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On Today's Bloomberg Intelligence Show, we dig inside the big business stories Impactnew Wall Street and the global markets.
Each and every week we provide in depth research and data on some of the two thousand companies and one hundred and thirty industries our analysts cover worldwide.
Today, we'll discuss why Apple's iPhone shipments are falling in China.
Plaus we'll look at Boeing's leadership overhaul, with CEO Did Calhoun stepping down at the end of twenty twenty four.
But first, Robinhood Market's best known for offering commission Free Trading is rolling out a credit card to US consumers as it looks to become a broader financial services company.
The Robinhood Gold Card will be offered exclusively to members of the firm subscription based Gold program.
For more, guest host Bailey Lipshaltz and I were joined by Robinhood, co founder and CEO of vladit Tenev. We first asked him for more context on the company's latest news.
We were really excited to announce this. We've been working on it for quite a while and we didn't just want to launch another me too credit card. We really wanted to come in and do something special and really lead the industry. So it's really the best cash back rewards that we found in any credit card on the market, the best digital experience, and really the best design. We have a solid gold card that's basically a hunk of metal.
It's extremely iconic, very simple, like, very well designed. We're really proud of the product.
How does the credit card fit into the business, because I know early last year you guys announced a retirement products, so it feels like you're trying to expand away from the core trading platform.
Yeah, so as a business Holistically, we're focused on three things. The first is being the number one platform for active traders. Right now, we're number two, but we have a path to being number one in some number of years, and that's really through user experience improvements, product innovations like twenty four hour market, adding new asset classes like futures, new platform launches like our web Pro platform, which we've announced. But we don't want to just be an active trader platform.
We also want to grow wallet share with our customers and help them build wealth. That's where Robinhood Gold comes in. That's where our innovations and the retirement program with three percent match come in. And of course, now the credit card is sort of another pillar of us growing wallet share with customers and helping them do all of their financial activities one place via Robinhood.
So are you competing with this card with the bank issued Visa master cards? Is that the market you're now going into.
I think that we're trying to do something really interesting with this card. So if you think about premium credit cards, the best ones out there, accept less than half of the people that apply.
Is that right? Is that half of that Chase Sephi or is that an platinum or whatever.
Those classes of credit cards really like the typical sort of like super prime premium rewards cards, and they have high annual fees. So what we wanted to do is, in the same way that Robinhood democratized stock trading and made it accessible to a wider group of people, we want to open up the private client experience. I don't know if you've been to a Chase branch, but you can see there's two doors, one for the private clients
and one for everyone else. And the whole idea behind Robinhood Gold is giving that private client experience for as little as five dollars a month, opening it to everyone. And it starts with the premium credit card. Of course, the retirement benefits where you get a three percent match, the first and biggest in the industry, the five percent apy on our cash, which is just an institutional grade, high yield offering that you have to have, you know,
millions of dollars to match at other brokers. So yeah, we're putting all this together and we're seeing Robinhood Gold customers actually depositing the lion's share of their money into Robinhood and really growing with us. And I think we have an opportunity to offer them services for all their financial needs in BLAD.
The perks are pretty sweet, as you mentioned, three percent cash back on all purchases. Do you make money off of this? How is this going to be kind of another peg for the profitability and the growth of the company.
Yeah. Two things there. One is we do obviously any business line we enter, we intend to be profitable over the long run on a standalone basis, so not just a creative but we anticipate this being a profitable business line just within the card portfolio, and that's through not just the interchange transaction revenue, but also the lending business
through the card. We anticipate this would actually be a very attractive card for people building credit over time, and not just folks that pay off their balance in full. The other side of it is we see that when customers adopt Robinhood Gold, their rate of deposit growth and account balance growth is much higher than non gold customers.
They also adopt our products at a much higher rate, and so even though they're getting so much more value with all these industry leading rates and value props, the revenue that accrues to the business from the gold relationship is also multiples higher than non gold customers. And we think the credit card since it's so core to people's financial needs. Typically all of their the line share of spending goes through credit and if you're using a credit card,
much easier to grab the paycheck deposit. We need to carry his cash around.
Now, this is the guy who walks around with hundreds of dollars in his pocket.
I don't know why I asked myself to say, when you walk into a bar, the jersey short good cash on the bar there?
All right?
So who is the typical Robinhood customer these days? Client?
These days?
