How to Invest in GLP-1 Stocks

What are GLP-1 medications, and how do they work?

GLP-1 drugs, also known as GLP-1 receptor agonists, work by mimicking the effects of a natural hormone called glucagon-like peptide-1 (GLP-1). They primarily target the pancreas and brain to regulate blood sugar and appetite, contributing to weight loss and better blood sugar control. GLP-1 drugs stimulate the pancreas to release insulin in response to meal-related blood sugar increases. This helps to lower blood sugar levels after eating. These drugs also reduce the amount of glucose produced by the liver, further contributing to blood sugar control.

Novo Nordisk’s GLP-1 blockbusters, Ozempic and Wegovy, bind to GLP-1 receptors in the brain and gastrointestinal tract. They work by mimicking GLP-1, reducing appetite, slowing gastric emptying, and improving insulin sensitivity. Ozempic is primarily used to treat type 2 diabetes and to reduce the risk of cardiovascular events in adults with type 2 diabetes and heart disease.

Wegovy is specifically approved for chronic weight management in adults with obesity or who are overweight and have at least one weight-related condition. Both drugs contain the same active ingredient, semaglutide. Wegovy contains a higher dose of semaglutide than Ozempic.

Eli Lilly's Mounjaro and Zepbound, both containing the active ingredient tirzepatide, work by mimicking the actions of two gut hormones: GLP-1 (glucagon-like peptide-1) and GIP (glucose-dependent insulinotropic polypeptide). These hormones play a role in regulating blood sugar, appetite, and digestion.

By activating both GLP-1 and GIP receptors, tirzepatide helps lower blood sugar, reduce appetite, and slow down digestion, leading to weight loss and improved blood sugar control. Mounjaro is approved for Type 2 diabetes, while Zepbound is approved for chronic weight management and obstructive sleep apnea in certain adults.

Who makes GLP-1 drugs?

Novo Nordisk's GLP-1 portfolio includes Ozempic, Rybelsus, and Wegovy, all of which are based on the peptide semaglutide. Ozempic and Rybelsus are used to treat diabetes, while Wegovy is FDA-approved for chronic weight management in obese patients. While they share the same active ingredient, semaglutide, they target different conditions and use different routes of administration (injection vs. oral).

Novo Nordisk says that it controls a 62% slice of the entire GLP-1 volume market share. Ozempic is an injectable GLP-1 receptor agonist used for type 2 diabetes management, while Wegovy is an injectable GLP-1 receptor agonist specifically approved for chronic weight management in obese individuals. Rybelsus is an oral semaglutide tablet also used for type 2 diabetes. Another GLP-1 medication, Saxenda (liraglutide), is also used for weight management. However, Ozempic and Wegovy are the two stars of Novo Nordisk’s GLP-1 portfolio.

The company is currently working on its next GLP-1 candidates, including CagriSema. CagriSema is a once-weekly injection developed by Novo Nordisk that combines semaglutide and cagrilintide, an amylin analog. It is being investigated as a potential treatment for adults with obesity and type 2 diabetes. Cagrilintide works by reducing appetite and increasing feelings of fullness, while semaglutide helps with blood sugar control and weight loss. The company plans to seek regulatory approval for CagriSema in the first quarter of 2026.

Separately, amycretin is a dual-action weight loss drug being developed by Novo Nordisk. It works by stimulating both GLP-1 and amylin receptors, which are involved in regulating appetite and blood sugar. In early trials, amycretin showed promising weight loss results, with some individuals losing as much as 22% of their body weight. Novo Nordisk is planning further clinical development of both the subcutaneous and oral formulations of amycretin.

Eli Lilly says it controls 53.3% of the U.S. incretin analogs market. Eli Lilly manufactures several GLP-1 receptor agonists, including Mounjaro for type 2 diabetes and Zepbound for weight loss in adults. These medications work by mimicking the actions of hormones in the gut that help regulate blood sugar and appetite. Eli Lilly is also developing an oral GLP-1 medication, orforglipron, which has shown promising results in phase 3 trials for weight loss and glycemic control in individuals with type 2 diabetes.

While Novo Nordisk and Eli Lilly remain the unequivocal leaders in the GLP-1 space, there are other players to watch that could carve out a niche within this broad, growing total addressable market in the future. One is Viking Therapeutics (NASDAQ:VKTX), and its candidate VK2735, which is a dual agonist of the GLP-1 and GIP receptors.

There are other notable companies developing their own GLP-1 candidates. These include Amgen (NASDAQ:AMGN) and its weight loss candidate, Maritide, and Roche (OTC:RHHBY ), which is working on several GLP-1 therapies. Merck (NYSE:MRK) has licensed an oral GLP-1 receptor agonist from Hansoh Pharma and is also developing its own candidate, efinopegdutide.

How to invest in GLP-1 stocks

The GLP-1 market, driven by weight loss and diabetes medications, presents a significant investment opportunity. However, choosing between investment opportunities in this space, such as individual stocks and funds, requires careful consideration of your risk tolerance and investment objectives.

Selecting the right GLP-1 stocks necessitates extensive research on the companies, their pipelines, and the competitive landscape. News related to clinical trial results, FDA approvals, or safety concerns can cause significant fluctuations in individual stock prices.

GLP-1 exchange-traded funds ( ETFs) hold a basket of stocks involved in the GLP-1 market, mitigating the risk associated with investing in a single company. ETFs offer a convenient way to gain exposure to the GLP-1 sector without the need for in-depth research on individual companies. Diversification and broader market exposure can make ETFs less susceptible to the risks associated with individual stocks.

While providing diversification, ETFs may not capture the full upside potential of a single, highly successful GLP-1 company. ETFs may include companies that are not performing well or have less promising pipelines. ETFs charge expense ratios, which can slightly reduce your returns over time.

Several ETFs provide exposure to the GLP-1 market, including the Roundhill GLP-1 & Weight Loss ETF (NASDAQ:OZEM), the Amplify Weight Loss Drug & Treatment ETF (NYSEMKT:THNR), and the Tema Obesity & Cardiometabolic ETF (NASDAQ:HRTS).

Should you invest in GLP-1 stocks?

GLP-1 drugs have shown effectiveness in treating type 2 diabetes and obesity and are experiencing rapid market growth. GLP-1 drugs, such as Ozempic, Wegovy, Mounjaro, and Zepbound, have gained immense popularity due to their weight loss effects, creating high demand and potential revenue growth for manufacturers. The GLP-1 market is attracting numerous companies, including both established pharmaceutical giants and smaller biotech firms, which could lead to increased competition and pressure on pricing.

The high demand for GLP-1 drugs has driven up the stock prices of some manufacturers, raising concerns about whether these stocks are overvalued. Increased scrutiny on drug pricing and potential government price negotiations could put pressure on the profitability of GLP-1 manufacturers. If you are going the individual stock route, research the pharma and biotech companies developing GLP-1 drugs, their pipelines, competitive advantages, and financial performance.

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