There's room for new players in the red-hot weight-loss drugs arena, especially if they can solve a problem that continues to vex Novo Nordisk and Eli Lilly: muscle loss.
The class of weight-loss drugs called GLP-1 agonists helps patients shed fat, but in an alarming trend these treatments also lead to the loss of lean mass — bones, organs and muscle. Now, biotech companies are taking on that major downside of popular brands like Zepbound or Wegovy.
"Despite all the enthusiasm surrounding GLP-1 agonist for obesity, it has been increasingly recognized that the profound weight loss is accompanied by substantial muscle loss," Regeneron Pharmaceuticals Chief Scientific Officer George Yancopoulos said on the company's fourth-quarter conference call.
"This potentially irretrievable muscle loss can be catastrophic for patients and may even lead to major public health concerns in the future."
Weight-Loss Drugs: The Muscle Factor
The focus on muscle loss while taking weight-loss drugs has intensified.
In a July client note, Evercore ISI analyst Umer Raffat said 20% to 50% of the weight lost from GLP-1 drugs is muscle mass.
In one study of Novo's semaglutide, the chemical backbone for weight-loss drug Wegovy, patients lost 23 pounds of fat and 15 pounds of muscle over 68 weeks, according to Fortune magazine, meaning roughly 40% of the weight patients lost came from muscle.
"That's the opposite of what you want to do, especially in an older population," Allurion Technologies Chief Executive Shanantu Gaur told Investor's Business Daily.
A Debate Over Muscle-Loss
But there's some disagreement on the seriousness of the muscle-loss issue.
Yuri Khodjamirian, chief investment officer at Tema ETFs, believes it has been largely blown out of proportion. Patients who lose muscle also have less weight to move around, Khodjamirian said. So, their fundamental strength remains intact.
Tema runs the Cardiovascular and Metabolic ETF. Some of its biggest assets include Vertex Pharmaceuticals, Amgen, Novo and Lilly. Shares of the ETF are now forming a cup base with a buy point at 33.56, according to MarketSmith.com.
Still, Khodjamirian says there's room for a third player behind Novo and Lilly in the weight-loss drugs market, especially one who can find a "niche, more interesting approach." Novo sells its drug, dubbed semaglutide, as a diabetes treatment called Ozempic and as the obesity medicine Wegovy. Lilly was late to the race with tirzepatide. Today, that drug sells as Mounjaro and Zepbound, for diabetes treatment and weight-loss, respectively.
"The prize is large," he told IBD. "The estimates keep rising. We think it could be anywhere between a $100 billion and $150 billion market, which would make it one of the largest pharmaceutical markets in the world. In theory, if you get adherence right, people are on these (drugs) for a very long time. So there's a big prize at the end of this and a lot of companies are going to try to go for it."
Market Leaders Watch Lean Mass Debate
The market leaders are well aware their drugs can cause lean-mass loss. But both note their drugs continue to be safe for weight loss.
"Currently available data on body composition do not indicate an association of greater lean body mass loss over fat mass loss with semaglutide treatment and neither has any safety signal been identified in the clinical and post-marketing data in relation to lean mass loss with semaglutide," a Novo Nordisk spokesperson said by email.
A spokesperson with Eli Lilly noted weight loss, by any means, is generally accompanied by the loss of both fat and lean mass. But a study called Surmount-1 shows promise for weight-loss drugs.
"Patients treated with tirzepatide had three times more fat-mass reduction than lean-mass reduction and experienced an overall improvement in body composition," the spokesperson said by email. "Given that obesity is a chronic and progressive disease, quality of weight reduction and long-term management are topics on which we continue to focus."
Still, the focus on muscle loss has attracted new competitors.
A Question Of Metabolism
Katy Dubinsky, a New York-based pharmacist, says the muscle-loss issue is essentially about metabolism.
"Muscle burns calories," Dubinsky, the founder and chief executive of a privately held supplement company called Vitalize, told IBD. "The more muscle you have, the more calories you burn, even when you're resting. This is because muscle tissue is more metabolically active than fat, and it uses up more energy."
In other words, when the body loses muscle mass, it burns fewer calories. And the metabolism — the rate at which the body uses those calories — slows down.
Weight Regain With GLP-1
In fact, many patients who stop taking weight-loss drugs tend to regain weight.
In December, Lilly said 650 patients who took weight-loss drug Zepbound for eight months lost an average 20.9% of their body weight. But when some of the group switched to a placebo, they regained 14% of their weight over a year. Those who continued with the obesity treatment lost an additional 5.5% of their body weight.
