,000 households linked to survey responses on medication adoption, Sylvia Hristakeva, Jūra Liaukonytė, and Leo Feler tracked exactly how Ozempic and Wegovy users change their spending. The results deserve attention from anyone holding food stocks.

The headline: households with a GLP-1 user cut grocery spending by 5.3% within six months. For high-income households, that figure jumps to 8.2%. Fast food takes an even harder hit, with spending at limited-service restaurants falling 8.0%. These aren’t people switching brands or trading down. They’re simply eating less.

The category-level data tells the real story. Savory snacks see the largest decline at 10.1%. Sweets, baked goods, cookies, all down. Even staples like meat, eggs, and bread decline. In the entire grocery basket, only one category shows a statistically significant increase: yogurt. Fresh fruit and nutrition bars trend up slightly, but yogurt is the lone winner with statistical confidence.

As of July 2024, 16.3% of U.S. households have at least one GLP-1 user. The adoption curve is steepening. Nearly half of adopters report taking the medication specifically for weight loss rather than diabetes management. These weight-loss users tend to be younger, higher income, and more willing to pay out of pocket. They’re also the most profitable customers for fast food chains, the ones who don’t flinch at price increases.

This creates what the researchers call a “double whammy” for the food industry. Companies are losing their highest-margin customers to a biological shift in appetite while being left with a more price-sensitive demographic that actually does respond to inflation. When McDonald’s CEO Chris Kempczinski talks about losing lower-income customers to home cooking, he’s describing the wrong problem.

The research also suggests why food executives might be keeping quiet. About 34% of GLP-1 users discontinue within the sample period. When they stop, their spending doesn’t just return to baseline. It becomes less healthy. Candy and chocolate purchases rise 11.4% above pre-adoption levels after stopping the medication.

If you’re running a snack company, the math might look survivable: lose customers to Ozempic for a year, then welcome them back once they quit. The drugs suppress appetite biologically; they don’t teach new habits. When the biology reverts, so does the behavior.

Scott Galloway has called the food industry an “obesity index” and predicted a “tsunami of shareholder destruction.” The Cornell data suggests he’s directionally right but possibly too aggressive on timing. The industry has a built-in buffer: medication discontinuation. The question is whether that buffer lasts as drugs get cheaper, side effects improve, and insurance coverage expands.

The deeper issue is about the persistence of dietary change. Previous studies found that even major life events, a diabetes diagnosis, job loss, childbirth, produce only modest and short-lived changes in diet. Information campaigns and price nudges have mixed results at best. GLP-1 medications work differently because they alter the biological reward system directly. Users describe the experience as “silencing food noise,” a constant background hum of cravings that simply disappears.

But this biological dependence cuts both ways. The changes don’t stick without the drug. Stopping medication means losing both the appetite suppression and whatever habits might have formed during treatment. The Cornell team notes that “GLP-1s could complement existing nutritional interventions” but cautions that “their broader public health relevance ultimately depends on sustained adherence.”

For investors, the practical question is positioning. Companies selling hyperpalatable, calorie-dense products face structural headwinds. Companies selling protein-rich, nutrient-dense foods in smaller portions have tailwinds. The data shows users shifting toward yogurt, fresh fruit, and nutrition bars. Package sizes may need to shrink. Marketing strategies may need to pivot from “craveable” to “satisfying.”

The next few quarters of earnings calls will be interesting. At some point, an analyst will ask the GLP-1 question directly. The honest answer from management would be: we don’t know the full impact yet, but 16% of households having a user, 8% declines in fast food spending, and the fastest-growing prescription category in the country is not something we can ignore.

GLP-1 Receptor Agonists in ASUD Treatment

me@philippdubach.com (Philipp D. Dubach) — Fri, 21 Nov 2025 00:00:00 +0000

Alcohol and other substance use disorders (ASUDs) are complex, multifaceted, but treatable medical conditions with widespread medical, psychological, and societal consequences. However, treatment options remain limited, therefore the discovery and development of new treatments for ASUDs is critical. Glucagon-like peptide-1 receptor agonists (GLP-1RAs), currently approved for the treatment of type 2 diabetes mellitus, obesity, and obstructive sleep apnea, have recently emerged as potential new pharmacotherapies for ASUDs.

