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Eli Lilly, it.
Had a salespaper. Shares are taken ahead, Yeah, Lily shares it down about fourteen percent. There is something overshadowing that. For that, we're going to bring in Damien Gardett's Bloomberg News health reporter. Damian, thanks for joining us here in the studio. So it looks like this experiment, this drug experiment, the weight loss pill, and that's the thing here. It didn't do as well in the study as Wall Street had.
Expected exactly so it met its goals and it helped people lose weight, which was the whole point of it. This was enrolling people with obesity, but that weight loss was about eleven percent of body weight, and Wall Street was hoping to see something more kin to fourteen to fifteen percent, which would match what's seen with the injectible GLP one weight loss medicines like with GOVI from rival
Novo Nordisk. So despite the trial being a success, and despite this pill seemingly on the path to winning FDA approval and hitting the market as early as next year, the reaction, as you mentioned, was dramatically negative formulaly because these, you know, single digit percentage differences are perceived to be massively important to the ultimate financial future. It's medicine.
Here's the thing for me knowing someone that does this GLP one thing, whatever it is. You gotta reduce the side effects of the nausea, and this one didn't. And that was the I know people that use it and use the injection or saying, boy, when the oral one comes out, I'm told that the side effects will be dramatically less, which is a huge selling point, and I guess that's not what they saw here.
Basically, in this study, they saw gastro intestinal side effects that were comparable to the injectible one, which your point could be viewed as a negative. There was a I think there was a home run scenario where Lily's pill would both lead to a greater percentage of body weight loss and as you mentioned, have fewer of the nausea vomiting field.
Plus that were we being the pharmaceutical biotech, and we're in the early innings of this GLP type obesity thing. I can't imagine why it's not going to get better and better and better and better, or I don't know the science. Maybe we're already at that limit. We are at the limit of this whatever this thing is.
I don't think so. I mean, in granted, you know clinical trials need to play out. Science biology famously unpredictable, but I would say the space is moving in two directions.
One combination medicines that add GLP one to other things that can lead to more dramatic weight loss, and then two more convenient things like pills that you can take that maybe don't have the same effect on body weight, but that would be cheaper to manufacture, presumably cheaper to acquire for patients because these injectables have list prices of inexcess of one thousand dollars a month. So in the best case scenario, let's say five years from now, there
will be an armamentarium of weight loss medicines. If you an armamentarium, which I think I stumbled over a whole bunch of them, like in an armory. Let's say so a physician yes, a physician, could you know, diagnose a patient and say, for some people you will need an injectable that you can lose twenty five percent of your
body weight on. For some people you may be good with an oral medicine where you lose a single digit or even ten percent of your body weight, or mixing and matching using one for maintenance and the upside being theoretically this will one become a massive one hundred billion dollar market for the pharmaceutical industry, but two have knock on beneficial effects for people's health.
So where do we stand with the pills? I mean, what other competition is out there? Who else is working on one that we should keep an eye on as well.
So Novo Nordisk has an oral version of the injectable week govy. It is not as convenient or I would say innovative frankly, as Lily's pill, because it's basically just a bunch of wgovy shoved into a tablet that you eat and it sits in your gut and administers the drug there. And that it comes with restriction. You can't take it with food, you have to do it in
the morning. It's not really as attractive a commercial product, I think it's fair to say as Lilies, but there are other oral options from smaller biotech companies that we may see them progress to the market. There's also a lot of m and a speculation around these firms that a company like Pfizer, for example, which kind of crashed and burned with its first attempt to make a GLP one pill, might acquire them. So this is very much
a space to watch. I would say a year from now, it's quite likely that it will look demonstrably different than it looks right now.
So as I look at the PGeo table, which kind of breaks down where the revenue comes from Lily, where is the cardio metabolic health is at the sector again, now that's that sector is sixty five percent of total revenue. So that's a big deal for Lily.
And that's not inclusive of this oral drug which isn't even approved yet. So I mean, as you mentioned these data overshadowing, Lily had like a blowout quarter. They're approved medicine for obesity and the same thing is sold for diabetes. Both of them beat estimates, they raised revenue guide and profit guidance. They're doing very very well, but I think the stock reaction today is sort of an illustration of just how much is baked into the potential of these medicines.
Lily has flirted with being a trillion dollar valuation company. They're not there anymore, but that's strictly a reflection of what people believe will come of this class of medicine.
