Reversing Obesity and Diabetes with Virta Health

Speaker 1:
Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Charles Rhyee:
Hello, my name is Charles Rhyee, TD Cowen's Healthcare Technology and Distribution Analyst, and welcome to the TD Cowen Future Health Podcast. Today's podcast is part of our ongoing series that continues TD Cowen's efforts to bring together thought leaders, innovators, and investors to discuss how the convergence of healthcare technology, consumerism, and policy is changing the way we look at health, healthcare, and the healthcare system. And in this episode, we talk about the obesity crisis. And in particular, the rise of GLP-1s to address not only obesity but also an increasing number of conditions. We'll also talk about the broader issue of health and how we should treat chronic conditions, which today is largely focused on pharmaceutical treatment. Increasingly, we've seen movement towards other approaches that focus on areas like behavioral change and nutrition that can in fact have just as much if not more lasting impact on overall health.
And to help us discuss these topics today and more, I'm joined by Sami Inkinen, co-founder and CEO of Virta Health, whose mission is to reverse diabetes and obesity in one billion people. Virta works today with over 500 large employers, health plans, and government organizations across the country and has already helped over a hundred thousand members reverse their diabetes and obesity. He holds a master's in engineering physics from the Helsinki University of Technology and an MBA from Stanford. Sami, thanks for joining us today.
Sami Inkinen:
Thank you so much for having me, Charles. Excited to chat with you.
Charles Rhyee:
I wanted to touch first on of the big topics here, right, diabetes and obesity, and obviously we're going to talk a lot about GLP-1s for most people, I think when they talk about GLP-1s today it tends to be in regards to obesity and weight loss. GLP-1s aren't new and there's something that Virta obviously has been dealing with for years as part of managing and reversing diabetes. So maybe starting from there, it's estimated that total cost of diagnosed diabetes in the US in 2022 was 413 billion, including about 307 billion in direct metal costs and 106 billion in indirect costs attributable to diabetes. What are we getting today for all that spend? Because it doesn't seem like diabetes is getting any better in the US.
Sami Inkinen:
That is a very good question, and I think I would summarize saying not much. So these are facts. One, we have more people with Type 2 diabetes in America than ever. Two, the total cost of addressing Type 2 diabetes today is higher than ever, and three, even more alarmingly the unit cost per a person living with Type 2 diabetes is higher than ever. And then four, which is the worst thing. A couple of years ago there was a published peer-reviewed article in JAMA concluding that we have not seen improvements in Type 2 diabetes clinical outcomes in America over the last decade. So the answer to your question is the approach of managing Type 2 diabetes symptoms, which is high blood sugar with ever-increasing loads of diabetes medications has not really helped or done much anything. And there's a fundamental problem with that approach, which is that when we are treating symptoms of a disease with drugs, it's not making the disease or the problem go away.
And instead what we should do is, which is obviously what we do at Virta, which is to address the underlying driver of the disease Type 2 diabetes, the root cause with nutrition, and actually reverse the disease. And that is obviously the fundamental way to lower cost and make people healthy. So that's kind of the fundamental problem. We are managing the disease, we're not reversing it. I will mention here because some listeners may be like, "Well, wait a second, why are we prescribing these medications? Why are we managing the disease?"
Well, the hypothesis is, and it is also true that what we are trying to do when Type 2 diabetes is managed is to delay or avoid, but usually it's delay, delay microvascular and macrovascular complications. So example of microvascular would be that you lose your eyesight or your fingers, so your toes or legs will be amputated. And then macrovascular damage would be something like a heart attack. So the idea is that if you keep taking these diabetes drugs, we can lower your blood sugar and we can either delay or in some cases, avoid the final end complications of Type 2 diabetes. But again, clearly, in light of all the data, it's not enough and it's just kind of maintaining the status quo instead of reversing the disease.
Charles Rhyee:
And you brought up an interesting point that third point about that the unit cost for managing diabetes has only increased. What do you think is the biggest underlying factor driving unit cost to treat Type 2 diabetes today?
Sami Inkinen:
I think there's two main things. One, obviously overall healthcare costs, both medical services and drug costs, unit costs. This keep rising faster than inflation and faster than GDP in America. So that's one, like anything we do in US healthcare is just more and more expensive every year, relatively speaking, more expensive than anything else. And then the second thing is we have new innovation that's not fundamentally changing the course of the disease. There's always a newer drug. You look at insulin as a 100-plus-year innovation, but the unit cost has just been skyrocketing year after year. Now it came down a little bit a couple of years ago, but the fundamental reason was that this was a newer drug that was getting more and more attention. And obviously, this is the GLP-1 class of drugs, which again are going more and more expensive. So everything in healthcare is more expensive. And then secondly, there's "new innovation, real innovation". But most if not all of this innovation, I'd say outside of Virta is again managing the disease. So you combine those two things, it's growth times growth and the unit costs keep going up.
