Eli Lilly's Mounjaro and Novo Nordisk's Ozempic and Wegovy are headliners in the expected boom in GLP-1 weight-loss drugs. But investors are making even more money on tangential players.
Nine stocks in the Tema Cardiovascular and Metabolic ETF, Viking Therapeutics, Keros Therapeutics and Mineralys Therapeutics, are up more than both Eli Lilly and Novo Nordisk, says data from S&P Global Market Intelligence and MarketSurge. That's impressive as shares of Eli Lilly are up 31.5% this year, easily topping the S&P 500's 8.3% gain.
And that's just the first ETF on the market looking to cash in on the expected boom in weight-loss drugs and related areas.
"J.P. Morgan Research forecasts that the GLP-1 market will exceed $100 billion by 2030, driven equally by diabetes and obesity usage," said Todd Rosenbluth of Vetta Fi. "Total GLP-1 users in the U.S. may number 30 million by 2030 — or around 9% of the overall population."
Using ETFs To Profit From GLP-1
Tema Cardiovascular and Metabolic is the first ETF to try to give investors a broader way to play the obesity-drug bonanza.
The ETF holds shares of more than 40 companies tied into the weight-loss theme. Not surprisingly, Novo Nordisk and Eli Lilly are the largest positions in the ETF at 5.3% and 5.1%, respectively. But the broad portfolio is appealing to investors nervous about betting too much on just a few players in such a nascent market. And that opens up opportunities to make money on less obvious stocks.
Viking Therapeutics is the ETF's top-performing stock this year. It's up 252% on hopes the company's drug could be potentially more effective than rivals'. There's also always speculation the firm could be acquired. The San Diego-based company is valued at just $6.9 billion. Eli Lilly on the other hand is worth nearly $700 billion thanks to its shares soaring nearly 130% in the past five years.
The other top-performers this year in the Tema Cardiovascular and Metabolic ETF including Keros Therapeutics and Mineralys Therapeutics, up 60% and 58% this year respectively. Keros is also experimenting with protein-based therapies while Mineralys is working on other treatments in the obesity area, like hypertension.
The Tema ETF is broad. But there's room for competition. The ETF launched only in November 2023 and is tiny. It only has $52 million in assets. The ETF also charges 0.75% annually, among the higher annual fees. "HRTS ... remains small. It is actively managed and holds around 40 positions," Rosenbluth said.
Enter ETF Weight-Loss Drugs Competition
Additionally, ETF rivals Amplify and Roundhill filed plans to launch their own ETFs tied to the weight-loss theme. Both are expected to trade in the second quarter, Rosenbluth said.
Roundhill's version is seen as being much more concentrated than HRTS, "owning a handful of companies," Rosenbluth said.
Amplify's ETF, on the other hand, will own roughly 20 companies. That will include Eli Lilly and Novo Nordisk, with drugs on the market, but also more speculative plays like Viking, too. It will also own companies like Thermo Fisher Scientific that make supplies used in drug research and development. The Amplify ETF will be based on an index built by Vetta Fi.
"Thematic ETFs in general help provide diversification benefits as individual companies could incur challenges to achieving long term goals. This long term trend will likely help many companies, not just the current leaders," Rosenbluth said.
Top Stocks This Year In Tema Cardiovascular And Metabolic ETF
| Company | Symbol | Weight in ETF | Stock year-to-date % Ch. |
|---|---|---|---|
| Viking Therapeutics | 2.0% | 251.5% | |
| Zealand Pharma | 2.0% | 81.5% | |
| Keros Therapeutics | 1.5% | 60.4% | |
| Mineralys Therapeutics | 1.5% | 57.6% | |
| Oscar Health | 1.2% | 48.5% | |
| Shockwave Medical | 2.2% | 43.4% | |
| Tenaya Therapeutics | 1.5% | 39.8% | |
| CymaBay Therapeutics | 0.9% | 37.5% | |
| Silence Therapeutics | 0.5% | 34.9% | |
| Eli Lilly | 5.1% | 31.5% |
