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PaperclipPerfector  8mo ago (text post)   3776 thread views

Small-Scale Question Sunday for August 27, 2023

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I missed out on bitcoin. I'm thinking that the new weight loss drugs are going to hit it big. Even though in a few years when they discover that a major side effect is cancer and death they will go out of popularity.

Anyway, what are the parent companies whose stock I should invest it go get in on the major weight loss drugs success.

If you find out let me know.

Why are you asking about this now and not last November when Scott wrote Semaglutidonomics? These drugs are mentioned everyday on CNBC. By the time that happens the opportunity to “hit it big” is usually over.

Are there hints as to why there should be cancer risk? I naively would have thought that cancer risk would be reduced from increased cell apoptosis coming from running a sustained caloric deficit.

The main manufacturer is the Danish pharma company Novo Nordisk, which produces Ozempic/Wegovy (they're the same drug). Novo's stock is up 75% this year alone pretty much entirely on Ozempic news.

There are risks. Pfizer and Eli Lilly are already working on competitors and have a combination of active products and very good trial results. The weight loss market is so big and profitable that margins might well be driven down across the board, especially because unlike eg. Viagra which printed money until generics were legalized, there are a whole range of possible competitors to semaglutide out the gate.

The most profitable drugs are those where no chemically-different-enough competitor achieves the same effect with the same risk profile and a similar cost, thus allowing the manufaturer 15 years or whatever it is of total market dominance at whatever margin it agrees is most profitable. Unfortunately for pharma investos, weight-loss drugs do not appear to be that kind of product.

The big ones everyone seems to be talking about, Ozempic and Wegovy, are owned by Novo Nordisk, and their stock has indeed been rising lately.

However, both are semaglutide products, and several of the related patents expire in the next few years (depending, among other things, on what country you're in). Someone with greater knowledge of specific semaglitude patents would have to weigh in on the likely next steps, but there are apparently some other glucagon-like peptide-1 agonists out there as well. So I suppose a person could pick specific stocks based on who appears to be positioning themselves to pump out GLP-1 agonists (for example, by lobbying Congress to approve said medicines for medicare and medicaid)--or maybe just find a good "big pharma" mutual fund. But I would expect a fair bit of this to already be priced in; you could make a bunch of money, but you could instead lose a bunch of money to an economic downturn and market contagion, and certainly I wouldn't expect anyone to be making bitcoin-boom levels of returns.

What really set bitcoin apart, as an insane wealth generator, was that many thousands of people with no capital whatsoever and through no particular effort of their own found themselves essentially holding stacks of practically-free "founder stock" in a "company" that suddenly became incredibly valuable. Almost everyone of significant wealth in the world has that wealth either because they (or their ancestors) put years of effort and capital into building something they owned into something other people wanted to buy, or because they had a large amount of capital they were able to invest into a low-cost enterprise that the effort of others transformed into a high-priced enterprise. Crypto was nothing like that; crypto essentially invented a new currency and early adopters became enriched by rampant speculation. This has not changed; the vast majority of crypto transactions are still purely speculative. The originally-intended benefits of cryptocurrency (anonymity, fiscal anarchy) have almost entirely failed to manifest, and that is probably at least in part because of the rampant speculation that drives the crypto market.

That sort of thing is far less predictable, and therefore far more difficult to price into equities valuations, than a new-ish class of pharmaceutical. That doesn't mean you can't make a decent profit trading on big pharma, I'm sure, but the way you posed the question suggests to me that you should probably begin by tempering your expectations.

What really set bitcoin apart, as an insane wealth generator, was that many thousands of people with no capital whatsoever and through no particular effort of their own found themselves essentially holding stacks of practically-free "founder stock" in a "company" that suddenly became incredibly valuable. Almost everyone of significant wealth in the world has that wealth either because they (or their ancestors) put years of effort and capital into building something they owned into something other people wanted to buy, or because they had a large amount of capital they were able to invest into a low-cost enterprise that the effort of others transformed into a high-priced enterprise. Crypto was nothing like that; crypto essentially invented a new currency and early adopters became enriched by rampant speculation. This has not changed; the vast majority of crypto transactions are still purely speculative. The originally-intended benefits of cryptocurrency (anonymity, fiscal anarchy) have almost entirely failed to manifest, and that is probably at least in part because of the rampant speculation that drives the crypto market.

Ugh yeah this was the worst part. I correctly predicted it wouldn't pan out anytime soon, but.... that wasn't the right move.

Sadly I actually owned bitcoin, enough to make me a millionaire, back in the 2011 days. I spent it on a few ounces of pot.

It still hurts me when I think about it... :'(

If it makes you feel better always remember that someone gave 25 Bitcoin each as consolation prizes to the people who finished 5th through 8th.

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