Charles Rhyee:
Yeah. And not to scare everyone even worse, I think likewise the figures for obesity are also staggering. I think the CDC estimates that one in five children and two in five adults have obesity. And the NIH estimated back in 2016, the aggregate medical cost due to obesity among adults in the US was estimated at 261 billion, which I can imagine has only increased since even before getting to GLP-1s what have we been doing here to address the issue and why hasn't that been working as well?
Sami Inkinen:
I think you set the conclusion right, it's kind of like Type 2 diabetes that clearly whatever we've done, whatever we've done, it is not working. And that is an objective fact. I don't think anyone can deny because we, again, similar to Type 2 diabetes, we have more people struggling with obesity or overweight than ever in America. So whatever we have been doing is not working. What is it that we've been doing in the past? Couple of things, obviously people have been repeating the mantra, diet and exercise, diet and exercise, diet and exercise. But the way we've recommended people to use diet and exercise, clearly it isn't working. And maybe using the WeightWatchers, which just declared bankruptcy kind of appropriately, their previous CEO a couple of months ago, I think in 2024 came out publicly and said, "Yeah, we've been asking you to count calories, count points, but we have to admit that it doesn't work."
And that is a true statement. This approach of count calories and suffer and try to eat less than you feel that you want to eat. It just fundamentally does not work. Willpower runs out and usually it runs out at the wedding photo after it's all bets off and people regain their weight. So that approach clearly has not worked sort of the mathematical second long-term dynamics approach that you just count calories and try to eat less than you'd like to. So that's not working. The other thing that hasn't been working is this entire supplement industry. Anyone who has ever been to or opened a fitness magazine or walked into GNC knows that we have a multibillion-dollar, all kinds of stuff being sold as a hope for people eat this, take that to lose weight. So that really hasn't worked and then on the clinical side, I'd say we've had two things with various degrees of success trying to address obesity.
On the far end of the spectrum, we have these very invasive and quite expensive different types of bariatric surgeries and obviously that has delivered pretty strong clinical outcomes. It's expensive, very risky, obviously tens of thousands of dollars. So we've had that. I think something like 0.1 or 0.2% of people with obesity get that operation still per a year in America. And then we've also had sort of the first generation of diet drugs with some results, but then also a lot of side effects. So that's the bundle of things that we've tried but again, the conclusion is in light of data, it has not worked fundamentally. And we can talk about why and what's a better way, but here we are with lots of Type 2 diabetes, lots of obesity despite all the things that we've thrown at the problem.
Charles Rhyee:
Maybe I can just follow up the mantra of eat less and diet and the exercise. It's something that obviously the medical community tells patients, but they don't really prescribe on how to achieve that, what is lacking in the medical community to not be able to provide better guidance in that regard do you think?
Sami Inkinen:
There's maybe two things, the tools that are given to doctors. So first of all, I will say medical doctors, primary care doctors, they are well-meaning, they are trying their hardest. I'm not blaming them like, oh, you can't do this or whatnot. It's they haven't been given the tools. Here's some of the two things I will mention and I empathize with the doctors whose patient comes in, they're 40 pounds overweight, they tell them, eat a little healthier, exercise, patient comes back and I'm making up numbers, but then they're 60 pounds overweight, then they're 80 pounds overweight, and this thing just keeps repeating itself. So what are the tools they haven't been given? Number one, there's really no nutrition education in medical school. You can get through Harvard Medical School or Stanford Medical School and get less than one hour of nutrition training. And at the end of the day, nutrition is not the only, but it is the number one driver of obesity.
So there's that and then the second thing is the tools that the doctor has doesn't allow continuous remote care or support. So patient may come one time two times, three times, four times a year, but that still leaves 362 days or 361 days or be by yourself for the patient. So I would say those are the two things that doctors are lacking and missing nutrition education and the tools to support the patient on an ongoing basis. And obviously, those are two of the many things, but two main things that we've solved with Virta Health and have been able to deliver sustained weight loss that these days, I like to say we deliver Ozempic-like results without the drug in terms of weight loss and glycemic control, which we can go in a second. But yeah, I empathize. Doctors have been put into a very, very, very tough spot.
Charles Rhyee:
Yeah, I think that's a perfect segue. I think for those who might be familiar with Virta, might think of it as sort of this keto-based diet approach. Obviously, I think that is oversimplifying it and it's probably not the right characterization. Maybe Sami, just to go into that a little bit and just help understand maybe a little bit more what Virta does, particularly for those who might not be as familiar with the company.
