A major exchange-traded fund provider is betting on the long-term popularity of weight-loss drug GLP-1.
GLP-1 & Weight Loss ETF (OZEM) from Roundhill Investments, which began trading last week, tops the leader pairs Eli Lilly And Novo Nordisk With players developing new treatments for weight loss and diabetes. CEO Dave Mazza said his company is tapping into the industry's tremendous growth potential.
“The ability to have active management of overweight companies that are already in the market to produce drugs and then move forward to identify those that are at certain stages is powerful,” Mazza told CNBC's “ETF Edge” last Monday.
Eli Lilly and Novo Nordisk each had a roughly 20% weighting in the ETF, according to Roundhill's website as of Friday. The next three largest are Zealand Pharma, Amgen And Chugai Pharmaceuticaleach of which has a weight of less than 5%.
In the past year, Eli Lilly shares have risen 90%, while Novo Nordisk shares have risen 68%, as of market close on Friday. Mazza dismissed concerns that investors would not benefit from this rise, noting that the weight-loss drug industry is still in its “early days.”
“The market has a lot of room to grow as other companies come in, whether they offer more powerful drugs or things that you don't actually need to get via injection.”
He also sees the makers of GLP-1 drugs following a similar path to AI-related stocks.
“It's kind of like thinking Nvidia With artificial intelligence. “They just got a head start. (Eli Lilly and Novo Nordisk) pivoted to focus on diabetes and weight-loss drugs a few years ago, and we were able to get to market and achieve remarkable results,” Mazza said.
Following last Tuesday's launch, shares of Roundhill's GLP-1 & Weight Loss ETF ended the week down nearly 2%.