A typical Robinhood customer, I would say, is someone in their thirties. They tend to be an early adopter of technology. They have. You know, more, half of our customers make over one hundred thousand dollars in annual income. So it's not sort of like the paycheck to paycheck customer as maybe some people think.
Yep.
And we also have much larger customers with big accounts. We recently have been introducing matches. In fact, we rolled out another initiative one percent unlimited pose and Match into Robinhood for all dollars deposited for our Gold members. So basically, most financial firms charge you a percentage to keep your money there as a management fee. We're paying you a percentage to move your money with us. And these types of offers have really attracted people with much bigger accounts.
We've had customers with tens of millions of dollars moving those accounts to Robinhood and they've been very happy with the experience. So we have been adding capabilities to serve customers across the entire market, not just sort of in that middle tier, but also people with more money and people with less who are just getting started. We also would like to serve them and have been focusing on that demographic since day one and vlat.
When I talk to skeptics, they point out that you guys are heavily reliant on options, trading crypto volumes, and that driving the business. Paul mentioned their huge run up over the last twelve months.
It's still down.
Forty eight percent from the IPO price. What is the kind of mission in the next coming months and years for the company to get back to that IPO price and trade higher.
Well, I think we've been doing really well focusing on the inputs of the business. I can't really control the stock price directly, but if we're growing revenues, if we're diversifying revenues, if we're launching innovative new products for our customers, I think we can kind of grow through market headwinds and high interest rate environment and be sort of like a company that thrives in all conditions. And you mentioned
the revenues and options trading and all these things. But what's happened in the past couple of years is the revenue profile of the business has diversified as we've rolled out all these products. As of the last earnings report several earnings calls, more than half of the revenues actually net interest margin, not even transaction base. So as we add more of these products, like the five percent yield on your cash, the profile of the business has also changed.
Our thanks to Robinhood, co founder and Ceenev, we.
Moved out of politics. President Joe Biden has gained ground against Republican Donald Trump and six of the seven key swinging states, and significantly so and at least two of them. The results make for the Democrats the strongest position yet. In a monthly Bloomberg News Morning Console Poll.
For more on this poll, we were joined by Mark Niquett, Bloomberg Real Economy Team reporter. We first asked Mark to break down some of the poll's findings.
The poll shows it's a monthly tracking poll that we've been doing since October, and it shows that Trump's still doing pretty well in Georgia, Arizona, Nevada are the most significant findings is that Biden has improved his standing in Michigan, Wisconsin, and Pennsylvania, sort of the blue Wall. I think these states are going to decide the election, and he needs to to win these states if he's going to get
a second term. In Wisconsin, Biden now holds one point lead over Trump after trailing and by four points in February. In Pennsylvania, the candidates are tied after Trump had a six point lead in February, and they're also tied in Michigan.
Any common denominator here, Marcus to what might be driving of these poll numbers.
The timing of the poll was interesting. It was conducted March eighth through the fifteenth in the swing states, and March eighth is a day after Biden's State of the Union address, which was pretty fiery, and I think, you know, alleviated some Democratic concerns about the president's age and his fitness to take on Trump a second time in a rematch. And it's also midway about March twelfth is Super Tuesday, when both Biden and Trump sort of clinch the respective nominations.
They got enough delegates to clinch, so it kind of really made it a binary choice. You know, we knew this was going to be the outcome, but I think the Democrats in particular, we're thinking that until it was really clear in voters' minds that this was going to be a rematch and it was Trump or Biden, that's their choices, that you know, Biden was not going to
do as well in the polls. So this is sort of the first poll that you know, we have clearly established that it's going to be a Trump Biden real match.
Are voters voting because they like the candidates or because they don't like the other one?
Well, Interestingly, our polls showed that in the case of Trump, most of the support is coming from people who like Trump. Only three and ten Trump supporters said they were voting for Trump because they didn't like Biden. They're essentially voting against Biden. But the case was different for Biden. About half the supporters of Biden so and they were voting for the president essentially as a vote against Trump. They didn't want to see Trump get back into the White House.
There was even more pronounced in Wisconsin, were like six and ten of the supporters of Biden were voting for him because they were voting against Trump.
To that point, are those voters more sticky or not? Like, is the anti vote stickier than the pro vote?
Well?
