William Blair analysts say that new data supporting the use of GLP-1s in patients with sleep apnea shouldn’t displace companies like ResMed
(NYSE: RMD)
in the market.
GLP-1 receptor agonists, like Ozempic and Wegovy, provide therapy for diabetes and can lead to weight loss. Beyond impacting the diabetes industry, questions have arisen over their overall impact on medtech. Intuitive Surgical, for instance, saw bariatric procedure declines due to weight loss. There have been suggestions that the reach could extend to sleep apnea and the continuous positive airway pressure (CPAP) market.
With so many unknowns, the GLP-1 craze caused one of the biggest swings in the medtech stock market in recent years in 2023.
According to Margaret Kaczor of William Blair, new top-line data from a GLP-1 clinical trial “could point to the erosion, in this case, of ResMed’s target market, obstructive sleep apnea patients.” The published data led to a 6% decline in ResMed stock yesterday. They attribute that slide to investor fear of the impact of GLP-1s on PAP therapy over time.
Shares of RMD fell to as low as $170.90 apiece yesterday in the wake of the data. However, they rose back to $178.45 apiece in mid-morning trading today.
Importantly, Kaczor and William Blair’s Macauley Kilbane and James Beers don’t see CPAP going anywhere. They point to the potential for use of GLP-1s as an adjunctive therapy, while CPAP remains the gold standard.
“As we gather a more complete dataset over time, we expect these results to ultimately conclude that the impact of these drugs on the market should not only be manageable but ultimately help drive awareness of the disease and fuel an increase in the number of patients who ultimately are offered various forms of treatment—in this case, positive airway pressure (PAP),” the analysts wrote.
More on the data and potential ramifications for ResMed
Eli Lilly’s Phase III trial of 469 subjects compared the efficacy of GLP-1s alone and in combination with PAP in patients with OSA over 12 months. Overall results proved positive for both arms, the analysts say, although investors responded negatively on ResMed’s end.
However positive the data is regarding the drugs, the analysts maintain the belief that the devices still serve their purpose.
“At a high level, we have long been believers that clinicians should turn to a variety of drugs, devices, and procedures in the treatment of diseases. These tools work in combination and are often applied differently depending on the patient profile.”
GLP-1s continue to show benefits in OSA patients, but like other tools, they have side effects, cost concerns and patient compliance issues. Those balance out the “headline benefits,” Kaczor and the team said. Notably, they should bear no impact on ResMed in the near- or long-term.
“With regard to its impact on ResMed, we do not expect a material impact on our near- or long-term growth profile, given the size of the underlying patient populations (growing to over 1.3 billion globally by 2050) as well as the still low penetration of CPAP (roughly 15% or less in many markets),” the analysts said. “No single treatment is likely to overwhelm the demonstrated benefits of CPAP given patient access, complications, and patient falloff that has been observed with the GLP-1 agents to date.”
ResMed keeps pushing forward in the CPAP market, in which it now holds a larger market share thanks to Philips’ ongoing recall woes.
