The weight loss industry is seeing a shift in customer demand as anti-obesity drugs take the lead as the most sought-after solution to drop pounds. And while some areas, such as bariatric surgery, are feeling the pinch, newly public Allurion Technologies (ALUR) says the focus on weight loss has been a boost for business.
The company, which makes a gastric balloon that doesn't require regular surgery, de-SPACed this week and went public on the New York Stock Exchange. Its new board includes medtech veteran Omar Ishrak, who told Yahoo Finance that weight loss is "a massive market" and "there is room for everybody here."
Ishrak, who has served as CEO of Medtronic (MDT) and GE Healthcare Systems (GEHC), said Allurion can fit into the weight loss market in the same way the cardiac disease space has multiple players today.
"Thirty to 40 years ago, surgery was the only option. Then stents came along, statins came along, all kinds of drugs came along and everyone found a home for themselves," Ishrak said.
"Obesity is a much bigger market and these things will settle down over time," he added. In fact, he said, the current frenzy is a tailwind for the company.
"This attention to obesity, that these drug companies essentially are driving, in many ways makes this almost an optimum time for Allurion to go public and make a name for themselves," Ishrak said.
Ishrak also leads Compute Health, the SPAC that merged with Allurion in February.
The transaction has been successful beyond expectations, said CEO Shantanu Gaur.
"We were looking to raise $70 million ... we ended up going public with $100 million of cash on the balance sheet. And that is rare in this environment, and it gives us a competitive edge in a market where a lot of companies are strapped for cash or in preservation mode," Gaur said.
The pace of investments in technology and medical devices in the first half of 2023 was slow compared to previous years fueled by the pandemic. Gaur sees the move to be a public company amid the attention on weight loss as a key to success.
Allurion has already provided 100,000 patients with its gastric balloon, which claims to help patients lose between 10%-15% of their weight over a four-month span. In addition, the company provides behavioral health services that help keep patients adherent to lifestyle changes that can maximize the impact of the balloon.
Which is why Ishrak is confident about Allurion's place in the market.
"There will be cases where the balloon is the appropriate therapy, there will be cases where GLP-1 is the appropriate therapy, and there may be cases in the future where the two of them combine in some way," Ishrak said.
GLP-1s, the category of popular injectables like Wegovy, Ozempic, and Mounjaro — the Type 2 diabetes and weight loss drugs from Novo Nordisk (NVO) and Eli Lilly (LLY) — have gained popularity due to their successful weight loss results ranging from 14%-24%. But the overwhelming demand has created a shortage for some products.
'How big can it get?'
"What these GLP-1 drugs have done, as a tailwind for our business, is bring millions of people out of their homes and into the doctor's office, talking about weight loss. These people would normally not have viewed obesity and weight loss as a medical issue, and now they are," Gaur told Yahoo Finance.
He says the conversation around weight loss today is validation for the company, which began in 2009.
"I remember when people questioned whether the obesity market was even worth going after. That entire narrative has shifted over the last 18 months. Now they're [asking], how big can it get?" Gaur said.
Estimates range from $75 billion to more than $100 billion by 2030, he said.
"That's a much better framing for a total addressable market for us than where we were even a few years ago," Gaur said.
Additionally, Gaur sees a sizable market for patients who may not want to take the injectable drugs. Whether they are averse to drugs, can't afford them, or end up getting off them after starting — those all add up to potential customers.
That's at least what he has seen in the 60 countries the company operates in.
"I don't really see GLP-1s as competition. I see them as building massive amounts of awareness and creating new pools of patients that are interested in losing weight," Gaur said.
Follow Anjalee Khemlani on Twitter @AnjKhem.
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