Although the 10-year US Treasury yield is as high as 4.3%, the Nasdaq Biotech is eager to give it a try and doesn't want to wait anymore, directly entering the second round of upward trend. The Nasdaq Biotechnology bull market was launched in November 2023, with Viking Therapeutics, which achieved a miracle of 10 times over 100 days and a market value close to $10 billion, making it the hottest mainstream weight loss drug currently. Weight loss pills have not yet reached the point of aesthetic fatigue. Looking back at the rise history of overseas pharmaceutical companies, every time is driven by large single products, without exception.
How to map overseas to domestic? Theme investment opportunities can resonate. Recently, the CXO sector of the Hong Kong stock market has also experienced significant fluctuations and rebounds. On March 4th, WuXi Biotech rose 11%, WuXi AppTec rose over 12%, while TaiGe Pharmaceutical and Kanglong Huacheng also recorded gains of over 5% and 9%, respectively. Driven by CXO and innovative drugs, Hang Seng Biotechnology has also continued to rebound. As of March 4th, the nearly 14 trading days have seen gains of nearly 17%.
Why can't the rising US bond interest rates suppress the Nasdaq Biotechnology?
After a month of rest, biotech stocks in the US can no longer hold back, abandoning US bond yields and riding north.
The Nasdaq Biotechnology ETF (SH513290) index recorded 5 consecutive gains, breaking the previous high at the end of February, with over 1 billion yuan of capital inflows in the past 60 trading days. The Nasdaq Biotechnology Index (NBI) tracked by 513290 uses market capitalization weighting, with the top ten weighted stocks accounting for a total of 56.76%, enjoying the advantage of being the industry leader in the "strong always strong" market. At the same time, there are as many as 225 constituent stocks in the index, which also takes into account the flexibility of small and medium-sized market capitalization "dark horses".
The Sharpe ratio of the Nasdaq Biotech Index is as high as 0.14, which is 1.3 times that of the S&P Biotech Index. This means that the return characteristics of the Nasdaq Biotech Index are significantly better when assuming the same unit of risk. EarlETF also compared from the perspective of the "anchor of five years", and the Nasdaq's biotechnology trend is regular, with a higher upward slope in the medium to long term. The Nazhi Biotechnology ETF (513290) is the only ETF in China that has established a global leader in innovative drugs, and is also a market indicator for innovative drugs. Investors who are accustomed to over-the-counter redemption or do not have a securities account can pay attention to the USD A (OTCFUND | 017894) USD C (OTCFUND | 017895) USD initiated by the Huitianfu NASDAQ Biotechnology ETF.
Why did the interest rates of US Treasury bonds rise across all maturities fail to suppress biotech stocks in the US?
One is that before interest rates fell, investment and financing continued to improve marginally. In December 2023, American innovative drug VC& The amount of PE investment and financing increased by 8.95% year-on-year. Secondly, the supply and demand of US bonds have deviated from the norm since Q3 2023, and the US bond interest rate was once unable to characterize the risk-free rate. This is confirmed by the fact that during the same period, the US bond interest rate was higher than that of large corporate bonds. According to statistics from Debon Securities, since mid February, the fitted risk-free interest rates for 2Y and 10Y have not significantly increased, and the overall trend is in a sideways oscillation pattern. The third is the catalysis of various therapeutic vents.
The weight loss medicine trend not only creates the king status of Lilly and Novo Nordisk, but also creates divine level Biotech. Viking has been unknown for ten years, and has become famous all over the world.
Viking was founded in 2012 and currently has only 27 employees. On February 27th, Viking Therapeutics released the latest clinical data on the GLP-1R/GIPR dual target agonist VK2735 in the treatment of obesity phase II. The weight loss at 13 weeks was 13.1% (non head to head), and the lateral comparison was better than the weight loss data of the same period with rituximab. Moreover, no weight loss reaching a plateau was observed at 13 weeks.
There are two GLP-1R/GIPR dual target agonists in China that claim to be superior to rituximab.
The Secretary of the Board of Directors of Zhongsheng Pharmaceutical stated that under blind data, compared with the results of phase I clinical pharmacokinetics of the same target drug Tilposide, it suggests that the half-life of RAY1225 injection is about twice that of Tilposide, and the exposure level is higher at the same dose. In the future, clinical use is expected to achieve once every two weeks.
When explaining the advantages of BGM0504 molecular design, Borui Pharmaceuticals stated that the company found that there is room for improvement in the side chain structure and connection sites of GLP-1 and GIP dual target molecules with telposide. It believes that by optimizing the side chain structure, adjusting the side chain modification sites, the company can attempt to provide drug activity and improve pharmacokinetic characteristics.
02 The most explosive GLP-1 drug to date
On the same day Viking shone brightly, GLP-1 dual target drug also released a more explosive clinical data.
In the Phase II clinical trial of treating metabolic dysfunction associated steatohepatitis (MASH, formerly known as NASH), 83% of patients with fatty liver improved with the bi (Bollinger Ingelheim)/ZealandPharma co developed GCGR/GLP-1R) dual agonist survey, reaching the primary endpoint of significantly improving MASH symptoms without worsening liver fibrosis 48 weeks later, and the secondary endpoint of significantly improving liver fibrosis.
The harm of MASH lies in the rapid rate of liver fibrosis in patients, with an average progression of 7 years per stage, until cirrhosis or liver cancer. NASH treatment requires both alleviating fibrosis and reducing liver fat content.
GLP-1 multi target drugs are not only weight loss drugs, but their prospects will be even more optimistic than expected, and they can be looked up at.
