New disruptor alert

Warren Buffett said, “It takes 20 years to build a reputation and five minutes to ruin it.”

In the case of WeightWatchers International (WW), it took 60 years to build a multibillion-dollar empire, which crumbled seemingly overnight.

WeightWatchers made billions of dollars selling weight loss plans. As recently as 2018, its stock was trading at $100/share.

Today, it’s trading at $0.25/share, and it just filed for bankruptcy two weeks ago. Look at this chart:

• The award for the most disruptive drug goes to…

Semaglutide—aka Ozempic—wins my vote.

In the 1990s, scientists studying the Gila monster discovered it can survive on one meal per month. They created a synthetic version of this lizard’s spit and turned it into the most important drug of the 21st century: semaglutide.

First, we discovered that semaglutide treats diabetes. Then, we found the drug—best known as Ozempic—melts fat off waistlines.

In a slew of recent trials, doctors are now discovering this “miracle in a syringe” also:

• Treats Alzheimer’s disease.

• Reduces heart attacks and strokes.

• Suppresses addiction.

• Lowers the risk of developing kidney, pancreatic, ovarian, liver, and colorectal cancers.

Ozempic could give the iPhone a run for its money as the most successful product on the market. I wouldn’t be surprised if Danish creator Novo Nordisk (NVO) sells a trillion dollars’ worth of it.

I’m a big believer in staying fit and healthy the old-school way. Get out of breath at least every other day and relax on the sugar.

But I’m all for Ozempic. I know so many people who’ve shed weight taking it. It was the “kick” they needed to start living healthier.

But WeightWatchers has been the biggest loser from Ozempic (no pun intended).

Why bother going to group meetings and fight cravings when you can just take a fat-killing jab instead?

• Novo’s stock soared for peak gains of 450% after the company released the wonder drug in 2017.

US drug giant Eli Lilly (LLY)—which now has its own lineup of semaglutide—skyrocketed 1,000% over the same period.

Those are the kinds of gains disruptors can hand out.

Longtime RiskHedge readers know disruption is the most powerful force in markets. It’s ruthless. It doesn’t care how big you are or how long you’ve been on top.

WeightWatchers is just the latest victim.

Blockbuster dominated video rentals until Netflix (NFLX).

Nokia led mobile phones until Apple (AAPL) took over with the iPhone.

Amazon (AMZN) wiped out iconic retailers like Toys “R” Us and even the mighty Sears.

The same playbook repeats. A disruptor shows up. The old giant stumbles. The disruptor claims the spoils and sees its stock surge.

• 2024: The year humanity first gained control over obesity.

That’s what future historians will write.

A recent survey found that 6% of Americans are taking semaglutide. 2023 was the first year in recorded history that the US obesity rate fell. Coincidence?

Source: Financial Times

Maybe Ozempic will have a bigger real-world impact than artificial intelligence.

Here in Ireland, you basically can’t get semaglutide unless you’re morbidly obese. So a black market for Ozempic has emerged. When law-abiding, God-fearing citizens are turning to the black market for your product, you know you’re onto something.

Right now, taking Ozempic requires jabbing yourself with a needle. Inconvenient.

Imagine how many more will try it when pills come out.

Novo Nordisk’s oral version, Amycretin, just showed promising Phase 1 results. Eli Lilly is also racing to develop a semaglutide pill you swallow.

• NVO has traded this cheap only twice before…

In 2017, right before Ozempic launched... and near the bottom of the 2008 recession.

Based on its forward price-to-earnings (P/E) ratio, the stock is as undervalued as it’s likely to get.

Investors have been selling Novo Nordisk lately on competition fears. The stock has plunged 50% from its 2024 highs. They’re making a mistake.

Competition is real. But so is Novo Nordisk’s lead. Ozempic is a household name. Just like no one says “search engine” (they say Google)... no one says “semaglutide.” They say Ozempic. That brand power is huge.

The GLP-1 (obesity drugs) market is set to more than double by 2030. There’s room for multiple players.

And Novo Nordisk is still growing fast. Its latest quarterly report showed revenue jumping 20% year over year.

I wouldn’t quite put Novo Nordisk in our Disruptor 20 portfolio.

But if you want exposure to the most important health disruption of this decade, this is a great price to buy it.

Stephen McBride
Chief Analyst, RiskHedge

PS: Disruptors don’t just change industries—they destroy the old guard. If you want help spotting the next great disruptors, join me each week in The Jolt.