More turbulence in the forecast for delta . Im melissa lee, coming to you live from studio b at the nasdaq. On the desk tonight tim seymour, karen finerman, guy aed adami, and julie biel. The move coming after early tests that ozempic could be used to treat kidney failure, as well. The news sending shares of med Tech Companies plunging. Baxter hitting its lowest level in nearly eight years. And this could be just the start. Ozempic and drugs like it could find uses in treating alcohol and drug addiction, lowering blood pressure, just to name a few. So, what could that mean for the Health Care Space . We always say the pendulum swings so far. If weve swung too far in terms of it being the miracle drug, guy. In terms of names like medtronnic, it swung way too far. I mean, this is one of the Great Companies, i mean, people are selling first, asking questions later, were talking about a stock thats at a sevenyear low, which, by the way, actually in terms of valuation is probably reasonable its been for quite some time. Flip side, guy, youre missing the point, earnings are going to come down dont be so sure. Ely lilly is an amazing company. The last pullback, weve seen this before. Every time its been bought, that proved to be the case. The question is going to come at some point, valuation is going to get in the way. If you are looking for places that make sense, mdt is an interesting play. For lilly, its hard to justify at the moment, right . As a value investor, its hard to be long this, but i do think this is such an extraordinary case. We dont know how big its going to get. Obviously it has tons of hype, which we dont normally love, but i feel like its i made a mistake before of inning it, both novo and lilly and just thinking, oh, my god, they have gotten out of control and getting out of both and then had to buy lilly much higher, so than where i sold it. I dont want to make that same mistake again, but i do think it is getting a bit frothy here. The way for me to look at it, it would be to sell some upside calls. I do want to have say in the story, but these reactions a are i mean, im very interested, we were talking about this on the ride home yesterday in the car yes, as we often do. As they do. When we look back on this five years from now, will everyone be on ozempic no. Some kind of glp1. Or something very different. But if you treat kidney and i understand. So many different things, tim. After being cynical, let me be positive. I think all the medical Technology Device companies, i think they should be scared. I think this is at least this st study was powerful. Im not going to challenge walmart and their data. Theyve invested in their data. I bet their data is some on the consumer is best in the world. Well talk about staples and whats gone on in that space. Theres a reason why the stocks have mostly sold off. As it relates to these news, this is a study thats profound. Its a study that ended early, because it was so definitive that it made it very clear for people to say the impact here is significant. And that that is theres no question, and thats why we get into the Addressable Market. I dont think we totally know here. I do think weve made assumptions on, you know, where these are going, and also, the insurance dynamics are still so unknown who can afford them . Who will they be available to . And what it means to the Insurance Companies. Well, the more and more studies that are out in terms of it improving other conditions, more likely it would be reimbursed by insurance. I mean, if its good for them. If you are taking it to reduce cardiovascular incidents, it will probably be insured. If that is found to be the case. But im curious, karen, before we get to julie. You own nvidia. I do. How is this story different, in terms of the possibility of a. I. And how much market cap those stocks gained on the back of the hope and promise of a. I. , versus this . Youre right. Theyre very, very similar. I think that particularly for novo is actually further along than lilly, right . We all expect that they will get approval for weight loss. And they would be horrific for the stock if that did not happen, so, there is a little risk there. I think theyre similar in, you know, the widespread, oh, its going to be in everything and, you know, you got to own it, and actually, to me, nvidias cheaper than lilly at the moment. But the moment is not this moment. On a Growth Perspective . Potential earnings. Right. Right now. But theyre similar, youre right. In terms of the hope. Right. The tote total Addressable Market. This is kind of a. I. Dust, we can name it. We did. This was this was we called, i think we called it nvidia of health care. And i think so far, so good, on that call. And on some level the door is opened wider and wider. Julie biel, would you rather nvidia or novo nordisk . Um me personally, probably novo nordisk. I really agree the parallel between a. I. And the glps is the right one to be making. I think that in the next five years, the glps will have a bigger impact on our economy, because the second order effects are massive. If we suddenly are able to address the problem of obesity in this country, how much thats going to Impact Health care costs. How much thats going to impact peoples psyche, in terms of, you know, antidepressant use. Whats going to happen with gyms . Probably negative things, right . People are feeling helgtier and they go to the gym more, increasing costs, or they recognize that the real way to lose weight is in the kitchen, without eating. And people just stop going and stop subscribing. So, i think theres massive, massive second order effects. And i think for the economy, its going to be really meaningful. Right. And also, for glp1s and its applications, there are studies. There are Clinical Trials being done, as opposed to a. I. , we believe its going to let me push back a little bit. Okay. Okay. And i rarely push balk you should push back more then. You do it well. Nvidia, we talked about how its going to be much bigger already, the Revenue Growth is extraordinary. Thats already happening. And i dont think i dont think its over. Right. But will Companies Look back and say, we spent this much on this nvidia chip and its paid