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Diabetes, cancer, and Alzheimer's disease are among the deadliest, most widespread diseases on Earth, affecting more than 500 million people.1 Their cost of care runs into the hundreds of billions of dollars each year.2 Today, innovative treatments under development for these diseases have the potential to improve patient outcomes and lower costs. New drug classes represent a growing investment opportunity set that is likely to reshape the health care sector long term.
Type 2 diabetes and obesity rates have nearly tripled since 1975.3 Today, more than one billion people globally live with diabetes and/or obesity. Both are key risk factors for cardiovascular disease — the leading cause of death worldwide — and are linked to a range of negative health outcomes, including obstructive sleep apnea and musculoskeletal issues, among others.4
A class of drugs known as incretins is changing the course of treatment for diabetes and obesity. Through multiple mechanisms, these molecules directly improve glycemic control and curb appetite, enabling the management of diabetes and inducing substantial weight loss for both diabetics and non-diabetics alike. The most prevalent incretins are glucagon-like peptide 1 agonists, or GLP-1s. GLP-1s have been in use for 20 years, but recent advancements have improved their efficacy and patient convenience. Some treatments are highly effective at controlling blood-sugar levels in diabetic patients. They are also transformative as weight-loss therapies, helping diabetic and non-diabetic individuals lose 20% or more of their bodyweight in some studies.5
The unprecedented growth and ongoing innovation of this drug class provide substantial long-term investment potential. Our research suggests GLP-1s are on track to generate more than US$35 billion in worldwide sales in 2023, up more than 60% from 2022. Considering that just a small fraction of diabetics and obese individuals in the US are on a GLP-1 today, and access to these drugs outside the US remains limited, the growth potential for these therapies could be significant. Industry estimates range from US$70 billion – US$90 billion in sales by the early part of the next decade.6 We believe the opportunity may be even larger, as the next wave of therapies will be cheaper, easier to take (orally versus injectable), and more widely available. Testing for the use of GLP-1s in treating sleep apnea, kidney disease, liver disease, and heart disease is also underway. By boosting the efficacy of diabetes and obesity treatment and helping patients avoid attendant medical complications, these therapies could enable significant long-term cost savings.
For millions of cancer patients worldwide, we expect another groundbreaking innovation to change the standard of care. Antibody-drug conjugates (ADCs) bind to cancer cells’ surface proteins, delivering a targeted dose of a chemotherapy-like “payload” directly to the diseased cells and avoiding healthy cells. ADCs’ targeted, cancer-lethal therapy makes them highly efficacious while minimizing intolerable safety issues.
Like incretins, ADCs have been on the market for more than 20 years and have undergone major improvements in the last decade. They are now safer and more effective. One new ADC proved to be 36% more effective in breast cancer patients than an older generation of the same therapy.7 Another ADC has proven effective with certain types of treatment-resistant ovarian cancer, reducing the risk of disease progression by as much as 35%.8 The single-largest benefit of new ADC technology is the promise of displacing traditional chemotherapy as the standard of cancer care.
We expect further innovation in ADCs to improve upon the current standard of care and to expand the number of patients most likely to benefit from them. Drug companies are also identifying new targets, including for previously unaddressed forms of cancer. Today, most large pharmaceutical companies and many smaller biotech companies are innovating on ADCs. We expect this class of drugs to represent a widening investment opportunity set for years to come.
For decades, medical professionals have referred to neurological disease and disorders, particularly Alzheimer’s disease, as a “graveyard” for drug discovery. Treatment options have been minimal and aimed at managing symptoms. We believe this is beginning to change and we could be in the early days of meaningful therapeutic advancements.
Alzheimer’s disease, which accounts for most dementia diagnoses, is an irreversible degeneration of the brain that negatively impacts memory, cognition, personality, and other brain functions, ultimately leading to death. More than 50 million people globally live with Alzheimer’s disease, a number that is expected to grow to 150 million by 2050.9
New treatments called amyloid plaque-clearing antibodies attack and clear amyloid protein buildups (plaques) that contribute to neuron death. In the past year, two leading drugs in large clinical trials have slowed cognitive and functional decline by 25% – 30% in early-Alzheimer’s patients. The benefits of these drugs appear to widen over time, indicating a breakthrough in the treatment of an intractable and devastating disease.
We see ample room for future innovation, including the potential for in-home treatment and molecules that treat earlier, pre-symptomatic forms of the disease. Companies are testing molecules against novel targets that could have additive benefits when combined with the anti-amyloid antibodies. They are also trying to identify patients with the lowest risk and highest potential for positive outcomes. Given the massive unmet need, future forms of these therapies could treat hundreds of thousands to millions of people each year, creating a new mega-blockbuster therapeutic category. The early success of these drugs is already creating a halo effect, catalyzing research efforts across other forms of dementia and neurological disease.
These developments represent major medical and pharmacological innovations. By tackling prevalent diseases that drive societal morbidity and mortality, they could translate to improved outcomes for millions of patients. They are already disrupting the health care sector and expanding the range of investment opportunities. Our team believes deep biomedical expertise is essential for identifying active drug candidates most likely to address unmet needs and achieve commercial success after launch. We believe the breadth and depth of our research capabilities position us well to exploit inefficiencies in the market and generate above-average returns over the long term on behalf of our clients.
1Estimates from World Cancer Research Fund International, International Diabetes Federation, Alzheimer’s Disease International. | 2Estimates from National Cancer Institute, American Diabetes Association, Alzheimer’s Association. | 3World Health Organization, 2023. | 4“Health effects of overweight and obesity,” Centers for Disease Control and Prevention, September 2022. | 5“Tirzepatide demonstrated significant and superior weight loss compared to placebo in two pivotal studies,” Eli Lilly and Company, July 2023. | 6Dunleavy, Kevin. “Novo, Lilly set to dominate $71B GLP-1 drug market by 2032: JPMorgan,” Fierce Pharma, September 2023. | 7“Enhertu approved in the US as the first HER2-directed therapy for patients with HER2-low metastatic breast cancer,” AstraZeneca, August 2022. | 8“ELAHERE® demonstrates 35% reduction in the risk of disease progression or death versus chemotherapy in FRα-positive platinum-resistant ovarian cancer,” ImmunoGen, June 2023. | 9“New study predicts the number of people living with Alzheimer’s disease to triple by 2050,” Alzheimer’s Disease International, January 2022.
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