So, speaking of the potential, then, so why is the science behind these pills? Why is it such a challenge.
I mean, getting what you can do in an injectable medicine, getting that down into a pill has been deviled the drug industry for many, many years because there are safety concerns, there are dosing concerns. The ideal product is like a superpill that prolongs your life and et cetera. But there's a reason we have so few of those, and it's basically just the trial and error and the unpredictability of biology. And I think these companies are always trying to bend
the curves of failures. But like it remains true that roughly one in ten medicines actually makes it from the lab to the pharmacy.
My freshman year college chemistry lab partner went on to become like this crazy smart dude played a wide receiver in the NFL. Then he became a signist an astronaut space shuttle crazy and I was like, I was like, dude, can you carry me in this chemistry classic because I'm not really into it? And he was super smart. So and then that he didn't peak there, he didn't He didn't peak in the NFL. I guess he peaked the flying around in space.
So good.
There. What's the next thing that you're looking for in a pharmer's space here? What's the next big mover here on a company level that you're looking.
At for weight loss specifically or just more broadly.
Yeah, I think everything.
Actually MRK is working on. Speaking of pills, they're working on a pill version that would be basically a superstat It would lower bad cholesterol to a level that cannot be done with oral medicines that exists right now, and that it kind of follows this same trajectory that I think we're seeing big pharma company years ago after statinshe generic kind of moved away from primary care medicines because it's difficult, you have to run big trials, it's expensive.
If they fail, you lose a lot of money. And move toward oncology and rare diseases. I feel like we're seeing and I think GLP one was sort of the trojan horse in some ways of this. We're seeing the major drug companies move back toward primary care, trying to invent medicines that would be taken by millions of people and they would actually address the number one killer of Americans,
which is heart disease. So I think that's a trend that I'm following, and we'll get data from that murk pill, I believe by the end of the year.
All Right, I mean you and Sam Fizzelli, you guys, do whatever you do in that healthcare thing. Just tell us when something important is happening. Damien Gardelli, a healthcare reporter for Bloomberg News, joinings life here in our Bloomberg Interactive Broker studio. You know, back in my trading days, man, I'd go to my healthcare guy, I say, hey, can
I buy Lily today? It's down fifteen percent. I mean, it feels like an entry point to me, and hopefully Mianas will have a good idea what's going on space.
I mean, you hear the GLP ones are supposed to lower cholesterol, but then you have other He was just talking about another cholesterol, yes, and coming out.
But I mean these GLP things have been I see a new story every day. How they help this, they cure this, they lowered the risk of this. It's not just so I don't know what's going. Healthcare space is a tough, tough one to invest in. I think that's why there's mds and PhDs all over the place in investment firms investing in that space.
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Almost the last time you went to a movie at a movie theater, oh, it was a.
Tough We were supposed to go to the other weekend and see like Superman, but that didn't happen. I watch a lot of them, like I stream them, like for example, Minecraft, like I saw at home and then I didn't go to the theater to see it. Right, that's what like Warner Brothers is dealing.
Yeah, exactly right, So but I'm Warner Brothers Discovery they put out results. I don't know. I mean, my expectations are really low for this company, but they I thought they were pretty decent stocks. Trading off a little bit here, let's get the latest on what's happening at One Brother's Discovery and even maybe a little bit on our friends at Peloton. Jen Sherman's my buddy there. She's a person I drink with. Of course, either wrong anah in us. I'm not gonna do it with some dude. I mean,
you know, why would you do that. She's your friend in your head exactly exactly where friends so githerrang and nothing. She actually is the analyst on all this media stuff. She's down there in our Princeton University sprawling campus. Hey, Gaeta, talk to us about Warner Brothers Discovery, because there are like a lot of traditional media comedies trying to make that transition from the good old days of linear television, cable television, all that kind of stuff to the streaming world.
What did you learn from Warner Brother's Discovery.
Yeah, so, Paul, what we really saw was, you know, a continuation of the same. So the streaming business is doing really well. The studio business is doing extremely well. But TV Networks, which is really eighty percent off their ibadah, is still struggling, and we saw a twenty five percent slump in their TV Networks ibadah. So you know, that
continues to be a pain point. And while there was initially some you know, obviously some excitement about the turnaround and both the streaming and the studio businesses, the fact that there is absolutely no respite inside for TV is extremely distressing and that's.