off x amount . Yeah. To the exactly. Nyou know, in a parallel fashion to, you know, these patients, in a doubleblind study took ozempic once weekly and found this reduction in renal failure. Well, we come back to the picks and shovels sorry, julie, go ahead. Nvidia is a capital cost. Its a onetime capital cost. They dont have, necessarily, contracts and terms that theyre going to have an extension out towards. They do in terms of the media supply, but not longterm. People are likely going to stay on these drugs longterm. So, there is, like, a recurring revenue element to this business that, to me, makes it more valuable than onetime capital purchases. Interesting, she says that longterm. That may be the case and going to be perfectly safe. Flip side of these coins, this drug was not set up to be on for the rest of your life. At these dosages. Correct. So, well see how this i mean, theres a lot of runway left in these stories. And i hope it is the wonder drug that everybody seems to think it is. Weve heard about wonder drugs before, and well see. To karens point, though, its interesting in the game of would you rather, i mean, i cant even believe im about to say this. I love lilly for the longest time, but i wunderstand what shes saying. Its a fascinating would you rather. Do you want to play this game, too . I always feel left out. Come on in. I think nvidia. And i just but again, ill emphasize, i think todays news for dialysis companies, again, the impact from diabetes, et cetera, on kidney dynamics and what this means this isnt a vague line. This is right there. And its powerful. And by the way, this is what these drugs really are made for. So as it relates to nvidia, i its been powerful. I still think the company this is kind of what julie was just saying. Companies that have the ability to have some kind of annuity factor, and that goes back to microsoft, who right away rung the register, though i think google was at it before they were. I guess nvidia. All right, so, do the other potential uses for obesity drugs warrant all this euphoria . Lets ask dr. Kavita patel, former white house policy director during the obama administration. Dr. Patel, always great to get your perspective. So, so far, weve gotten a lot of different sorts of studies when it comes to card yoiovascu events, kidneys, there are a lot of other trials going on, particularly for alzheimers. How do you regard this drug right now . Is it in your view looking like a miracle drug . Melissa, id love to think it was a miracle drug ill be honest, i was shocked at the drop in the buy yall sis companies, because none of us were surprised this trial was halted, as you kind of mentioned earlier, a year in advance, because the outcomes were so strong, but they were in d dia diabetics. We know this drug works really well in diabetics. But there are so many barriers to getting there, cost, adherence, prescriber rate. Doctors arent even aware of kind of all the uses. They are just hearing about it on tiktok and thinking about it for weight loss, so i was a little surprised that that kind of sharp decline, however, it is a very big deal. It is a gamechanger. It is something thats going to absolutely create these secondary effects. In terms of its expansion, to kind of be that one drug cures all ills. The mechanism of inhibiting the release, which we get after we eat, kind of any sort of meal and get that sugar input into our bodies, that is not necessarily the chemical basis of what we know for a lot of things like addiction disorders or other Mental Health disorders. And those trials, as you pointed out, are nowhere near as robust as the data as we have on flow, on diabetes control, double bl blinded, randomized control trials that are incredible and we have less than 20 patients in a trial around Mental Health and addiction disorders. So and then rat studies, animal studies. We have a long way to go for that, and ive seen a lot of miracle drugs before. This will probably make the biggest dent in our mortality, and i think thats important to consider. Its s karen, thanks for b on. So, what do you see as the biggest risk for this drug . Yeah, so, the biggest risk is really that we have no longterm studies of this drug. And you talked about it, karen, there are things we just dont know. We are seeing kind of a warning that the fda has put on ozempic to talk about the stomach paralysis or that intestinal paralysis that can be a symptom and very concerning, potentially even fatal, so, were learning more and more. Remember, in a control trial setting, we have a lot of things that we try to control and root o out. When you use it offlabel, you start to pick up things and you start to see a change in the effect size. As you widen the denominator of any drug, youre going to see the limitations and signals show up, and i think thats what youre seeing. But no question, lilly and know vor nor disk and kind of pfizer and thinking about the oral drug, having an oral and in intramuscular approach for a drug, it gives you a lot of shots on goal. Not everybody wants to inject. So, oral drugs could be a big game changer in this, as well. There are limitations to oral, in terms of having to take it a certain time before meals and et cetera, so, timing aspect can be a challenge for people who want to go that route. Right. In terms for the treatment of chronic kidney disease, do you think that ozempic will get that label, and if that happens, as we see more and more of the studies, is it more likely that insurance reimbursement will be much greater . Yeah, so, right now, we are seeing active kind of employers, entire states that are kind of declining to cover on the weight loss indication. It is very hard after looking at this data from flow and well get kind of final packets of the data published, but well see a final package of data that will be so compelling that it would be wrong not to cover this, because it should be superior to what we have available to us. That is something that i think Insurance Companies will have a difficult time, but melissa, i have seen a lot of drugs where there is superior data right now and we dont utilize them. We have uncontrolled, poorly controlled diabetics, not because doctors are doing