Sami Inkinen:
Absolutely. So first of all, we use a nutrition-first approach with real medical supervision and remote monitoring to achieve our outcomes. So our "molecule and treatment" is nutrition through lifestyle change. That is what drives the results and that's combined with, again, doctors and coaches who are powered with technology and AI and software to provide very intense and individualized support to patients. In terms of outcomes just so listeners understand that what we are talking about here is quite transformative. Weight loss-wise we've shown this is published and peer-reviewed from a five-year perspective clinical trial, 13% weight loss at one year and two years sustained on an intent-to-treat basis. So this is not cherry-picking cherries from the cake. But on an intent-to-treat basis 13% weight loss at year one, year two, that compares to real-world results by GLP-1 drugs again published. It's sort of unheard of to deliver that type of weight loss.
And then we can obviously talk about Type 2 diabetes outcomes, people getting off of insulin and drugs and blood sugar comes down and many other metabolic health markers improve from cardiovascular disease markers and so far. But how do we do that? Again, it is two things. It is nutritional lifestyle based and then a support nutrition. I think it's important to highlight that everything is highly individualized. We have been and every day are successful with people who may be vegans or vegetarians. We are successful people who are meat eaters. We are successful with truck drivers or work with several Native American tribes where people may only have access to casino food or fast food or 7-Eleven or burger joints. We are successful people with who cook at home. So that is a very important thing to remember and so sometimes people say from outside, oh, Virta is one size fits all.
Well, guess what, if you do that, you'll be successful maybe with one person out of 10,000, it just doesn't work. So everything's highly individualized. I will say that nutritionally a key element is reducing carbohydrate intake, which is one of the key elements so that we can reduce hunger and cravings, but beyond that, it is highly, highly, highly individualized. And then the second piece is yeah, you can have the best nutrition protocol in the world, but unless you rapidly iterate, not quite on an hour-by-hour basis necessarily, but at least on a daily basis, people usually sort of fall off the wagon or can't follow the protocol. So the second piece, which I already mentioned was doctors and coaches, which by the way are our full-time employees and they usually form nearly three-year longitudinal relationship with the patients. This care team provides daily support to our patients based on how the patient's body reacts to what we tell them to do.
So we do remote monitoring, we get lots of data every day from each of our patients, and then based on that data we tell, "Hey, maybe you should reduce whatever it might be the protein intake or increase sodium or let's try to figure out this dinner thing because that seems to be a struggle for you." So when you combine those two things, again, it's easy to say but very, very hard to implement. But it's a combination of lifestyle change and then this very intense human-powered and tech-enabled support that we provide to achieve the kind of results that we've achieved.
Charles Rhyee:
The technology part of it, how do you leverage technology here? Because with sort of intensive coaching, I think a lot of people would think scaling can be a problem, but obviously, you're handling hundreds of clients at this point and hundreds of thousands of members. Maybe talk a little bit how technology is able to enable the outcomes that you're seeing so far.
Sami Inkinen:
In some ways, you could... It's dangerous to pull Tesla here as an example these days, but in some ways, you could think of us building the Tesla and the self-driving capabilities. And what I mean by that is first of all, we use technology to remotely monitor multiple biomarkers from the patient. So you could think of this as Tesla with the sensors with the cameras getting near real-time feedback. And then on the backend, we have an algorithm and software that's trying to figure out is the car in this case is the patient and their biomarkers between the white and a yellow line or between the white lines. And then constantly try to iterate as you would do with a self-driving car. There's a corner, okay, now we need to turn a little bit left. And then I guess the other piece of the analogy that hopefully works is we have the driver that is the coach and a doctor still on a driver's seat in a steering wheel.
So it's not fully self-driving in that sense. So we feed the data sometimes give instantaneous feedback to the patient with software and AI. And then sometimes depending on how clinical of nature is the recommendation, it is the person, the coach, or the doctor who gets back to the patient. And then obviously there's real human elements, empathy. There may be death in family. Now we're living the days and time of post-liberation day, I think there's probably going to be tons of layoffs at companies.
So there's a lot of work stress and things like that that human being such as our coach and medical doctor are uniquely equipped to address. So we don't pretend that we are human and then use AI or software to get back to the patient. So we separate very clearly what's automated and whether AI is helping the member and then which coach and a doctor. And then lastly I'll just mention obviously the software and increasingly AI help our care team members to be way more effective and automate the mundane tasks so that again, the humans can focus on the hardest parts, which is the empathy and taking care of the patients where real human to human connection is needed.