Why their shares are down like seven percent. Okay, So talk to me about the companies in the process of splitting itself into two separate entities, right, So where do we stand with that? What are the pros and cons that go along with that?
Yeah, so this is you know, one of the best ways for them, or at least you know, the fact that they've kind of decided to do this really follows a pattern in most of the media landscape where they're selling. They're kind of separating the low growth assets from the slightly higher growth assets. The low growth or the low
growth assets being the TV business. That for Warner Brothers, that split will happen in the middle of next year, and really the strategy here is to unlock shareholder value because you know that, you know, they combine their Warner Brothers business with a Discovery you know networks. Of course that really hasn't gone anywhere. And so finally everybody in the in the in the media world is doing this where they're kind of separating out the secularly challenged TV networks.
Uh.
The only problem here is that we still really don't have a very clear strategy. So they have to really outline that, and I think that is part of the reason why we're also kind of seeing this the decline and shares this morning.
All Right, they had the studio had a good quarter here, a couple in some some hits like Sinners, a Minecraft movie, Final Destination, Bloodlines and things like that. Talk to us about the studio and maybe it's kind of it's forward slate. How does that look for the company?
The forward say it, Actually, it looks really good, Paul. You know, they just had their major DC reboot with Superman. Uh, and they're what they're really trying to do now going forward. I mean, they didn't have a Superman movie for years. Their DC strategy was in a mess. You know, it was a mess. They had so many movies out there, it was all confusing lines. But I think finally they've kind of they're going to write that ship. So they've committed to a pretty strong slate of about twelve to
fourteen movies going forward. The big thing for them is to really get Studio EBITDA to about three billion dollars, and they seem to be well on their way. I mean, last year was a complete mess. This year definitely much much better. They're actually if you just look at box office performance overall, they already have about a twenty five twenty six percent share of the domestic box office, so they're only very slightly behind Disney. So they're definitely doing
well and their strategy is working. They have a pretty good content pipeline.
All right, let's switch over at Peloton. How is this company doing? I mean, is there subscribers? Are they continuing to come in? Are people still using this equipment as much as they used to?
So for Peloton, really and the story has not been so much on subscribers, unfortunately. It has really been more about trimming the fat literally at the company and kind of getting profits into full focus. And if you just saw this quarter's results and what they reported for the full year. For fiscal twenty twenty five, I mean, the progress that they've made in terms of profitability has been
absolutely outstanding. So they reported adjusted IBADAH that came in about nineteen twenty percent higher than guidance and consensus their forward guidance, So fiscal twenty twenty six suggested EBITDA guidance is also was also way above consensus. So the way that they're kind of optimizing their operating expenses has been absolutely stellar. You know, just everything in terms of workforce reduction, in terms of inventory management, you know, op X costs,
marketing expenses, everything has been absolutely top notch. The only problem for them is reintegrating demand. And that's where you know, we're kind of really kind of seeing this disconnect because the financial metrics are really good, but the subscriber metrics, unfortunately are not.
Is there a credible plan there to reignite growth there? I just kind of it feels like, you know, everybody who's got one's got one. How did they think talk about that part of the story.
Yeah, so it's really going to be a little bit hard. I mean, yeah, on the margin, I think they can do some things to kind of reignite a little bit of the hardware sales, but in terms of a sustainable go forward strategy that is really still pretty unclear. Paul, So, I think right now, what they're really trying to do is again really get you know, more costs out of the system, maybe increase subscription prices a little bit, so
kind of pad that top line a little bit. But in terms of you know, the overall subscription growth story, I'm not so sure that's really going to be a volume story. I think it's it's going to you know, focus more on kind of rates and price and improving pricing and either how much.
Of that, you know, cutting costs includes cutting jobs.
Yeah, they did actually you know, announce a six percent workforce reduction as well, so a lot of it is going to come down to cutting jobs.
All right, Just one quick thing on Warner Brothers Discovery. What's the timing of this separation it's.
Going to So they announced the formal plan in June. It's going to happen by Midge twenty twenty six, so by middle of next year.
Okay, all right, we'll keep an eye on that. Gith Throng and at and she covers all the media stuff for Bloomberg intelligence down there for them to display.
I mean, you see Comcasts do it right.