Is what we're going to find out is what's more motivating, right, support for your candidate or desire not to see the other candidate win. You know, I think Trump has benefited over time from enthusiastic support from his base and base turning out board for him, but the negative feeling can also be a very strong motivating factor, could drive folks to the polls specifically to vote against Donald Trump because they don't want to see him back in the lighthouse.
But we're going to find out what's more motivating, you know, voting for your guy or voting against the other guy.
All right, great stuff, really appreciate it, Thank you very much. We look forward to the next poll as well Mark Nkatt, He's Bloomberg Real Economy reporter, joining us in the latest Morning Console poll.
Coming up on the program, we'll discuss why Apple's iPhone shipments are falling in China. You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in that research and data on two thousand companies in one hundred and thirty industries. You can access Bloomberg Intelligence via b I go in the terminal.
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We look next at the aerospace industry in Boeing. Earlier this week, we got news that Boeing CEO Dave Calhoun is stepping down at the end of this year. It's all part of a leadership overhaul.
This comes as a planemaker has been dealing with the aftermath of a near catastrophic fuselage failure on a seven thirty seven Max nine aircraft early this year.
Boeing also said the chairman, Larry Kellner, will not stand for reelection and stand deal. Chief of Boeing's commercial airplane division is departing. He'll be replaced by Chief operating Officer Stephanie Pope.
For more, we're joined by George ferguson Bloomberg Intelligence, senior aerospace analysts. We first asked George for his reaction to the news.
My reaction was, you know, we thought Dave Calhoun probably would be going. I hate to sort of wish that in anybody, but it seemed that, you know, the problems in the manufacturing business just there were just too many of them over too long a period of time to say that he was as effectual, if that's a right words, as he should have been at bringing everything, you know, back into order. It does seem weird that it's going to take them till the end of twenty twenty four
to find his replacement. There's a lot of things that have to happen between now and then that the company just can't wait for. They've got to serve to the FAA their view and how they're going to stabilize their production process, and at the same time, right they've got to start to increase build rates so they can improve profits and cash flow. They can't wait a year on
that either. So there's a lot of super important things that are happening this year to wait till the end of the year to replace the CEO that doesn't seem to have been able to get that job done well. It seems like a lengthy timeline to me, But it may just be that the board was flat footed and realizing that the CEO had to go and as nowhere in a search and so they've got to start from scratch here and figure out who the next person is.
What can you tell us about Stephanie Pope. She's going to be stepping up and taking a big role with the aircraft business.
Yeah, so she's been around for a while and she's been CFO of that aircraft business. So it seems like a logical in side choice. But I think when you have a you know, ahead of that department stand deal who's leaving after thirty plus years of the company, they're hard shoes to fill. You look around internally for who could.
Be the next person.
The CFO is always in particularly decent shape because they understand at least all the financials about the business. She's also had, you know, had positions at Boeing Global Services, which is a super successful business inside Boeing, high teens margins. To me, the only thing I don't see in her background is that manufacturing skill set. I think the next CEO has to really have a manufacturing engineering mindset background, and I think that's that's what I don't quite see there.
Sort Of like Larry culp No.
I mean Lowry obviously, he's pretty busy, and honestly, the job he has now a GE could be better profits, more fun than Boeing because there's a lot of great technology inside GE and there's a huge bow wave of a lot of maintenance coming that really high margin. I think you'd really have to work hard to get like.
But George, I mean, does he like fun or does he like a challenge? I mean he was the one that went did GE to begin with.
I do think he likes a challenge, and I think he showed his ability to navigate it really well at GE. But again, you know, they're just kind of getting to the super fun part. I think there's still challenge inside GE, but he's just getting to the point where he's got aerospace broken out and he can really make a lot of hay here. So someone like him is absolutely what
I think Boeing needs. I don't know, maybe he's got a you know, maybe there's a protege somewhere inside there that they could tap or something.
Thinking about who could be the next CEO. Here is the expectation, George, that it'll come from an external candidate or internally And are there any early front runners? Do you think?
Yeah?
So, I definitely think it's going to come external, right. I just think the fact that you've seen this purge of the CEO, you see the purge of commercial airplane president, means that we've depleted some talent there. There was you know, former heads of boeing'smmercial airplanes that had left when Muhlenberg came on. They could potentially be, you know, in the
running for something like this. I know a couple of them wanted the CEO job and didn't get it, But I'm almost positive you're talking about something that's going to be outside. Ray Connor is the name that comes to mind. Used to be the head of Boeing Commercial. Not sure what he's doing now, but he might be on the list.
