Alex Karnal - The Trillion-Dollar Health Revolution - [Invest Like the Best, EP.468]

Introduction to Ramp

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0:30Felix by Rogo is a personal finance agent that turns a single prompt into finished, client-ready work using your firm's own templates, context, and standards. Send Felix an email like, take these comments and turn them for me, or update my tracker with the context of these emails, or run the ability to pay math on this buyer, and Felix sends back finished PowerPoint decks, Excel models, and sourced research. Felix works the way your team already does, delivering work quickly and accurately around the clock. Learn more at rogo.ai slash Felix. OpenAI, Cursor, Anthropic, Perplexity, and Vercel all have something in common.

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Podcast Introduction

1:34Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus, our quarterly publication with in-depth profiles of the people shaping business and investing. You can find Colossus along with all of our podcasts at colossus.com. Patrick O'Shaughnessy is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions

2:07and do not reflect the opinion of Positive Sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum may maintain positions in the securities discussed in this podcast. To learn more, visit PSUM.VC.

Guest Introduction

2:24My guest today is Alex Carnell. Alex is probably the most talented bio and healthcare investor that I've ever met. And as you'll see, he is an encyclopedia of all things going on in life sciences. Alex has been teaching me this topic for more than five years, and every single one of our conversations is about as deep as this one that you'll hear today. We cover every single aspect of what makes today's life sciences world so interesting, starting with this concept of the health stack, the things that we can do both offensive and defensive,

2:54to extend our life based on the evidence that he sees in the most exciting companies of today. We talk about cardiovascular disease, neurodegenerative disorders, metabolic disorders, cancers, and beyond. And finally, we finish with his remarkable personal story. I hope you enjoyed this great conversation.

3:12You and I have had these conversations now for many, many years. We've been partners and friends for a long time. And so it's hard to know where to begin the conversation because I suspect we'll go for hours talking about drugs and bio and healthcare and outcomes and a million things that affect us all. You have this cockpit-like view into what's going on in the state of medicine today. How would you describe the state of the union, the daily cockpit view that you get of the whole industry? Give us a dispatch from that room.

State of Medicine

3:43What do you see today? When I look at this moment in terms of where we are in medicine, and I look back over my 20 years of building and backing biotech companies, I would say that 2025 was probably the single most exciting year in my entire journey. So to unpack that, what we're seeing is GLP-1 medicines are showing us what happens when we get to the root of disease. These medicines have the potential to do everything from protect us from being diabetic

4:13after being pre-diabetic, all the way through lowering our risk of having a heart attack or a stroke, protecting our kidneys, and soon we're going to see the opportunity to protect us from developing addictions to alcohol and drugs. So a profoundly important single medicine. Of course, because these medicines are incredibly powerful and they can do wonders for people's long-term health, what we're seeing is that the adoption of these medicines have exceeded almost everyone's expectations, including my own, which were pretty darn high.

4:44I think it's easy now to conclude that this is a class of medicines will easily be in excess of $100 billion a year in revenue. And so what gets me fired up about that is not necessarily this once-in-a-decade $100 billion revenue opportunity that exists within GLP-1s. What gets me fired up is that it's actually the first commercial proof that we are ready for what I think we're going to look back on in time as a once-in-a-lifetime trillion-dollar revolution in all of public health.

5:16In order for that to be true, there's going to be layers of attack that are needed to help us live our longest and best lives. I think one of the things a lot of people don't appreciate when I meet them and we start talking about where medicine is and what it can do is that incredible scientists have already cracked the code on most of the medicines we need to protect us from most of the diseases that will claim most of our lives. That's a really important point because what that means

5:48is that there are tons and tons of people that have traveled through all different mazes to arrive at the biological target and come up with a medicine against that target that can help us to live longer and better lives. And so when we think about what is the gap that exists in the world today between the reality that when we look at any expected lifespan charts, they haven't budged in decades. The last major advancement we had in inflection was decades ago on the back of antibiotics, vaccines, and better hygiene.