Charles Rhyee:
And obviously, here I think you've had a lot of experience with diabetes. I think you've mentioned you have over five years now of peer-reviewed data showing some of the progress you've made. I don't know if you're the one that coined the phrase, but certainly, you're the first one I know that talked about reversing diabetes versus managing. It's interesting how much it's in the mainstream now, but how much resistance did you face at the beginning to this idea of reversing diabetes?
Sami Inkinen:
Yeah, well thank you. Will take the credit for coining the term reversing Type 2 diabetes, but quite honestly, I think we are maybe the second or third wave. If you go literally a hundred years back before insulin was "invented", this concept of reversing diabetes and addressing Type 2 diabetes and to some extent Type 1 diabetes with nutrition was a known fact. So in some ways, the elements and how we approach treating and reversing Type 2 diabetes is not new. But I would say over the last couple of decades it was kind of lost because we entered this paradigm of managing Type 2 diabetes with hypercholizimic drugs rather than reversing it. So to answer your question specifically, absolutely we got a lot of sort of slack. I co-founded Virta with amazing team of scientists and my co-founder, chief medical officer, Dr. Phinney, he went to Stanford in '70s, did his MD medical degree there, practiced as a clinician, then went to MIT, the PhD in nutritional biochemistry, just a brilliant scientist and clinician was a professor of medicine at UC Davis, three decades of history.
So we had one of the most incredible science and clinical teams in the company and we knew everything we do is evidence-based collected data, published. So we knew we're absolutely right and we could see it with our own eyes from lab results that hey, patients come in, their blood sugars come down, they get off of all the diabetes medications. So we had zero hesitation whether putting Type 2 diabetes into remission or reversing it is possible and we could see that it's happening in front of our eyes. We got a lot of questioning and what is this? Is this the next Theranos claiming to reverse Type 2 diabetes? This was 2015, 2016. Are you overreaching? That's just not possible. But it's typical when a new paradigm shift happens and I'm going to be careful, I will say this because I've heard this called many times people say paradigm shifts don't happen through, or the change doesn't happen through one peer-reviewed paper or even two.
They happen one funeral at the time, one funeral at the time. And it's kind of a crazy thing to say, but if you've been a scientist clinician and you've attached your career and reputation to one paradigm and say, "Hey, Type 2 diabetes is chronic progressive, all we can do is manage." It's very, very hard to then say, "Wait a second, I've been saying that for 20, 30, 40 years, but I think I was wrong. It's probably possible to put it into remission with nutrition." It's very, very hard in all parts of science. So again, I can empathize with the resistance, but now with all the papers we published hundreds of thousands of patients treated in real world, we literally have patients with permanently tattooed Virta Health logo, company logo on their bodies. There's so much evidence walking around American streets, people who reverse their Type 2 diabetes that I think it's quite irrefutable that this disease is not a lifelong one-way kind of a death sentence. You can get rid of it, but there's still people who will roll their eyes and don't quite believe but yeah, it's happening every day.
Charles Rhyee:
Obviously. I'm sure there's still people that are resistant to it because certainly when I was first getting into the industry, the idea that diabetes was progressive only and then so you had to try to manage to slow it down as much as possible. I feel like I now hear elsewhere folks talking about reversing diabetes. And just curious, do you feel it's becoming more generally accepted among the medical community?
Sami Inkinen:
A hundred percent seeing is believing. I love the fact that there's some clinical institutions and some for-profit companies popping up and they're using that term. It's absolutely fantastic. American Diabetes Association a couple of years ago issued a position paper where they defined Type 2 diabetes remission. They used the word remission, it's the same thing basically. Remission, they defined partial remission, so they basically define a criteria. So no, I love that and we don't have to take credit for it, but it's absolutely fantastic that's happening. Even the terminology didn't officially exist. It's kind of like in cancer you have the remission and then after certain years you call it cure and it's basically defined words. How do you use it? Because cancer has existed for a long time. Basically the same has now happened at least in America in Type 2 diabetes care and led by American Diabetes Association.
So I applaud that. And you're absolutely right, times have changed, but again, if you go on pull thousand primary care physicians, I don't know what percentage would say, "Yeah, yeah, it's totally reversible but not a hundred percent." So there's still a ways to go, and I think it only trickles down to all the doctors when medical schools start teaching. And I will say that no amount of peer-reviewed papers that we published has convinced doctors as well as a simple fact when one patient from the panel, let's say primary care physician's panel, one patient walks back who may have had diabetes for 10 years and they're on insulin and they come back to visit and say, "I'm off insulin." The doctor runs their lab work and their blood sugar A1C comes down in a normal range. You need one patient, one anecdote. It usually convinces the provider better than any paper we've published and they go, "I can't believe this. Whatever you're doing, keep doing it. This is incredible. I need to read and study and understand what's really happening here."