Similar what's the culture like at a Boeing in terms of getting an outsider?
You know, I think Boeing is one of those companies. I think you get a job and you stick around for lots and lots of years, and so, you know, I think that bringing people in from outside is something you do only when you have a breakdown like you've had now. Right under normal circumstances, there would be very clean lines of succession inside Boeing. You know, you would move up through the ranks and expect opportunities as you rose.
But there's been so much tumult in this business over the last I don't know, you know, four years or so that I think that it's a time in their history where they're they're going to be going outside a lot more to replenish some of these senior management ranks. So they've just they've turned over a bunch of it.
And George, it seems like this is no quick fix here. It seems like it was years, maybe even decades in the making in terms of maybe the deterioration of some of their quality controls.
Here.
When you talk to an industry folks, people at Boeing, is there a pathway to kind of get back to where they were in terms of quality.
I think there is, but it's a lot of attention to detail. And like you said, it's it's slow work, so you can't sort of wave a wand I think and make it, you know, happen overnight. Really, you know, I think has a lot to do with people and processes, right, And that's why I think you want someone like a Larry Koppe who loves people in processes. You need and
I mean that just takes time. You need a lot more, you need training, you need, you need, you know, in the interim, you probably need to beef up some of the oversight. You need to get into your supply chain. You need to give them a hug, you need to help them out, you know, help them bring you quality products. It's not a hey, how are you going to make my margins work better in the next couple of years discussion, right, It's really, like I said, it's people and processes. It's
the softer side of management. I think Boeing over the last decade or two really was more into the how do I squeeze you to get you know, you to give me products at a cheaper price. So I could build my margins recipe for success. It wasn't that wasn't quite the term, but there was a term like that that Boeing was using with their suppliers. It was all about squeezing them. So the supply chain is all. You know,
they've been scarred. They're worried about when Boeing comes to talk to them, and I think they need to get to a world where when Boeing shows up, that they think someone's there to help them and is looking out for their best.
Interests our Thanks to George Ferguson, Bloomberg Intelligence, Senior Aerospace Analyst.
We moved next to big tech and Apple. Earlier in the week, we reported that Apple iPhone shipments in China fell about thirty three percent in February from a year earlier, and that's citing data from the China Academy of Information and Communications Technology.
For more on this, we were joined by man Deep Sing, Bloomberg Intelligence Senior Tech analysts. We first asked man Deep why he thinks China iPhone shipments are falling.
Clearly, you know they have a problem both with the demand for iPhone as well as competition. I think one of the things that doesn't get as much attention right now is the fact that Huawei has a comparable phone to iPhone, and the reason they have been able to do it very quickly is because of the supply chains
that Apple created in the region. So a lot of those suppliers are actually making the phone for Huawei and they don't have to do much because Apple is at the cutting edge when it comes to the chip, the assembly, and so all the supply chains. Guys are actually diversifying themselves and making phones for Shami Huawei. Huawei is the notable share gainer here, but that just goes to show that, you know, they are also diversifying.
I don't know the answer. I can't think of an answer for Apple, particularly on a supply chain. I can pencil out China going too close to zero in terms of sales. I could pencil that out, put a multiple on it, and there we go. There is no Apple without China. In terms of supply chain. There is no Apple without that supply chain.
And for the longest time we thought the risk for the suppliers is if Apple is not giving business to them, they don't have anything to manufacture. Well, guess what they have, you know, a Huawei and the local guys, and so that's how they are going about the business right now.
So if I'm Tim Cook and I have seen this for years and I want to diversify my supply chain, what does that look like? What is that?
I mean, it's a we did a big report. It's a multi year yes, and you know, the assembly part is already moving to India. We've seen a big ramp up in India. Almost twenty two percent of the phones last year iPhones, not the highest end, but a lot of the models were assembled in India, and gradually they will have to diversify, you know, the assembly side. The problem they're running into is the all the components that you need to manufacture an iPhone and the complex device
that it is. It's not that easy to just you know, lift and shift your supply chains into a different regions. There's so many dependencies both with TSMC and the other suppliers that feed into the Chinese assembly. So all that needs to be relocated, and it will happen. It's just it's a multi year effort, and right now the focus
is also shifting towards on device AI. I feel the reason why Chinese government is really cracking down is because the next wave of this is AI will run on device, and they don't want a US based company probably to be running AI you know on device in the in the region. So that's the other aspect of THEIRS.