6:24We've gone nowhere since then. The gap is not necessarily needing more medicines. It's actually pointing those medicines at the impact that they can have. What I'm excited about about the GLP-1 opportunity is we're seeing the first commercial proof that we're ready to head in that direction. The reason that those sales have exceeded our expectations is people are taking into their own hands their future. People are basically voting with their feet saying, I'm done waiting to reactively go and treat myself for the diseases that I backward-lookingly manifest.

6:56I'm ready to go get after and help myself to live longest and fullest. I wanted to zoom in on a concept that you and I have been riffing on a lot recently,

Health Stack Concept

7:03which we're calling health stack. Stack is a term in technology, like your tech stack is all the various components that you use to create your overall thing. We thought this idea could be applied to health. We're all interested in our own health. It's a universal interest and concern. Maybe riff a little bit to begin on this notion of the modern, evolving, and emerging health stack. What a health stack looks like has a couple of different elements to it. It has elements of offense and defense. And on the offensive side of the equation are some of the basics that we all know about.

7:34It's everything from proper nutrition, strength training, proper monitoring, and testing. And doing those activities in a systematic way and tracking that data and building off of it over time. Later on, we could talk about how AI can play a big role in enabling that to reach its final chapter of what it takes for impact. What I find most interesting about it is if we think about five core dimensions, not only are they within our hands to be able to be proactive about protecting ourselves,

8:04but we have the medicines to do that. To me, the five key layers are lipid optimization, it's cardiometabolic health, it is neurocognitive health, it is inflammatory health, and our blood pressure. When we think about the lipid optimization, we have, and our bodies produce, cholesterol. And there's a type of cholesterol called your LDL cholesterol that's really dangerous. And it's dangerous because this cholesterol builds up in our bodies over time. And it's slowly accumulating in our vasculature.

8:37And as it accumulates, it gets to a point where it causes a blockage. That's a heart attack and a stroke. And we have medicines today, whether they're statins, the PCSK9 inhibitors, that can do wonders to reduce our level of cholesterol. And most middle-aged men and women walking around have somewhere between a 30% and a 50% probability of having a heart attack and a stroke sometime between the time that they turn 40 and the time that they turn 80. And to me, that's tragic

9:07because we have the medicines that exist that can help us to dramatically lower that risk to sub-10%. Looking at the next layer in cardiometabolic health, what we're talking about is the glycemic environment in our bodies combined with visceral fat. These are two major drivers or impediments to our long-term health. To give you an intuition for these, basically the higher the level of glucose in our bodies, think about it, like the more brittle it's making our vasculature. And so if you are both having lipids accumulate in your body and your vasculature is getting more brittle,

9:39you're only force-multiplying the risk that you ultimately have one of those horrific heart attacks or strokes. But we can do something about that. We've got amazing GLP-1 medicines that I started with that from clear data out of Eli Lilly show a 94% reduction in your risk of moving from being pre-diabetic to diabetic. We see amazing data in terms of what it does to both help us to lose weight and have category shifts going from obese to overweight, from overweight to normal weight. It's a game changer in terms of our long-term health. Moving down to neurocognitive health,

10:11the data is not out yet, but later on this year, we're going to see the next step for what are called anti-amyloid medicines. Medicines that can go right at the heart of the accumulation of plaques, this time not in our vasculature, but in our brains that lead to all sorts of damage and cognitive decline. And we've got medicines today that can go right at those plaques and bust them. And what Lilly is going to probably show later on this year, it's my guess, but I think the data really supports it and we'll see. What they're going to show is that getting at those plaques earlier

10:41before they accumulate significantly is going to show dramatic effects on protecting us from developing Alzheimer's. Moving on to inflammatory health, one of the things I think people don't appreciate is that the food we eat is actually quite inflammatory. And because we have, over time, moved from being hunters and gatherers to being able to have as much access to Pop-Tarts as we want, and I love them too, you don't get one, you get two, we overeat to a point where it drives an inflammatory response