Charles Rhyee:
And this probably helps get us to our next topic. GLP-1s have been around for what? 20 years or maybe close to 20 years. Obviously not new to you guys because it's common in the treatment of diabetes, part of the value proposition was to get patients get into remission or reversal of diabetes through a nutrition-based approach and get them off these kind of expensive drugs. So you've been around these for quite some time here. Now we've seen them used in obesity. Just curious, does the experience that you've had with these drugs provide any advantages as you now look to expand or have started expanding into the obesity market?
Sami Inkinen:
The answer is yes. And just to start from a first part of your question, if I remember right, the first FDA-approved GLP-1 drug in America was 2005. So indeed, sort of the GLP-1 class of drugs is not new. It's exactly about 20 years old in America and we started treating patients in 2015, so that's also a decade ago initially in our clinical trial using telemedicine. And so our providers have just about a decade of experience prescribing, managing, de-prescribing, and dealing with symptoms and all the things that come with prescribing a drug and trying to make most out of it in Type 2 diabetes context, which is not that different from if someone is "just obese". So absolutely we have, the fact that our providers have and had a decade of experience using GLP-1's we kind of found ourselves in the eye of the hurricane at the right time when the first GLP-1's were approved for treating obesity a couple of years ago. We give it brand name from Novo Nordisk, which is the same molecule as Ozempic.
It's been very helpful and it's been helpful because obviously in treating patients, patients come in and they may be on a GLP-1 for obesity, so we know how to manage and potentially de-prescribe those drugs when appropriate. And then secondly, for the plan sponsors for employers and health plans, yes, they're looking for nutrition-first approaches to address obesity, but also many of them are increasingly looking for, hey, who can responsibly help manage these drugs and also prescribe these drugs who are appropriate? So it's been very, very helpful both on the B2C clinical context and then B2B with our clients.
Charles Rhyee:
How does reversing obesity differ from reversing diabetes, both from a program approach, the way you guys address it versus just in general? What's different in approaching patients between the two?
Sami Inkinen:
Some things are very different and some things are the same. So maybe I'll start from what's different in nutritionally treating and generally treating someone with Type 2 diabetes versus obesity. What's different is obviously in Type 2 context so the safety issues are much heightened. Safety mainly because if you have hypoglycemic drugs, we're dealing with blood sugar and tracking it very carefully. And just a specific example, obviously if you're on insulin or even sulfonylureas and then we get your blood sugar down rapidly through nutrition, a provider, which is our provider, needs to very much be on their toes and start reducing the hypoglycemic drugs so there wouldn't be hypoglycemia. So there's that sort of safety and focus on blood sugar. There's obviously as a result of that, we need much more clinical intensity when treating someone with Type 2 diabetes versus obesity, where most of the focus is on nutrition and lifestyle change.
And then the other thing that's different is expectations and emotional state of being, if you will, for people who come with obesity. Well, what I mean by that is oftentimes people who come with Type 2 diabetes, it's more like they're like, okay, well I have this disease and I just have it. And there's less of shame, no lack of shame necessarily, but less of shame emotionally. For people who are obese nearly everyone comes with a lot of shame, which is, and wherever that's coming societally, otherwise I'm not going to comment on that, but it's like I have failed. I have failed myself and I have tried... Most people have tried five to 10 if not more nutrition programs to diets when they come to Virta. So there's a lot of this kind of like, I'm a failure, it's not true, but this is how people feel versus Type 2 diabetes where it's like, oh, I have this disease and I just have it. That may be genetic.
So there's these practical and clinical elements and how do we address this different? But then also the emotional state of being for someone coming, which is obesity is quite different. What's same may be surprisingly to some people is the underlying drivers of poor metabolic health are pretty much the same. So the way we use nutrition doesn't differ that much, if at all. And what I mean by that is we address insulin resistance and inflammation in the body and manifestations or symptoms of insulin resistance, inflammation are high blood sugar. Usually, you gain weight because you're hungry all the time, so that's obesity. And then of course, lipids, cardiovascular disease markers, high hypertension, high blood pressure, so whether you come with the explicit issue of high blood sugar, I.e. Type 2 diabetes or obesity, high weight, or hey, my lipids and blood pressure is way out of whack to address the underlying drivers of those, it's the same approach nutritionally, that's kind of the same and a difference, so there's more similarities than people think.