Yeah, I think it is simply because you hope that the two parts have more total value than they do together, and so you're concerned that the high growth business is being pulled down by the slower growth cable networks. So you split them out and see how far this, you know, the streaming business in the studio can fly, I guess is kind of the thought there. So we see it all the time and lots of different industries, and there was a time, you know, when all these assets made
sense to be together. But the fortunes, the economic fortunes of the cable network and broadcast network business have been permanently damaged, and it gets worse every year. So you know, you just got to cut those out and see how they trade on a standalone basis. Maybe ultimately they get acquired, or maybe some of these networks maybe get together the Comcast stuff. Maybe we'll get together with the Warner brother stuff and just become bigger and get some cross energy.
So we'll see how that plays out. But we're seeing that across the media space.
Here.
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Intel coming into the crosshairs of President Trump day, particularly the CEO saying he's got to go. I mean, I have no idea where that came from. I'm guessing Man Deep Sing is read up on this. If nothing else, Man Deep seeing senior tech analyst from Bloomberg Intelligence, President Trump calling for this CEO of Intel to quit not He says he's conflicted. Can you give us the backstory what's going on here? As far as you know?
I mean, most likely it has to do with the minority investments that the Intel CEO has in companies within China, and they may have some ties to the Chinese government in some way. And look, he used to be a VC, so this guy has had multiple roles. He used to be the CEO of Cadence, then he was a VC with you know, multiple investments in startups across the globe.
So I'm guessing the board Intel board before they appointed him as the CEO, did their due diligence in terms of looking at all these aspects, and to my mind, I mean, it obviously is a surprise that, you know, I mean, his credentials are being questioned here given the reputation he has in the valley.
Is the American citizen I'm not sure, probably, but I mean, those are the type of things he would expect the board to do their due diligence on.
For a company like Intel, which has had multiple CEOs and clearly is looking for a big turnaround, A lot of people felt this guy had the credentials, you know, in terms of having the experience to turn around a big ship like Intel. And I mean, so far, it's too early to call out how good of a job he was doing. Still early days with his strategy, but clearly he has plans to keep the foundry business and turn around the core chip design business, and he has
raised a lot of cash. So I would say still early days with his strategy. But this clearly puts, you know, a wrench in terms of his strategy.
Just as per Wiki Wikipedia, it says that he is a Malaysian born American business executive. So that's all I got.
Well, something you brought up that they probably you know, people already knew about this. You know, this is no secret. My question is why now? Why bring this up?
Now?
Why the timing now? And the company has been struggling, right, it's chairs now or down what they're down three percent this morning? But why do you think this has taking place now?
I think it's because Senator Tom Cotton, he wrote a letter to the Intel board. They obviously found out some things that he the Senator highlighted, you know, the links to some of the Chinese companies, small companies that had ties to the Chinese government. And I think the board probably has to come up with an answer in terms of the you know, the concerns that were raised by a senator.
Has the company responded at all to the senator or the president?
I mean they have in terms of the initial response, But to the best of my knowledge, I think the board clearly is defending uh, you know, the credentials of their CEO and uh there's nothing here that would put a question mark around the future of libbutan in terms of running Intel at least for now.
Well, that's what I say.
Do you think he would would step down? How long has he been in a position?
Not few months?
Yeah, exactly? Yea.
So how is the Intel call here? I mean the stock obviously underperforming, under underperforming pretty dramatically here. It's you know, flat year to date, but you know, relative to Tech that's just losing ground.
Germanic they are. And this brings back, you know, some of the discussions we were having a few months back before Libbutan was appointed as a CEO that Intel may be broken down, Qualcom may be looking to buy parts of Intel, and then the foundry business would be separated. I feel if for some reason this CEO has to step down and you know, so someone else is appointed, then it brings all those discussions back into play, because so far, what lib Bhutan had maintained was he wants
to keep the foundry business. He wants to turn around through a strategy that involved keeping the chip design and the foundry business together. But if that wasn't to be the case, and if there's somebody new, then I would say that whole aspect around breaking up Intel comes back into play.
All right.
Stock is down three percent today, so it is feeling the impact of that many i've seen. Thank you so much for joining us, Senior techanost for Bloomberg Intelligence. Joining us here in our studio again. The headline Trump urges quote conflicted Intel CEO ten to resign immediately.
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