This week, we hosted our 20th annual Cleveland Clinic event highlighted by meaningful physician discussions on trends in cardio, diabetes/obesity, myeloma, autoimmune, and respiratory diseases.
High GLP-1 enthusiasm stood out with clinical benefits expected beyond metabolic disease into cardio/inflammation, which bodes well for Lilly’s tirzepatide. CAR-T adoption in myeloma appears well entrenched but with significant upside potential across the autoimmune landscape. We suspect Gilead’s anito-cel may be very differentiated in myeloma, but its cell therapy platform could also be a major value driver. More targeted MOAs could transform cardio (Lilly + Amgen for GLP-1, Lp(a)) and respiratory care (Merck’s Winrevair for PAH), with many line-extension opportunities. Though tariffs (more here) have dominated the Biopharma headlines of late, product innovation remains a major focus for us, informed by many discussions at the Cleveland Clinic.
Our in-person 20th annual Cleveland Clinic event highlighted several sessions with high-profile KOLs in impactful areas across biopharma, med/tech, and healthcare IT. Discussions noted the continued innovation within the healthcare space and put a spotlight on numerous opportunities for investors within the broad healthcare space. Volatility on policy headlines (tariffs, DOGE cuts, etc.) continues to be a common theme and, despite healthcare benefiting given perception of it as a safe haven from macro uncertainties (DRG index: +2.6% YTD; S&P500: -7.6%), not all sectors are affected equally with some feeling the effects more so than others (XBI index: -13% YTD). We are hosting a call TODAY at 11am ET to provide more in-depth views and implications.
We are downgrading the KHC shares to Sell ahead of 1Q25 earnings. We see risk to organic sales growth. KHC’s measured takeaway growth continues to struggle, driven by share losses in most key categories. And other channels and geographies (food-away-from home, Canada) could face sales pressure, as well. This continued sales weakness could pressure earnings. We also wonder if KHC might eventually need to reset its margin structure lower to drive volumes higher. KHC did this in 2019, and margin expectations for US food peers CAG and GIS have been reset recently, in part due to stepped up investments (promos, price cuts, higher marketing).