Unless patients were doing resistance training and increasing their protein uptake, that weight gain was more than likely fat, experts say. Now, imagine repeated cycles of starting and stopping a GLP-1 drug — either due to difficult side-effects or reaching your target weight.
"If you do this a couple of times, you start accumulating way more fatty tissue," Tema executive Khodjamirian said.
A Concern For Older People
The accumulation of fatty tissue is known as sarcopenia. And it's a serious problem for older people.
"Sarcopenia is basically accumulation of excess fatty tissue, and this can be quite a dangerous medical condition," Khodjamirian said. "For example, it can affect your liver really badly. So, a lot of times you get fatty liver disease, liver failure and cirrhosis of the liver."
With few exceptions, muscle mass starts to deplete naturally in a person's 30s or 40s. Testosterone also begins decreasing, making it more difficult to pack on muscle even with increased protein intake and resistance training. With less muscle, older people are more frail, prone to falls and less capable of living an independent life.
Biohaven Chief Executive Vlad Coric says people lose about 10% of their muscle mass every decade beginning in their mid-30s. And the loss of muscle mass — through weight-loss drugs or age — "contributes very significantly to obesity," Coric told IBD.
Lilly Adds Versanis, BioAge Deals
So, what are companies doing to address this?
Eli Lilly launched one of the most high-profile efforts to address the problem. In August, the company wrapped up its takeover of Versanis Bio for up to $1.93 billion, including potential milestone payments. The company's lead drug is known as bimagrumab. It works by binding to a pair of activin receptors involved in muscle growth.
In a midstage study, patients with obesity and type 2 diabetes who took bimagrumab for 48 weeks had a 21.9% reduction in fat mass, and a 4.5% increase in lean muscle mass.
Additionally, patients who stopped taking bimagrumab didn't regain any weight over 12 weeks. In comparison, patients who stopped taking other GLP-1-based weight-loss drugs experienced "rapid weight regain," Versanis said in a June news release.
Lilly is also working with privately held BioAge Labs. The company's lead drug, azelaprag, mimics a peptide known as apelin. The body releases apelin during exercise. It acts on skeletal muscles, the heart and nervous system to regulate metabolism and promote muscle regeneration.
BioAge says preclinical testing suggests azelaprag could lead to significant weight loss without causing the gastrointestinal side effects tied to GLP-1-based weight-loss drugs.
"In our preclinical studies, azelaprag synergizes with incretins (like semaglutide or tirzepatide) to amplify weight loss, raising the exciting potential for patients to achieve weight loss equivalent to a higher dose of a GLP-1 with a superior tolerability profile when they're taking azelaprag in combination," BioAge CEO Kristen Fortney told IBD by email.
Eli Lilly stock has trended higher since announcing its deal with BioAge last October. Shares now have a nearly perfect IBD Composite Rating of 97. This means shares rank in the top 3% of all stocks in terms of fundamental and technical measures. Lead rival Novo has a perfect Composite Rating of 99.
'Holy Grail' For Weight-Loss Drugs
There are earlier-stage efforts in the wings that could help patients bulk up — or at least maintain — muscle while still losing fat.
Allurion CEO Gaur says the conversation needs to shift away from weight loss, which he considers a misnomer. The company is testing a gastric balloon that partially fills the stomach for four months.
"I think the goal should be fat loss and weight maintenance," he said. "Lose the weight in the form of fat and then maintain your weight over time. That actually leads to better clinical outcomes, better metabolic health and probably, in the long run, will lead to longevity as well."
"That is the holy grail," Gaur stressed. "Not just injecting yourself with a GLP-1 drug and watching the pounds drop off on the scale."
Weight-Loss Drugs In The Mainstream
Dr. Florence Comite, founder of the Comite Center for Precision Medicine and Healthy Longevity, says many patients are prescribed weight-loss drugs like Wegovy or Zepbound, but they aren't getting proper advice on how they work.
These new weight-loss drugs moved into the mainstream consciousness rapidly with even direct-to-consumer, off-label and controversial compounded options. And it's not always medical doctors behind those scripts, Comite told IBD.
"This isn't an area that physicians and clinicians are familiar with: talking about what to eat, how to work out, (and how) to sustain testosterone. Those are three topics that are largely unknown in medicine," Comite said. "Medical doctors are conventional and tend to treat disease, so they're not looking proactively at how you, for example, would stop muscle loss."