A bear case could be made here, long term, multi year bear case here. I've got supply chain issues. I've already zeroed out my China revenue and.
Aris's revenue is going to be changing because of all the new laws right in terms.
Of core cases could be Yeah, the DOJ lawsuit, it's come at the worst time for Apple. I mean, they should be doubling down on other markets where they can acquire share that they may end up losing in China. Obviously, the dj lawsuit is not helping. And the EU regulation they are digital markets acts, so from a regulatory perspective,
you're right. I think the bear case is really around the revenue exposure and I'm sure the supply chains they'll moddel through in terms of making sure they can still make the phone. And you know, as long as the manufacturers or they are getting the business, they don't mind Apple continuing to you know, have the supply chains remain intact there. But I think the hard part would be the EPs drawdown as a result of the Chinese revenue going down.
Why can't they just build stuff in the US? Like, I know, it's not as easy as like here's a plant, let's PLoP it down in the US. But like why is India the next port of call? Like why not the US?
Well, again, it's the components. So think of the bill of Yeah, there are certain components that can only be sourced over there, and over time they can move things around. But if you're talking about, you know, a twelve hundred dollars phone, it has a certain bill of materials. Things are done in a certain way. That's why it comes at that cost. We're not talking about a five thousand dollars phone.
You remember when the iPhone was coming out of a thousand and it was like, no one's going to pay that. This is insane, this is ridiculous. Now it's like twelve hundred whatever.
Yeah, exactly.
The market adapts as we've seen here, all right, So if you're a bull, are you simply saying there's two billion units out there? They'll forget to way to make money off of those things and that ecosystem.
I mean The bull case is still the ecosystem and the fact that they have an install base of one point three billion users you know who still have the iPhone and they will refresh the phone at some point, and everyone still likes the iOS ecosystem. I think what Huawei is doing is laying out a path where people can move out of the iOS ecosystem, and then the whole AI thing and the regulatory stuff, I think is just making it worse. Word the timing of it is just worse for Apple right now.
The Developer conference in June, right the pressure is gonna be big for.
Them to reach.
And remember they're looking at leveraging by do now. The reason for leveraging by Doo for AI in Chinese region is just to please you know that, the fact that they're using a local AI player as opposed to deploying their own ais our.
Thanks to Mandy, you've seeing Bloomberg Intelligence senior tech analyst.
Coming up on the program a look at how Danish Drugmakernovo Nordist is expanding its treatment for cardiovascular disease.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing research and data on two thousand companies and one hundred and thirty injuries. You can access Bloomberg Intelligence via b I go on the terminal.
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Now to the cruise operator Carnival, the company reporting first quarter revenue the beat analyst expectations. The company also raising its profit forecast for the year on record bookings volume, and this includes high demand for cruise vacations combined with cost management including debt, refinancing and repayment.
For more on this, we're joined by Jody Lorie, Bloomberg Intelligence credit analysts. We first asked for her take on Carnival's first quarter earnings.
I would say that when you look at Carnival, it's really a cash flow story. It really is a credit story more than anything else. And the bookings are sort of confirming that. Now the booking level if you include short and long term, it's actually not at the peak, which was second quarter of last year, but it's right near the peak, and based on what management is saying, it sounds like second quarter of this year my top
second quarter of last year. That said, I think more importantly, the company is starting to attack some of its debt load, particularly in of its secured areas, which will help to sort of free up the balance sheet a little bit, provide some flexibility, make it so that the company has an ability to sort of make its way back to high grade ratings as it's been targeting for twenty twenty six.
H Jody, you call that out just using the FA function on the terminal Carnival cruise almost thirty two billion dollars in debt compared to a market cap of twenty one billion dollars. How does that stack up to the likes of Royal Caribbean or Norwegian and some of those other piers in the cruise liner space.
