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Schwartzman

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Virginia Tech SEED

November 15^th, 2023

Market Update

November 9^th – 15^th 2023

Zachary Schwartzman

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Virginia Tech SEED

Schwartzman

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November 15^th, 2023

	Close 11/15/23	1 Day Change	YTD Change
S&P 500	4,509.08	0.30%	12.97%
NASDAQ	14,120.05	0.18%	24.30%
DJIA	35,031.27	0.58%	4.28%
Oil	80.81	(0.65)%	(11.5)%
10 Year Treasury	4.539%	0.002	0.098

Consumer Price Index

CBOE Volatility Index

Producer Price Index

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Schwartzman

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Virginia Tech SEED

November 15^th, 2023

Eli Lilly gains U.S. and U.K. approval for anti-obesity drug Zepbound

16 Months

Average loss of 22% body weight

33.3% of patients losing over 58 pounds

Novo Nordisk diabetes treatment Wegovy posts big results after three-year trial

Death (any cause)

Stroke

Heart Attacks

28%

8%

19%

Hypothesize fewer side effects compared to injections

Betting on the future of weight loss drugs

Phase II out of III trials to begin in 2024

AstraZeneca licenses the rights to Eccogene’s oral weight loss pill

Global Diabetes and Obesity Drug Sales

2023

$4.5 Billion

2025

$11.8 Billion

Roughly 70% of Americans are considered overweight or obese

Total American Population

For the past 6 months or so we have been seeing a huge trend in the pharmaceutical space emerge with Diabetes drugs containing GLP-1’s being used for weightloss. Late last week Eli Lilly received both FDA and UK approval for their diabetes drug, Mounjaro, to be used for weight loss purposes, and will be sold under the name Zepbound. It has been approved for adults with BMI over 30 with weight related complications. Lilly expects to sell the drug for $1060 a month, about 20% below the price of Novo Nordisks equivalent, Wegovy.

Novo Nordisk recently concluded a three year study on the effects of Wegovy, and you can see the results of the study on the slide. I believe that this truly highlights that the impact these drugs have goes far beyond simply losing weight, but so many other facets of physical health that accompany obesity. And because of that, I believe it will be a trend that will continue into the future.

While Lilly and Novo battle head to head for dominance in the weight loss arena, Astrazeneca decided to make a bet on the future of weight loss drugs: pills. Their CEO recognized the fact that Astrazeneca is a few years behind Lilly and Novo in this area, and made the move to lisence Eccogene’s oral weight loss pill, which is expected to being their phase 2 out of 3 trials early 2024, to get ahead of consumer preferences, as 75% of pateints note that they prefer pills to injections.

Getting out ahead of the market could pay dividends moving forward, as we see the impressive growth expectations for the treatment over the coming years and the large addressable market that these companies have the opportunity to capture.

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Schwartzman

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Virginia Tech SEED

November 15^th, 2023

U.S. – China Relations

Economic Might

Technological Edge

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Virginia Tech SEED

November 15^th, 2023

Schwartzman

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Biden Administration announces further restrictions on advanced semiconductor chips to China

October 17^th

Nvidia announces three new chips tailored to the Chinese Market: H20, L20, and L2

November 10^th

Vishay Intertechnology to buy Newport Wafer Fab, the UK’s largest chip manufacturer, for $177 MM Cash

Wingtech Technology

Nexperia

Newport Wafer Fab

Chinese GDP Relative to U.S.

China looks to Middle East & Southeast Asia

U.S. looks to Mexico & India

U.S. Imports from China fell 8% since 2018 to 14%

IMF predicts blocs would decrease global GDP by 7%

From an economic standpoint, China has been long projected to overtake the United States in terms of GDP, growing at an impressive rate of 10% annually from their economic opening in 1980 to 2012. However, the IMF projects Chinese growth to teeter down to 3.9% over the course of the next five years. This revised growth rate along with a steady decline in Chinese GDP relative to that of the United States may indicate that the United States in positioned to maintain superiority in terms of GDP.

Now, as tensions between the two countries continue to boil, the nations have adequately adjusted where they direct investments. China has turned to resource rich countries in the Middle East and large labor forces in Southeast Asia, while the United states looks towards Western countries, notably Mexico and India, to further economic ties.

However, continuing down this road could prove dangerous to the greater global economy. As US imports from China fell from 22 to 14% since 2018 and the nations divide their economic alliances around the world, the IMF fears that American and Chinese led Blocs may would decrease global GDP by up to 7%.

Now to look at the technology side of the relationship, it boils down to a single topic: semiconductors. Semi’s touch everything we use today, from the phones in our pockets to the cars we drive, but to two nations battling for global supremacy, their military applications are paramount. America’s estimated 2-3 year lead in terms of chip designs and with Moore’s law, the principal that the computing power of semi’s will double every year, solidifies the fact that this is our race to lose.

As such, the Biden administration announced on October 17^th a second round of restrictions on advanced semi’s to China, prompting Nvidia’s response of three new chips tailored to the Chinese Market. I find this particularly interesting as this highlights the impact of geopolitical rivalries on domestic businesses by restricting Nvidia’s ability to sell their top of line products to one of the largest markets in the world.

This battle, however, isn’t only restricted to companies operations, but impacts the M&A markets as well. Last week, Vishay Intertechnology, an American manufacturer of discrete Semiconductors and passive electronic components, acquired Newport Wafer Fab, the largest semi manufacturing plant in the UK, located in South Wales from Nexperia, a dutch firm. Wingtech Technology, a Chinese state owned semi and communication product integration company, owns Nexperia, who owned Newport, and the British government earlier this year told Newport that they must be sold due to the inherent connection to China.

Since beginning following the news and markets a year ago, the delicate balance of US China relationships and the impact of Geopolitical tensions impact on the economy and markets has been one of the most interesting aspects of finance, and I believe that these two examples do a great job of embodying that premise.

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Virginia Tech SEED

November 15^th, 2023

Schwartzman

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