Biohaven, Regeneron Block A Key Protein
Some companies are looking at medical ways to bolster muscle mass without ever picking up a dumbbell.
Biohaven is developing a drug called taldefgrobep alfa that will help the body grow muscle. The company's studies in spinal muscular atrophy, a genetic condition that causes muscle loss, appear promising. Biohaven expects to have top-line results from a Phase 3 study in the second half of this year.
Now, the company is setting its sights on obesity. It expects to start a Phase 2 study of taldefgrobep alfa as a weight-loss drug in the second quarter.
That study will test Biohaven's drug alone and in conjunction with a GLP-1-based drug vs. a GLP-1 alone. The hope, says Coric, is that the combination can help patients maintain muscle mass and prevent weight regain when stopping treatment.
"Can you get a greater weight loss and maintain your muscle mass?" he told IBD. "That, in and of itself, would be quite important to the treatment of obesity."
A Genetic Component To Obesity
Similarly, Regeneron is studying two weight-loss drugs, including one that would block myostatin, a protein that regulates the growth of muscles.
Another drug focuses on a protein involved in muscle mass regulation called activin A. Yancopoulos, the company's chief scientific officer, says Regeneron plans to test its drugs on top of Novo's semaglutide beginning in mid-2024.
Regeneron is also working with Alnylam Pharmaceuticals to test the theory that blocking a gene called GPR75 could lead to weight loss. Several years ago, a study suggested people with specific mutations in this gene have a 54% reduced risk of developing obesity.
Weight-Loss Drugs: New Approaches
Arrowhead Pharmaceuticals is taking a similar approach: focusing on genes that cause disease.
The firm is already testing two treatments that target genes in the muscles. Both are for forms of muscular dystrophy. But CEO Christopher Anzalone says the company could leverage its technology against the lean muscle mass loss associated with GLP-1 weight-loss drugs.
"If, in fact, we're able to do that in a well-tolerated manner, we might be able to address some of the liabilities of these GLP-1 inhibitors — not the least of which is the wasting of lean muscle mass," he told IBD. "We like the idea of developing something that could be a companion to some of those."
More near term, Arrowhead could shift its focus to adipose, or fat, tissue. Anzalone notes adipose is the largest endocrine tissue in the body. So, it makes sense fat tissue would be involved in metabolic disorders like diabetes, nonalcoholic steatohepatitis or chronic kidney disease. These are all conditions associated with obesity.
Anzalone notes Arrowhead hasn't given guidance yet on which new diseases it will target.
"Stay tuned," he said. "I do believe you will see in 2024 at least one adipose drug candidate in clinical trials from us."
Is The Muscle Problem Actually A Problem?
Tema's Khodjamirian says these companies could face an uphill battle with regulators who will likely favor factors other than body composition when approving new weight-loss drugs.
The current suite of weight-loss drugs helps patients shed pounds. Whether that comes from fat or lean muscle mass, the outcome is seemingly the same: a lower risk of developing cardiovascular disease and improvements related to metabolic diseases like diabetes, NASH and kidney disease.
For many people, though, it all boils down to aesthetics, he says.
"Is there a holy grail where I can lose body fat and gain muscle?" he said. "And you can imagine the entire fitness industry is basically that. Every article you read is: How do I gain lean muscle mass? That's all people care about. I think that's maybe the reason why the press and the consumer is very interested in this."
But doctors don't have the same concerns about the loss of lean muscle mass, he said. Their concerns are for older patients and patients who do repeated cycles of GLP-1 treatment for weight loss — and the risk of developing sarcopenia.
"The doctors we talked to, one, don't see this as big of a problem because of the body composition improvement," he said. "Two, are much more focused on function of the body and what they see is no deterioration of function in the body. And, three, there's a lot of uncertainty in terms of the biology of what lean muscle mass does for you."
Weight-Loss Drugs: Aesthetics As A Factor
But aesthetics are often important for those looking to lose weight.
Raffat, the Evercore analyst, cited the phenomenon of the "Ozempic face," in which users of the popular weight loss drug end up shedding muscle mass on the face, making them look haggard and older.
"Do you want to lose that much fat?" he said in a report detailing Versanis' bimagrumab. "For health reasons, yes. But if a patient is already worried about the 'Ozempic face' look and additional wrinkles, I don't know. Presumably, some muscle volume increase will help, but 20% fat loss could have implications for wrinkles. We need data on aesthetic aspects."
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