11:11in our bodies. You can think about that whole equation of if we have both lipids accumulating and our body has a high glycemic environment making our vasculature brittle, and the same food that we're eating is driving an inflammatory environment around it, oh my goodness, it's like a ticking time bomb for all of that to go off. And not only is the inflammatory environment of our body implicated in driving an increase in cardiovascular events, strokes, and heart attacks,

11:42but also a whole set of inflammatory diseases that span everything from atopic dermatitis to ulcerative carotis and Crohn's disease. Finally, blood pressure, and maybe this one's very intuitive to people, but you can imagine that both if we are living high-stress lives, if we're not working out, if we are developing obesity, we have this high glycemic environment, so our vasculature is brittle, our LDL is mounting, and on top of that, the pressure going through that system is going higher and higher

12:12as we're aging and doing nothing about it. Oh my God, that's just another force multiplier. So all of these axes that I define as the five key layers to the defensive side of a health stack, each of them has medicines available to help us control our fate. Each of them has medicines available that if we could get on them early and be proactive about where we're going with our health, they will undoubtedly add an extra decade of life to our expected lifespan and have the potential to take curves that have been dead flat

12:43for decades and drive one of the first inflections ever. I want to spend a little bit of time at each, maybe not all five, but at least four of the five levels to let you explain what you're seeing and learning, especially from your perch as an investor. One of the things that I think makes you so unique is that ultimately you're trying to make money on all this stuff and you're doing so with extreme care and precision and a very sophisticated team and lots of data. There's money on the line here. You're not someone that is reading something and trying something.

13:14It comes out on a scoreboard. And I want to start with GLP-1s because it's obviously the thing everyone understands the most. It's visceral. Maybe to begin would be for you to tell us what specifically you're seeing in 25 and 26 that is so exciting. These things have been around for a little while. People were starting to get on them earlier than that. What is the inflection? And then I want to get into the actual mechanics of how it works. The one that's about to come out next year which seems maybe even more revolutionary than semaglutide and triseptide. What happened recently that has you so extra

13:45excited about them? Maybe one of the things most people don't realize is that there are a couple different injectable GLP-1s that are on the market today and we have some of the first orals that are coming to the market now and more that are coming. These medicines exist at lots of different doses. And I think one of the most interesting discoveries that I made over the past year in just looking at all of the data that we get to consume as investors, I wanted to know the answer to Wall Street is very focused on the next GLP-1

14:16having more weight loss and more weight loss and more weight loss and I'm sitting back and thinking to myself I don't know if that's the right focal point. One of the most interesting findings from diving into the data is people are not solving for this massive bazooka. People are solving for something that helps them to lose some weight, stabilize, and be there. I think that's really interesting because what that means to me is that what people really want is something that's going to give them a health advantage but it's going to be

14:46incredibly tolerable. And what we find is that you go higher and higher in doses, the unintended consequence of that is yeah, you're going to have more weight loss but there's going to be a whole host of other side effects that come with it. That is different than in most medicines where we're trying to maximize the efficacy of the medicine, really where Wall Street mind typically tends to go. What people are maximizing for here is like how do I get on these things and then stay on them? So that to me was one of the big unlocks for 2025 was this idea that people want to protect themselves.

15:17If you marry that with the next big discovery from 2025 is that typically the way medicines are commercialized is you have big pharmaceutical companies, Eli Lilly, Nova Nordisk, that have armies of sales reps that are out everywhere calling on doctors, making sure they know about their medicines, pitching the attributes and why they're the best in the class and why there's no other option that their patients should be pursuing than their medicine. And as you can imagine, that's a very capital intensive exercise. It's a very human talent

15:48intensive exercise. And what we saw, interestingly, is that Eli Lilly pretty early on last year pushed more aggressively into a non-traditional way to get these medicines into the hands of people. They added to their legions of salespeople a digital front end in Lilly Direct that allowed people to get a prescription from their doctor and go get the medicine direct from Eli Lilly. It was one of the first big insights that the consumers

16:18want to be able to get these medicines themselves and not have to go through traditional means to get them. As you fast forward towards the end of 2025, what we started to see was that, oh my goodness, more than half of the new people joining are coming in directly. So hold that with the third point that comes from 2025, which was all sorts of theater and dramatics around compounded GLP-1s. What we learned from the compounded GLP-1s was that not only do people want something