Semaglutide, the GLP-1 receptor agonist marketed as Ozempic and Wegovy, may be the most significant new pharmacotherapy candidate for alcohol use disorder in decades. This development matters most for people struggling with substance use disorders who have few effective treatment options. It also matters for manufacturers like Novo Nordisk facing patent expiration pressures on Ozempic. The research into GLP-1RAs for addiction treatment is early but notable given the limited pharmacotherapy options currently available for ASUDs. In February 2025, researchers at UNC published results from the first randomized controlled trial of semaglutide for ASUD treatment. The phase 2 trial enrolled 48 non-treatment-seeking adults with AUD and administered low-dose semaglutide (0.25 mg/week for 4 weeks, 0.5 mg/week for 4 weeks - standard dosing for weight loss reaches 2.4 mg per week) over 9 weeks. Participants on semaglutide consumed less alcohol in controlled laboratory settings and reported fewer drinks per drinking day in their normal lives. They also reported less craving for alcohol. Heavy drinking episodes declined more sharply in the semaglutide group compared to placebo over the nine-week trial. The mechanism likely involves GLP-1 receptors in the brain’s mesolimbic reward pathway, where semaglutide modulates dopamine signaling to reduce the reinforcing effects of alcohol consumption. Despite the low doses, effect sizes for some drinking outcomes exceeded those typically seen with naltrexone, one of the few FDA-approved medications for alcohol use disorder. A large real-world study of 83,825 patients with obesity found semaglutide associated with a 50-56% lower risk of AUD incidence and recurrence compared to other anti-obesity medications. While larger trials are needed to confirm these results, the early evidence suggests GLP-1 may offer a meaningful treatment option for a condition where new therapies have been approved at a rate of roughly one every 25 years. Phase 3 trials evaluating semaglutide for AUD are now underway, and pemvidutide, a GLP-1/glucagon dual receptor agonist, has received FDA Fast Track designation for alcohol use disorder.

Novo Nordisk's Post-Patent Strategy

me@philippdubach.com (Philipp D. Dubach) — Sun, 29 Jun 2025 00:00:00 +0000

Novo Nordisk, a long time member of my “regrets” stock list, has become reasonably affordable lately (-48% yoy). Part of the reason being that they currently sit atop a ~$20 billion Ozempic/Wegovy franchise that faces patent expiration in 2031. That’s roughly seven years to replace their blockbuster drug. We revisit them today, since per newly published Lancet data, Novo’s lead replacement candidate—amycretin—just posted some genuinely impressive Phase 1 results. The injectable version delivered 24.3% average weight loss versus 1.1% for placebo, beating both current market leaders (Wegovy at 15% and Lilly’s Zepbound at 22.5%). Even the oral version hit 13.1% weight loss in just 12 weeks, with patients still losing weight when the trial ended.

Amycretin is very elegantly designed: It combines semaglutide (the active ingredient in Ozempic/Wegovy) with amylin, creating what’s essentially a dual-pathway satiety signal. Semaglutide activates GLP-1 receptors to slow gastric emptying and reduce appetite centrally, while amylin works through complementary mechanisms to enhance fullness signals. This way both your stomach and your brain’s “appetite control center” are getting the “stop eating” message simultaneously. One concern raised by Elaine Chen at STAT is that the results of a Phase 1/2 study include unusual findings around dosage. The full text article is behind a paywall unfortunately, so I did not have access. However, looking at the actual data from the study, I am assuming she is referring to Parts C, D, and E, which tested maintenance doses of 20 mg, 5 mg, and 1.25 mg respectively. The weight loss results were:

Part C (20 mg): -22.0% weight loss at 36 weeks
Part D (5 mg): -16.2% weight loss at 28 weeks
Part E (1.25 mg): -9.7% weight loss at 20 weeks

While there is a dose-response relationship, what’s notable is the curves in Figure 3 show relatively similar trajectories during the overlapping time periods. Typically in drug development, researchers would expect clear separation between dose groups (with higher doses producing proportionally greater effects). When weight-loss curves overlap significantly (which they do in this case), it suggests the doses may be producing similar effects despite different drug concentrations. If lower doses produce similar weight loss with potentially fewer side effects, this could favor using the lower, better-tolerated dose. Further, it might indicate that amycretin reaches maximum effect at relatively low doses. This should probably influence how future Phase 3 trials are designed, potentially focusing on the optimal dose rather than the maximum tolerated dose. Given that gastrointestinal side effects were dose-dependent but efficacy curves overlapped, this supports using the lowest effective dose. How that might be a bad thing I have yet to find out.