bad things or patients are doing bad things, we just have an access problem in our country, and its not easy, as you point out, to stay on all these drugs. So, i dont think its as easy as that. It certainly helps when you have an onindication label. Thats just one barrier out of many. All right, dr. Patel, great to get your take, thank you. Thank you. Lets turn now to the market effect in the stocks impacted by the wideranging effects of these drugs. Jared holz joins us here onset. Great to have you with us. When you look at the decimation that happened across the kidney treatment space, how far has the pendulum swung in that direction . Too far . Its not only the kidney space, its the entire medical device space, flight we havent seen value detrux like this, even during the pandemic when there were no procedures being done literally. So, i feel like, yes, its extreme, on the other hand, this is sort of a risk in perpetuity, we really dont know the impact, in terms of the financials and well start getting numbers soon with earnings. Its really tough to defend the stocks, and i think guys have tried to and theyve been stopped out as a result, because they keep going down every day. I actually think the financial impact, the Economic Impact as it impacts med tech, including the kidney players, is probably not so severe near term, but longer term, as the drugs catch on, i think its a little bit more difficult to defend them. Management response is sort of interesting. This prolongs the lifespan of these patients with chronic kidney disease, so, it just ps pushes out the dialysis and when that happens. People live longer, they will need dialysis for longer, so, there is no impact. Do you buy that, or is that just sort of, you know, Glass Half Full . I kind of buy it. I feel like theres some offsets in the market. Whether its orthopedic players, in terms of patients getting thinner, then being more active, then needing some knee surgery or hip surgery later in life, so, all these things are deferred. But i feel like the market is so shortterm focused now that if we start to bring in the thesis where longterm things are fine, but nearterm, there are major issues, i dont know who wants to buy those stocks in this type of tape. So, to the stocks, because seeing you say, take profits in lilly and novo, and you say, theres huge Value Creation and so, where is that . Where are the places that have also at the expense here, again, were talking about dialysis companies, do you go at davita, do you go after baxter, j j, though its a much bigger company. I think im probably overly cynical having covered health care for so long. Taking profits in pharma stocks that have gone bonkers to me makes sense. And thats why we discussed around abvi and merck and trying to diversify. Not selling everything you own, but contemplate diversifying away from them, given the euphoria, and the valuation versus, you know, amgen, pfizer, merck, the entire space is incredibly dispersed, right . We havent seen this type of valuation disconnect between the peer group maybe in the history of the sector. So, its less about being negative on novo and lililly, is finding other options. I dont know if i want to dabble in med tech. The rhetoric and the noise, to me, is overwhelming. Value sometimes can be really value trap. Yes. Especially, it seems, in pharma. When something is done, its done. Were going to get numbers soon. I would have thought that some of the names like dexcom, which start to preannounce, just to give the street some sort of idea of, if were not seeing it, lets show everybody, so, i wouldnt be surprised if we, you know, we could get a p preannouncement tomorrow night, maybe early next week, weeks before they report, because they are literally down every day and today was, like, you know, very extreme, i thought. Bristol myers has its own issues, but merck is another one. Both stocks have not traded particularly well. Feels as if, to me, theres been this move were going to be in big cap pharma, were going to be in eli lilly and novo. Thats been the trade for over a year now. We have the clear winners, and then the other players that dont have this revenue exposure to weight loss, the street is kind of jettijettisoned. They dont want it. They want the companies to do deals, and then when they do, well, was that the right deal . They are up against the gun, diversify, do more m a, hopefully they get create for it, but so far, they havent. What makes you i dont know what the right word is exactly. Cautious about the valuation of lilly and novo. Can you not do the math in terms of getting to the valuation, in terms of the Addressable Market . Or the run has been so fast, so quickly, i mean whaeshgs is it . Because its probably a hard case to make, i would imagine, to investors, like, jared, you told me to diversify away from lilly and here we are, new high today. I totally get it. Yeah, you can make up any number you want for the Addressable Market. We get that. The issue is the supply versus the demand. The companies cant make enough, i dont think, to actually president up revenue thats going to appease investors, given where the stocks are trading, right . Theyre going to report in a few weeks. Mounjaro is still not approved for obesity. So, that line item is not going to be massive, we know that. And the payers, at some point y, are going to say, we get it, but we can cannot pay for these at this volume without seeing the benefit. We have no idea when the offset is going to be. So, who is more expensive through that prism, lilly or k novo . I think lilly. Jared, thank you. Thank you. What do you think . I think about the insurers and, you know, if it is as effective as it is, theyre going have to pay for it. If you have obese patients who now are not, youre paying whatever it is per month to keep them on, in indefinitely thats obviously a big ticket, i dont know what the other side of the ledger is, how much are you saving from all of the things that go along with that heart attacks that they dont have, the knee replace ms that they dont need anymore, et cetera. Yeah, but at jared pointed out, there have been a few that have been coming on. Look at amgen. The closing of that horizon deal