16:49that's going to defend them and be tolerable, not only do they want something that they can get through all the frictions of the system and just hit a button and have it come to their homes, a real consumer-like product, but price matters a ton. Through most of 2025, the average monthly cost of a GLP-1 was north of $400 or $500. Thanks to our administration, those prices are coming down and I think that's really good and it's particularly good because what we learned from the compounded versions of GLP-1s was that there is massive

17:20price elasticity in this market. Compounded GLP-1s cost about half as much per month as the traditional approved GLP-1s by Lillian Novo. We were collecting data that was suggesting to us somewhere between 15 to 20% of the market that you couldn't capture through scripts was actually flowing through groups like Hims and Hers and other sources where people knew they wanted the benefits and wanted to be proactive about their health. They wanted to get these GLP-1s, but they couldn't possibly afford $400 or $500 a month,

17:53but they could afford $200, $250 a month. And so to me, that's profound because you've got a compounded version that hasn't gone through any clinical trials. You know nothing about the manufacturing, but you know that these medicines are so important to your health that you're willing to take the risks, not only the safety risks of the medicine, but all these risks of these unknowns of where this is even coming from. And because you can afford it, go take it. And so I left 2025 thinking to myself, oh my goodness, we're finally starting to see people step up

18:24and vote with their feet. They're saying, I want the benefits of these medicines. And now you get to 2026 and this is the absolute game changer. In 2026, we now have an oral version of Wagovi. And this medicine has launched over the last couple months. We are seeing every week the oral version of Wagovi is setting record after record after record. And you might think, yeah, of course, like who wants to inject themselves once a week for the rest of their life. I don't really think that's what's driving

18:55an almost 4X relative launch cycle for the oral Wagovi versus the most recent injectable launch, ZepBound. People that want these medicines, then the lowest end of the curve, that doesn't cost $500 a month. It doesn't cost $250 a month. It costs $150 a month. And so now we've seen at the lower end of the curve, if we get to an $1,800 a year cost, these medicines fly off the shelves. And to put that in context, prior to the launch

19:25of the oral Wagovi, just a few months ago, the GLP-1 market was moving at about 200,000 recorded new scripts per week. 200,000 new people getting on these medicines per week. The most recent data that I looked at this past Friday says that that has now moved from 200,000 a week to 300,000 a week in just a few months' time. We have to take these incredible learnings from the commercialization of GLP-1s and the most logical conclusion is that people are ready and people do

19:56want to go and be proactive and arming them with the stack that can help us to all live an extra decade, really focusing on hard on what does it take to close that gap between invention and impact. When I say this trillion-dollar revolution, what that means really is this trillion-dollar reduction in our annual healthcare spend. And I think that that's really possible now. As your business scales up, everything gets more complex, especially your compliance and security needs. With so many tools offering band-aids and patches, it's unfortunately far too easy for something to slip through the cracks.

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GLP-1 Drugs Explanation

21:22I want to spend

GLP-1 Drugs Explanation

21:22some time explaining what is actually going on with this class of drugs. Starting with semaglutide, sort of the single acting, going to triseptide, the dual acting, going to the triple acting, one that will be coming out this year or next year. Can you do your best to explain what this thing is and what it does? I think people's original conception was it's a drug I take and I lose weight. I think you have a really interesting way of explaining and understanding these things as maybe the most important modern drug. So it seems worth spending some time just explaining literally what it is and what the

21:53science progression has been and where you see it continuing to go. Like this isn't static. A lot of people don't realize these medicines have actually been around for 20 years. Some of my first exposure to GLP-1 as a drug class actually happened in my early days entering the industry as a young biotech investor back in 2005 with Amlin Pharmaceuticals having what we thought at the time was the most miraculous breakthrough. GLP-1 is a hormone that our bodies naturally produce. The problem with this naturally produced hormone

22:23is that once it's produced by our bodies it only lasts for about two minutes before it's gone. So if you just pause there what does that mean practically? Okay if you were to take human GLP-1 and we would be injecting it we'd have to inject ourselves 30 times an hour for the rest of our lives to get the benefit of what we can today with either one pill a day or one injection a week. The science behind moving from a protein that lasts for two minutes to a protein that can last over a week is a dramatic transformation.