From a financial perspective, Novo Nordisk’s pipeline is very interesting: Amycretin’s injectable version is currently in Phase 2, suggesting Phase 3 trials around 2026-2027, with potential approval by 2031; basically right as the Ozempic patents expire. But Novo isn’t betting everything on amycretin. They’re running what appears to be a diversified pipeline strategy with multiple shots on goal: NNC-0519 (another next-gen GLP-1), NNC-0662 (details kept confidential), and cagrilintide combinations. This makes sense: you want multiple candidates because the failure rate in drug development makes even the most promising compounds statistically likely to fail. Eli Lilly’s tirzepatide (Mounjaro/Zepbound) works through a different mechanism—GLP-1 plus GIP receptor activation—and appears to be gaining market share. Lilly’s orforglipron, an oral GLP-1 that hit 14.7% weight loss in Phase 2, represents another competitive threat. Judging by LLY’s price development, investors currently seem to think that Lilly is doing a better job at architecting a portfolio than Novo (or at least providing more disclosure about their pipeline). Yet, the overall competitive landscape might actually benefit both companies. The “war” between Novo and Lilly is expanding the overall market for obesity treatments, potentially growing the pie faster than either company is losing share. Also, to analyze the financial impact of the expiring Ozempic patents, we have to look further than just Novo’s research pipeline. Manufacturing these GLP-1 compounds and their delivery devices is “pretty tough.” Complex peptides requiring specialized manufacturing capabilities, plus the injection devices themselves are patent-protected. This creates what we would call a capacity constraint moat in corporate strategy. Novo’s manufacturing capabilities/partnerships and injectable device patents are a key competitive advantage. Even when semaglutide goes generic in 2031, the entire generic pharmaceutical industry would essentially need to coordinate to build sufficient manufacturing capacity to meaningfully dent Novo’s market share. Meanwhile, Novo could potentially defend by lowering prices while maintaining manufacturing advantages in a monopoly-to-oligopoly transition.

The other day I came across Martin Shkreli’s NOVO model. Conservatively, it puts Novo’s fair value around 705 DKK (21% upside from ~585 DKK), while a failure scenario drops valuation to 385 DKK. The range reflects what you’d expect for a large-cap pharmaceutical company;the market has already incorporated most knowable information about pipeline risks and patent timelines. This also underscores the point that manufacturing capabilities and continuous innovation pipelines can potentially maintain quasi-monopolistic positions longer than traditional patent protection would suggest. Shkreli’s analysis suggests Novo Nordisk is reasonably valued with modest upside potential, contingent on successful pipeline execution. Novo Nordisk is at a critical juncture, with substantial franchise value dependent on successful pipeline execution over the next 7-8 years. While the current valuation appears reasonable, the binary nature of drug development success creates both upside potential and significant downside risk.

This article is for informational purposes only, you should not consider any information or other material on this site as investment, financial, or other advice. There are risks associated with investing.

AlphaFold 3: Free for Science

me@philippdubach.com (Philipp D. Dubach) — Sun, 12 May 2024 00:00:00 +0000

Nothing says “we’re serious about dominating a market” quite like giving away breakthrough technology for free. Google’s latest move with AlphaFold 3 might be their most audacious version of this strategy yet.

“AlphaFold 3 can predict the structure and interactions of all of life’s molecules with unprecedented accuracy”

This isn’t just an incremental improvement - While previous versions of AlphaFold could predict protein structures, AlphaFold 3 models the interactions between proteins, DNA, RNA, and small molecules. It’s the difference between having a parts catalog and understanding how the entire machine works.

Drug discovery typically costs billions and takes decades. If AlphaFold 3 can meaningfully accelerate that process - even by modest percentages—the value creation is staggering. Yet Google is handing it to researchers for free through the AlphaFold Server, with the predictable caveat of commercial restrictions. Is this Google’s cloud strategy playing out in life sciences? Establish the platform, get everyone dependent on your infrastructure, then monetize the ecosystem. The pharmaceutical industry, already grappling with AI disruption, now faces a world where molecular interactions can be predicted with “50% better accuracy” than existing methods. The real question isn’t whether AI will transform drug discovery - it’s whether Google will own that transformation.