Charles Rhyee:
So now, obviously the last few years we've seen this real surge in demand for GLP-1s for weight loss, and obviously companies like Nova and Lily are benefiting from this. I guess the question is how important do you think this class of drugs are in the grand scheme of things, not only in the obesity, right? We're now seeing that it has positive effects on sleep apnea, congestive heart failure, it's clearly demonstrating pretty impressive health outcomes. I guess one is this something that you guys had already noticed in the last 10 years as you've been tracking patients under Type 2 diabetes, but love your thoughts on what do you think of this big trend that we've seen or this, I don't want to call it a fad, right? It's this recent excitement in the last couple of years around GLP-1, its ability to be significant in terms of weight loss and other health benefits.
Sami Inkinen:
Yeah. Well, irrefutably, this GLP-1 class of drugs is quite attractive and effective in addressing, again, high blood sugar in Type 2 diabetes context, but also helping people to lose weight. And relative to the generation one of weight loss drugs, the side effects are much less so it is an attractive class of drugs from that perspective. There's just no way around that, and there's no hesitation from my part to say, "Hey, this is a better drug than many other drugs either for blood sugar or weight loss." That said, where I think people have sort of overhype, oh, there's a miracle drug that not only helps you lose weight, but it's a miracle drug for, I don't know, sleep apnea or this heart condition or that. That to me is overhyped and why is that the case? Well, I'll mention a couple of things. One is we've known for a long, long, long time that if you are BMI 40 or whatever, you're a hundred pounds overweight, you have a hundred pounds of excess body fat.
If you get rid of that, guess what? Pretty much all your metabolic disease comorbidities disappear. I'll make that point even sharper, which is Virta, we published peer-reviewed papers before the GLP-1 manufacturers published their GLP-1 comorbid outcomes that what we've shown is sleep improve and sleep apnea gets reversed in many cases. Liver markers improve, kidney markers improve. In fact, we've shown reversal from CKD 3b to 3a and to hypertension, blood pressure comes down, cardiovascular disease risk markers improve 10-year cardiovascular disease risk improves significantly. I think I mentioned hypertension comes down, depressive symptoms improve and whether that's driven by just weight loss or improvement in insulin resistance or inflammation is still up for debate what the mechanism is.
But the bottom line is when we have helped people lose substantial amount of body weight nutritionally, we see more or less the exact same results as these GLP-1 manufacturers have shown. And so therefore, I think it's a little bit overhyped to say, "Hey, we had this drug that in isolation treats five chronic comorbidities." My response to that would be, well, if we can help people lose body weight, take them from BMI 40 to whatever, 25 or 27, guess what, they are very, very likely going to get healthier in all those dimensions.
Charles Rhyee:
I think some people might say, "Well, it's easier to take this medication that I prick myself once a week versus maybe a perception that going through a program like Virta just requires a lot more effort." Just curious your thoughts to that kind of argument.
Sami Inkinen:
Well, yeah, anyone can say that. I'll just quote two statistics. So one is the adherence to GLP-1 drugs, and we can all argue why is that. It is about 35 to 40% at one year, so 35 to 40% of people who take GLP-1 for obesity are on it at one year, which is, I don't know if it's low or high, but kind of sounds like, okay, it's pretty low. Virta patients are twice as likely nutritionally to be on Virta. So 83% at one year in our published peer review trial and not Virta is a tad bit lower in our commercial population because people also deal with eligibility loss. But basically, in light of those numbers, we can say patients are twice as likely to stick to our nutrition protocol at year one than just taking a drug. That's just one sort of a data point comparison.
The second one is, as we've surveyed our patients and then just national survey of people struggling with obesity, great majority of Americans struggling with obesity would not like to be on any drug if they could achieve results without. And so yeah, we have this sort of national narrative, whoever introduced it first, but it's like, oh, Americans would never... They'd always rather take a pill than change anything. Now, yeah, maybe there's an element of truth, but it's almost like it has become accepted truth without actual grounding in reality. And my answer to that basically is yes, if you give the tools an ability to succeed without grinding teeth and suffering in weight loss, people will always choose that nutritionally. If the choice is between you're hungry all the time and you're counting calories and you know you're going to fail, versus you take this drug and it eliminates hunger and cravings, yeah, people are more likely to get [inaudible 00:36:48] the drug. So that's kind of my take on that.
Charles Rhyee:
You mentioned there, right? Adherence for GLP-1's 30, 40%. I definitely think that cost is a part of that, right? And that's either whether that's access through insurance or out-of-pocket expenses. You just posted recently an update on the first quarter where you noted 50% cost savings related to GLP-1s for your Fortune 500 clients dive into that. What does that exactly represent, and how is it that you're able to achieve those kinds of savings for employers?