Survodutide injection can reduce weight by 19% after 46 weeks, and its uniqueness lies in its potential to become the first anti obesity drug that reduces appetite, increases energy expenditure, and has a direct impact on the liver. Smegglutide cannot increase energy expenditure, and the GLP-1 receptor itself is not expressed in the liver. Whether it can improve liver fibrosis in patients still needs clarification. In a placebo-controlled phase II clinical trial (NCT03987451), the placebo treatment was more effective than smeglutide. Only 10.6% of patients in the smeglutide treatment group showed improvement in liver fibrosis, while the proportion of patients in the placebo group was 29.2%.
Survodutide targets the glucagon receptor (GCGR), which can be expressed in the liver and has the potential to directly act on the liver and improve liver fibrosis.
GIPR/GLP-1R/GCGR is a regulator that maintains blood glucose balance in the human body. GLP-1R has the effects of promoting insulin secretion, lowering blood sugar, and reducing weight. GCGR is involved in blood glucose and energy regulation. GIPR increases insulin secretion during hyperglycemia and stimulates the release of glucagon during hypoglycemia.
GLP-1R and GIPR are highly expressed in pancreatic cells, and GIP regulates liver lipid content and may be involved in the pathogenesis of non-alcoholic fatty liver. However, there is still controversy over whether GIP directly affects lipid accumulation in the liver independent of its effects on insulin and adipose tissue, as the expression of GIP receptors in the liver has not been confirmed.
The glucagon receptor (GCGR) is mainly expressed in liver cells, and its activation can increase energy expenditure (including glycogen breakdown, gluconeogenesis, and lipolysis). Xinda Biologics Masalidomide is also a GLP-1R/GCGR dual agonist and is exploring indications for NASH, which is the strongest BD in the history of innovative drugs in China. It was found in 2019 by Lilly.
GLP-1 multi target drugs not only have stronger weight loss effects, but also can expand indications on a wider range.
Don't be aesthetically fatigued by GLP-1 drugs, as this is the most definite opportunity mapped from overseas. On March 4th, the Hong Kong pharmaceutical ETF with the highest increase in the market was the Hang Seng Biotechnology ETF (513280), whose main constituent stocks belong to the authentic GLP-1 industry chain.
The reason why the Hang Seng Biotechnology ETF (513280) was able to lead the way during the CXO outbreak is also due to the flexibility of its target index's quarterly position adjustment. The Hang Seng Biotechnology Index (HSHKBIO) completed its first position adjustment for 2024 on March 4th, with 2 in and 2 out constituent stocks, including Lizhu Pharmaceuticals and Yaoming United, while excluding Far Eastern Pharmaceuticals and Kangxinuo Biotechnology.
According to the PCF list fitting, Pharmaceuticals and BeiGene are currently the first and second largest heavy holdings in the Hang Seng Biotechnology ETF (513280) index (Hang Seng Biotechnology Index), accounting for over 10%. Xinda Biotechnology and Shiyao Group account for over 8%, China Biopharmaceuticals account for over 5%, Kangfang Biotechnology accounts for over 4%, Kingsray Biotechnology accounts for over 3%, Pharmaceuticals, Kangzhe Pharmaceutical, JD Health, Hansen Pharmaceutical, Juzi Biotechnology Zaiding Pharmaceutical, Sinopharm Holdings, and Hehuang Pharmaceutical all account for over 2%
In addition, the Hang Seng Biotechnology ETF (513280) is the lowest priced innovative drug product in the Hong Kong stock market, with a management fee of only 0.15% per year and a custody fee of 0.05% per year. Compared to other similar products (management fee of 0.5%+custody fee of 0.15%), it is more than two-thirds cheaper, and in the long run, saving is earning!
03 Weight loss pills help, hitting a market value of 1 trillion US dollars
GLP-1 drugs have changed the competitive landscape of overseas pharmaceutical companies, and it is believed that this will also be reflected in the domestic market.
The changes in overseas MNC market value in the past five years have been directly affected by the rise and fall of major single products. Lilly and Novo Nordisk hold the GLP-1 major single product, with stock prices rising 59% and 51% respectively in 2023. Abbreville, BMS, and Johnson&Johnson's major single products Adalimumab, Lenalidomide, and Ulinumumab are facing a patent cliff, and their stock prices have adjusted in 2023, falling 4%, 32%, and 18% respectively.
Let's take a look at the race between Lilly, Novo Nordisk, and GLP-1. The advantages of multi target drugs have already been demonstrated at the beginning.
According to Guosheng Pharmaceutical, the weight loss dosage form Wegory of Eleanor and Nord's Smegglutide was listed in June 2021, divided by the stock price of Lilly from 2015 to present.
From January 2015 to June 2021, the stock price of Lilly rose from $70.06 per share to $235.70 per share. During this period, Eli Lilly launched innovative single products in tumor treatment, autoimmune diseases, and pain management. Among them, Ikizumab was approved as an indication for plaque psoriasis, with approximately 7.5 million patients in the United States. Baritinib has been approved for rheumatoid arthritis, with approximately 1.5 million patients in the United States, lamidomide succinate and gacanazumab approved for migraines, and approximately 33 million patients in the United States. However, all of these combined are not worth mentioning in the face of telposide.
From June 2021 to February 2024, the stock price of Lilly increased from $202.02 per share to $794.47 per share. Tilpoleptide was approved for the first time in the United States for the treatment of type II diabetes in May 2022, and its indication for obesity or overweight was approved in November 2023. The stock market has the function of early price discovery, and whether in 2022 or 2023, the overall stock price increase of Lilly has been better than that of Novo Nordisk.
When AI helps Nvidia hit a market value of $2 trillion, GLP-1 is also helping biotech companies hit a market value of $1 trillion.
Domestic innovative drugs are constrained by payment environment and admission barriers, making it extremely difficult to exceed 1 billion yuan per product, with weight loss drugs possibly becoming an exception.
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