22:54So what's good about that is it is a hormone that's already in our bodies and it's a medicine that we've got data on for over 20 years and so we know a remarkable amount about it not just because it's been around for 20 years but it's now been in millions and millions of people. What happens is when we eat food at some point that food makes its way to our small intestine and when food gets to our small intestine it's what triggers the release of GLP-1 in our bodies naturally. That GLP-1 molecule travels all over our bodies. It interacts with receptors

23:24in our stomachs that helps to slow the digestion of food. It also interacts with receptors in our brains that help us to feel fuller longer to feel satiated. The combination of those two mechanisms of action are what allow us to turn off the food noise that allow us to seek out and consume far fewer calories than we've ever done before. In addition to that it does an important role in regulating the production of our insulin. It interacts with receptors

23:55on our pancreas that triggers the release of insulin. It plays a big role in not just having that sugar not affect our vasculature but also making sure that that sugar is not destroying our kidneys. The mechanism and the science behind it is actually pretty well elucidated. Biologically we know how it's produced we understand all the different places in the body that it interacts and when you think about all the places in the body that it interacts it then becomes no surprise that it's had such an incredible range of effects both from

24:26protecting us from becoming diabetic to reducing the risk of having heart attacks and strokes to lowering our level of inflammation because we're consuming less food and so we're having less of an inflammatory response to that all the way through to helping us to lose weight which is a bit of a virtuous cycle in terms of lowering our blood pressure. So when you look across the five axes the five layers of defense that are mission critical for us maximizing the number of years that we can live and having the most life in those years

24:57I fundamentally believe there's no molecule that's more important than GLP-1 across that entire axis. When we think about the different forms that it's available to us in we already cracked the most important code which was moving from something impractical 30 shots an hour to the early days with Amlin Pharmaceuticals of a twice a day shot to where we are today which is not just longer acting once a week versions but far more potent meaning we need far less of it and it actually starts to get to levels

25:27that we can inject that have incredible pharmaceutical properties to them. The next axis to think about is not just the form by which you get it oral or injectable and not just the duration of the dosing or else we take every day. Today we take injectables once a week. There's some amazing ones that Pfizer just acquired that look like it might be a once a month. Amgen's also working on a once a month might be once a quarter. The duration of time between those doses is really important because the easier it is to take a medicine

25:57the more likely it will be to stay on these medicines and have the longest term benefit from them. The next important axis to then focus in on is how do we think about dose and the trade-offs between semaglutide and terzepatide semaglutide being ozempic and wagovi terzepatide being zepbound and manjaro. Our team's fundamental perspective is that they all achieve the same goals. They were just novel IP strategies to achieve those same goals. They're all pretty much interchangeable.

26:27That leads to the question of how do we think about them from an investment perspective and a human impact perspective? Both of those perspectives come together because when we think about investing in medicine the key question that we're focused on is why does a medicine have a right to win? And of course for a medicine to have a right to win what we're essentially saying is that this medicine is going to really have a differential impact for people such that people should choose it. The right to win analysis comes down to also the different segments of the market that we're thinking about. And to put a framework around

26:58this we always think about the obesity market as having three main segments. People that are overweight which are basically BMIs between normal roughly 25 and 30. Obese which is between 30 and 40. And morbidly obese which is north of 40. When we look at the aperture from a BMI of 25 up to a BMI of just under 40 that's where most of the patients are today that require reactive treatment. I would argue in the

27:28future we could talk about why GLP-1s might be appropriate for just about everyone and that's because the reality of it is as you go from your adolescence to your 50s and 60s on average people are going to pick up about five BMI points. Being able to take a medicine even at low doses even though they haven't been tested in those populations I'm willing to bet would help protect people from that five point increase that puts them in harm's way and puts that to bed. But when we look at