So yeah, Carnival was able to bring down their debt load to about thirty billion over the past year, and it's likely that it'll probably end this year around that level based on what they're taking in in terms of ships. That said, it is significantly higher than Royal, it is significantly higher than Norwegian, but on a leverage perspective, it's sort of middle of the pack at the moment as compared to Royal and Norwegian. Royal is a few quarters
ahead of Carnival in terms of its deleveraging strategy. Management at Royal actually bumped up their narrative around getting to investment grade level metrics to do it earlier than twenty twenty five, and Carnival stuck to that twenty twenty six number, which I think is descriptive of being a little bit more conservative, particularly with the backdrop of everything happening globally, not just the Baltimore Bridge situation, but also at the
Red Sea and everywhere else that's affecting Carnival more broadly because of its more global nature.
I'm looking at again, the FA function is barely called out. I still see, you know, three four billion dollars in capex every year. Are they buying ships or what are they spending that kind of money on?
Yeah, the three four billion dollars of CAPEX is primarily ship. There is a portion of it that is in terms of maintenance CAPEX right, your ships get old, you have to update them every few years. You have all these sort of different requirements related to it. They also have that celebration key that they're rolling out on, which is on the Grand Behind and that's to rival their peers, which have been investing really heavily also into island presence, right.
The Caribbean island presence is a money maker for all of them. It's this captive audience. They bring the people who are on their ships to these islands and to these sections of islands, like you know, not the whole Grand Bahama, but that carved out sections specifically for carnival, and you know, wine and dine them get them to spend extra money. That onboard spend is really where you see that.
Margin you mentioned wining and dining. I just want to look at some of the other areas that you cover talking about wind resorts, MGM, Hilton, all the funds, all the fund stuff. Yeah, you have the best job. I hope you take advantage of it. But when you look at the underlying business dynamics of some of the other areas that you cover, what are we seeing in terms of hotel demand and hotel sales and what that means from a credit.
Perspective, so hotel demands, hotel sales. It is a bit mixed regionally, but I think overall we're pretty optimistic about this year, and that's a function of the fact that business and conference is really picking up this year as compared to the past few years. You know, we're at that point where that post pandemic narrative has sort of played out and we're getting to more normalized. That said,
there are areas of expansion and growth. We're also seeing that all inclusive area be a much more attractive area for a lot of these companies, and I think we are seeing some rivalry across the board when it comes to hotels, casinos, cruise lines as these destination opportunities. We're talking Las Vegas obviously, not the regional casinos that's a little bit different, but Las Vegas, Macau, the cruise lines,
and the hotels. There's a lot of sort of this destination narrative that's going on to get people to spend that extra money and to sort of go on vacation, live.
Life to the fullest.
Now, we do have these partnerships that are happening between Marriott and MGM, but then also we have an MGM and carnival relationship, So there is this fluidity that's happening within my industry that makes it sort.
Of interesting and you get a great view on the consumer Jody with you know, the coverage you have again hotels and casinos and cruise lines. Where are people kind of spending their dollar And it seems like they're still spending on that whole experiential thing, the experiences. What are the companies you cover, what are they saying is to the how that's likely to play out?
So consumers are definitely spending still on experiences. We're still very much seeing it now. If you compare twenty twenty three twenty twenty two, it's a different sort of narrative than twenty twenty three twenty twenty four because the base is a much greater, right, if you looked at the base going back to twenty twenty one, you're dealing with nothing,
building on nothing. It's very significant. That said, there still is that narrative of growth and that consumer spending on experiences where we sort of wonder is what's going to happen heading into the second half. That's sort of the puzzle piece that isn't quite filled out for us yet, where first half into the summer season is very strong.
We're also seeing that for cruise lines. They're saying that going into the twenty twenty five they're seeing strength, and that's a function of the fact that people book their cruises so far in advance. You don't get that benefit in the hotel space, you don't get that benefit as much in the vacation arena elsewhere. People don't book vacations apart from cruises so far in advance. So I think as we head into second half, we'll sort of get a feel for how comfortable the consumer is in terms.
Of spending our Thanks to Jody Lourie Bloomberg Intelligence Credit Analysts, we turn.
Down to the drug space.
Now.
This week we heard the Danish weight loss drug maker Novo Nordisk has agreed to buy Cardier Pharmaceuticals for up to one point one million dollars. This comes as soaring demand for obesity drugs continues to drive the more deal making for Nova Nordois.
For more, we were joined by Michael Shaw, Bloomberg Intelligence, Senior pharmat Biotech Analysts. We first asked him for some context on this deal, but.
