Investors could be forgiven if last week’s discuss the potential suicide risk related to a recent class of diabetes and weight-loss drugs caused nervousness. Previous attempts to treat chubby or obese patients with drugs have often been plagued with unintended effects and drug withdrawals. These earlier drugs often didn’t seem value the risk. But the perception of recent GLP-1 drugs akin to Novo Nordisk’s Ozempic, Saxenda and Wegovy and Novo Nordisk’s Trulicity and Mounjaro is that these treatments are generally well tolerated by patients and helpful in weight loss. Each stocks skyrocketed because of the blockbuster potential of these therapies, with Wall Street analysts estimating the category might be value $100 billion, surpassing the size of some other drug category to this point. NVO 5D mountain Novo shares have gained over 18% since the starting of the 12 months. Nonetheless, investors learned on Monday that the European Medicines Agency is investigating reports that some patients had suicidal thoughts and/or self-harm after taking Saxenda and Ozempic. Then on Tuesday, the regulator expanded the review to incorporate other GLP-1 receptor agonists, including Lilly’s Trulicity. In the wake of the news, each stocks fell about 5%, but rose on Friday. Novo shares remained positive for every week and are up greater than 18% year-to-date. Lilly’s shares are down lower than 1% in the week but are up about 23% since the start of the 12 months. Each corporations downplayed the concerns, with the European regulator saying the review “doesn’t necessarily mean that the drug caused the hostile event in query”. He expects to make a call by November. EMA catching up? Wolfe Research analyst Tim Anderson said there are three facts that “can’t be dismissed completely.” First, most anti-obesity drugs, including GLP-1, act “centrally,” meaning they act on the patient’s brain. Based on Anderson, this implies there’s a likelihood of a neuropsychiatric effect. Second, earlier obesity drugs were withdrawn as a consequence of a high rate of mental disorders, he said, citing Sanofi’s Acomplia as one of the newer examples. Importantly, this drug was not GLP-1, but one other class generally known as cannabinoid receptor antagonists. LLY 5D Mountain Eli Lilly shares are up about 23% since the start of the 12 months. Finally, he noted that the US label for Wegovy already mentions “suicidal behavior and thoughts” as a “warning and precaution”. “In our view, there’s an extended history suggesting that the FDA is mostly a more prudent agency than the EMA,” said Wolfe’s Anderson. He expects the EMA to meet up with the US on this issue. The analyst noted that in the FDA review documents for Wegova, the agency concluded that every one centrally acting obesity drugs have some risk of suicide and depression. It further anticipates that such a warning will probably be added to Tirzepatide Lilly (Mounjaro) once it’s approved for the treatment of obesity, which is anticipated by the end of the 12 months. Still, Anderson said there are good reasons to consider it’s “almost definitely not a major problem,” including the clinical profile of GLP-1 drugs, which have been around since 2005 as diabetes medications. As well as, any comparison with Acomplia should note that concerns about this drug’s relationship to depression and anxiety were observed very early in its clinical trials. This was not the case for GLP-1 drugs. In a research note, UBS analyst Colin Bristow said he had spoken to Lilly, and the company confirmed there have been “no safety signals” in the routine monitoring of patients at Mounjaro and Trulicity. “One problem is that these kinds of things can develop into self-fulfilling prophecies to some extent, which implies that in case you know the best way to search for a side effect, likelihood is you will find more of it,” Anderson said in a research memo. Furthermore, he predicts there will probably be more safety concerns as drugs are closely watched. More risk ahead? “Investors unfortunately need to organize for more,” Anderson said. “While drugs akin to Novo’s Wegovy and LLY’s tirzepatide/Mounjaro provide significant weight loss in comparison with older treatments, that is prone to profit many other body systems (higher cardiovascular health, fewer prosthetics, amongst others). joints, less diabetes) there are layers of controversy, but that implies that close scrutiny will proceed.” Lilly stays one of Wolfe’s “top picks”, but Anderson warned that a “doomsday scenario” where Lilly is unable to market tirzepatide for obesity and the drug is “contaminated” for type 2 diabetes as well will cause stocks to fall as much as 40%. “To be clear, that is an unlikely scenario, however it continues to be instructive to contemplate the impact of such black swan events given what’s at stake, in addition to past problems with obesity drugs (not only Sanofi’s Acomplia, but in addition ‘Wyeth’ fen- phen’ before him, who suffered from a special set of unintended effects), he said. Similar thoughts were echoed by other analysts. Citi analyst Peter Verdult reiterated his buy suggestion for Novo Nordisk on Friday. He noted that he expected Wegovy to see “increased control provided that it stays in the public mind because of widespread media coverage. “We now have long held the view that GLP-1 is a ‘market making’ story versus a ‘market share’ story where NVO/LLYs enjoy structural duopoly until the Nineteen Thirties,” said Verdult. “With global sales of GLP-1 obesity in 2022 reaching $2.4 billion, despite Wegova’s limited supply and lack of lively promotion, we consider the opportunity > $40 billion is realistic…” UBS’s Bristow has a buy suggestion for Lilly, with a Goal Price of $498. On Wednesday, he called the fall in stock prices a “buying opportunity.” “… We discover LLY very attractive in absolute terms (numbers must appear in 24/25) and relative terms (LLY has the strongest foundation/event path in a US large-cap biopharmaceutical),” he said. Deutsche Bank analyst Emmanuel Papadakis said he considered the discussion “irrelevant”. “Given the study data and the extent/duration of semaglutide use (a few years in thousands and thousands of patients), we’re calm about the risk here,” said Papadakis, referring to the drugs higher generally known as Ozempic, Wegovy and Rybelsus. —Michael Bloom of CNBC contributed to this report. In case you or someone you already know is experiencing a crisis, call the National Suicide Prevention Lifeline at 800-273-8255 in the US or call or text 988.