Sami Inkinen:
Yeah, that was pretty exciting and I will say it's relatively early. We can get back to this a year later and see if it's gotten better or worse. But yeah, we were able to reduce GLP-1 spend by 50, which is insane. Five 0% cut it to half with a very important, while maintaining or improving weight loss outcomes, so this is a very, very important thing. So we did not achieve this with the traditional US healthcare approach to cost management, which is called utilization management, which is effectively putting barriers and pissing off your members and employees. Easiest way to cut costs is to say, "Oh, this drug is too expensive. Let's pull it out of formulary so we don't cover it anymore." So that's, for better or worse, the American healthcare where something's too expensive, we stop covering it, problem solved no costs. So that is not our approach.
Also, our approach is not the middle ground, which is complicated step therapy. Like, okay, if you run a marathon backwards, you get GLP-1 covered. So that's sort of the step therapy approach. You put a lot of barriers and it's very, very hard to get it. What is it that we've done? It's basically we give the member a choice, we have a conversation with them and say, "Hey, we have this nutrition first program, and here's the results it has delivered. You are likely to achieve weight loss similar to these drugs with this nutrition-first approach. Do you want to try that first?" And majority of incoming members who were initially thinking, "Hey, I'll just take the drug," they actually tried that. The really cool thing or exciting thing is what we've been able to accomplish is we've minimized the member friction and we are always a member in this case health plan member or employee who is covered by the plan, and we give them a choice, and then we have this nutrition treatment that delivers GLP-1 like weight loss.
And yeah, there's some percentage of people who still say like, "Oh, no, no, no, I'm not ready to change anything in nutrition. I'm so excited about these drugs because I heard from my whatever friend or colleague or TV or Instagram or whatever. I really want." Then we say, "Okay, well if that's what you want to do, your plan covers it and then we'll provide you the extra support to also change what you eat while you're on this drug." Because what these GLP-1 drugs do irrefutably is they definitely change how much you eat, but they don't change what you eat. So if you're still nibbling unhealthy food that keeps your cravings and hunger going, it's a bad thing. So we try to change the what you eat in parallel. So that's how we've been able to achieve those 50% cut in GLP-1 spend while still maintaining or improving weight loss. And I think that's a magic combo, like minimize friction, improve or maintain outcomes, and then lower costs.
Charles Rhyee:
So even for patients who decide they want to take GLP-1s, you're going to be there to provide the support to provide that education on how to eat better. Because clearly, I think even for people who are on it, the thought of being on it forever is probably not that appealing. You want to achieve your goals and then maybe able to titrate off medication, but if you haven't learned the right behaviors, I think even the clinical trial data was it for Ozempic or Wegovy, right? It's six months post. A lot of people gained a lot of the weight back, and that's because they probably didn't learn new ways of nutrition, didn't have any kind of behavior modification as part of that.
It seems like that's somewhere that everyone's recognizing as the demand for these drugs have increased, and so we're seeing more focus perhaps on the behavioral management, the behavioral change side of the equation, and more employers looking to add those kind of capabilities. It sounds like that's what you guys are providing. And is that really the crux then, and is it right for folks to be... It's the right direction that we're seeing that companies, let's say like a Cigna with EncircleRx and other programs may be kind of starting to combine both medical treatment along with patient support. Do you see that being really the effective way to get long-term outcomes and to maybe retain the benefits I guess from the use of these kind of medications?
Sami Inkinen:
Yes and no. The no part is you have to find signal from the noise and you have to separate the (beep) from the real stuff. And I'll be very blunt here, and this is not a reference to any specific company, but what I mean is given the GLP-1 cost, given the volume, given the money being spent, it's like a gold trust. And so everyone and their cousin has a wraparound around these drugs, and a wraparound doesn't add any value unless the wraparound also works as a standalone. And what I mean by that is I would say any buyer and decision maker, your first question when there's like, "Hey, here's this app with these drugs," I would ask, "Okay, does this app and a program and a related support, the nutrition support, does it deliver credible outcomes without the drug?" And if it doesn't, it's very, very, very likely more or less a useless app and wraparound. Why do I say that?
It's because these drugs work. They fundamentally reduce how much you eat so people lose weight. And so just to go for some sort of a wraparound doesn't do much. If you have, obviously, it may sound like I'm speaking in my own book, we don't just have a wraparound, we have a program and coaches and providers and intense support that delivers, again, GLP-1 like weight loss even without the drug nutritionally. And then secondly, what we've also shown, and this is also published and peer-reviewed is the ability to maintain weight loss for year or more after patients completely come off of GLP-1s. So the ability to maintain the weight loss for a year more nutritionally after people come off of GLP-1, which is key because as you referenced in all the trials published by the pharma companies, when people come off the GLP-1s, it's a V-shaped curve, so people nearly instantaneously regain the weight. That's clinically bad, it doesn't deliver the health outcomes that people want.