Deal very much in line with kind of Novo's strategic aspirations, which is to build a presence in the cordative ast to spaced. So prior deals that they've done include a deal with KBB for a hypertension asset, a deal with care Video for silk investment, So this is very much in line with that sort of play in terms of you know, the lead asset, it's a drug called CDR one three two L, So you know, in simple terms,
it's designed to block a buyermarker of heart failure. What we see with current therapies is you know, current therapies kind of slow disease progression, but they don't necessarily you know, hold it or reverse it. And that's kind of what Nova trying to do with this asset.
So they're trying to stop it all together and reverse it.
Yeah.
Wow, Actually that's amazing. How does this also fit into Novo's weight loss drug in that I remember speaking to the Nova Nordisk CEO and they're like really really really invested in like improving people's overall health. Like the weight loss drug isn't about losing weight, it's about relieving the pressure that it puts on the heart, it's about relieving diabetes, it's about the broader stuff. How do these two work together.
Could potentially add to Novo's cardiovascular portfolio. So, I mean it's still very early stage, but you know, we're seeing Novo build this presence in the space. So we've seen the outcome status for supplemental approval for GOVI that's also you know, pending a approval in heart failure. We've got these other passets which I talked about in terms of Zelkaveka, MAAB. So it's really just kind of building out that portfolio in the space.
All right.
So I'm asking for a friend here, Mikey. When is Novo Nordisk in a ramp up its production of these with gov and ozempic and all that kind of stuff to meet demand because it's not even close yet.
Yeah, I mean, so Novo Holdings obviously did the deal recently. I mean production is going to take time to ramp up, you know, three four years before you know, these sites come online. There's also limited capacity in the market as well. I think what's going to help kind of things you know, longer term is you know, the potential approvals of oral JOLP ones that should hopefully ease some of the you know, some of the type.
Supply and what's the what's the timing on that?
So twenty seven I would say that sort of time frame twenty seven to twenty eight, possibly maybe a year earlier. There's several you know, players that are developing oral jop one drugs, so Lily being one of them. We could see some data for Viking and amjines albeit early data this year, but yeah, that could really be key to kind of opening up the market.
So are there also M and A opportunities or boltons that nobody could make to help expand capacity more quickly?
Well, they've done one deal already and yeah, I mean they're looking to invest to basically expand capacity going forward and support their jop one portfolio. So it wouldn't surprise me if you know, there are further deals of further efforts and investment into expanding this supplydcraft.
All right, So Mikey, what are some of the maybe the one or two big therapeutics or drugs or twenty twenty four event here that are you guys are waiting on that If something hits, it's just going to be big, Whether it's in the world of cancer or if it's in the world anywhere else in healthcare, what's kind of the big next big blockbuster that you think is reasonable to come out of the format industry.
I think twenty four is all of our weight loss and some of the chomon viviencies. To be honest, I mean some of the data points that we're looking out for. It's going to be semi glue Tide's mash readouts, so that's a liver condition. We're also expecting kind of detailed data from Boeing and Zealand's server do Tide in the same disease area, and then we'll also see details of
Lily's ze bound in that liver condition too. You know BC readouts, you know, front and center again, So in terms of you know, data upcoming data sets, it's going to be amgines readouts for Amgine's assets, and as I said earlier, possibly some oral data for Vikings GLP one drug.
What do you make of the valuations for the likes of Nova, Nordisk or any that are in the weight loss drug Like, we have no idea how to value this. It's sort of like the AI phenomenon. How do you think about it.
Yeah, So when we look at you know, Lily and Nova, you know, they clearly stand out obesit GLP ones underpinning their growth prospects. You know, both have well, Nova at least has you know, margins up there with peers. But we look at you know, the obesity space. You know, in general, more than one hundred million suffers GLP one
penetration rates you know, very low at the moment. You know, we think access is going to improve, you know, as we see more data, as we see more benefits and comorbidities, and you know, we're looking at a or we're forecasting ABC market size of you know, eighty billion dollars in
twenty thirty, which is looking quite conservative. And when we look at kind of penetration rates as based on just twelve percent of US patients being on a JLP one therapy, So there's significant runway there, you know, to support the valuations. And then there's also other markets which we haven't necessarily kind of fully factored in. So China, for example, could be a massive market for these drugs.
Right Thanks to Michael Sha Bloomberg Intelligence senior Pharma biotech analyst.
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