And then if you're a plan sponsor, employer health plan, you may have just paid three months, that could be $3,000 or six months, $6,000 for yo-yo dieting, which really means nothing. So I guess I would highlight that, yes, to implement these drugs responsibly, you do need the proper support and nutrition treatment that can be an alternative one, two adjunct, and three off-ramp. But just throwing any app as a wraparound doesn't necessarily do anything. And let me tell you, there are lots of companies and apps trying to do that, which I understand because it's a gold rush, so everyone has a wraparound and claims and all sorts of things, but you have to look at evidence, which obviously in the digital health it's a little bit challenging because there's no FDA approvals needed. So pretty much anyone can just stand up and claim and say, "Hey, this delivers something." But more often than not, it's kind of nothing.
Charles Rhyee:
You mentioned gold rush, and obviously, we're also seeing a lot of telehealth-type players, dispensing compounded versions of GLP-1s. Is there a role for them in the market? What's your view on that side of the spectrum?
Sami Inkinen:
Yeah, so you were asking about the direct-to-consumer companies offering easy access to GLP-1s. Well, there's sort of two ways to look at this. One argument is there's friction in the market. The company serves the purpose of reducing friction, making it easy to access drugs. Now we've seen what happened when companies started doing this for Adderall and ED pills and so forth. I'm sure you could make arguments both pro and con. Where I see the risks are that if you have a little and e-commerce company whose economic model is predicated on the volume of scripts, so how many pills and injections you can sell and to minimize your cost to maximize your profits, I think that's a very, very, very dangerous economic incentives. And I always say to everyone, just follow the money and you know what the company is going to do. And just mention as a footnote Virta, we only get paid for members we treat, and only if we deliver results, clinical outcomes.
If we don't, we don't get paid anything. So the only way for us to make money is successfully treat people with Type 2 diabetes, obesity. So I see that as a risk for these direct-to-consumer companies where they're trying to maximize the scripts and to minimize costs, and their providers don't form a three-year longitudinal relationship with the patients like we do. They're also not full-time employees W2s, more often than not, they are 1099 doctors who literally just click a mouse and approve scripts as quick as they can usually in seconds per a patient request.
I just see lots of risks there, and I understand if someone argues that while it takes away friction and makes easier access, yeah, I can see that point. But that's kind of the challenge I see. And now if you're a plan sponsor, employee health plan covering even part of those drugs, you're probably asking a question, "Wait a second, are you just driving utilization up? And are we seeing a couple of months of weight loss and potential side effects and nobody's really supervising and then the weights regains." When I talk to employers in health plans, these online pill mills, nobody likes them. Literally, nobody likes them.
Charles Rhyee:
Last couple of questions here. Obviously, there are a focus on or expectations for a next generation of more effective oral versions versus the ones that we've had previously that are expected to come to the market in the next couple of years. What kind of effect do you think that will have on the market?
Sami Inkinen:
I'm not a biotech investor, so I'm literally an amateur here but I would say a couple of things. One, I do hope that the more competition, the better it is for obviously both innovation, hopefully, prices, unit prices. So I would hope that whether that's going to happen is to be seen as we know insulin, hundred-year-old drug, and more than one manufacturer, but the prices just keep going up and up and up, so it's not guaranteed. So that's one. Second one is obviously orals are, for most patients, it's a more attractive option if the efficacy is as good and side effects are as low. So for most patients, it's easier. So I could see that then utilization increases, that would be my guess, and orals will certainly enter the market. There's absolutely no question about that. I think the question is more on the outcomes and tolerability and side effects when you ingest through your gut, and it has to be metabolized, time will tell, but I would say it's exciting that this innovation is happening.
I truly hope not just for my company Virta's sake, but for humanity's sake, the patient's sake, taxpayer's sake, that we don't lose sight of the fact that what happened in Type 2 diabetes, which is more drugs, more innovation, but we just have more people with diabetes and more costs. We have to address the underlying root cause drivers of poor metabolic health, which starts with nutrition. No matter how much innovation we have, as we again saw with Type 2 diabetes over the last 30, 40 years in America, if you don't address the nutrition, you're just patching symptoms. So we have to solve the nutrition-driven poor metabolic health while we have innovation in these pharmaceuticals. And I think there's maybe a little bit too much excitement around just new drugs versus addressing the real thing.
Charles Rhyee:
We're all excited about the new shiny toy when the old model is very serviceable, but sometimes people want to look ahead and instead of versus what we know what that works. Sami, last question. Looking out next two to five years, what do you think this market looks like and what are your hopes that you hope to see happen?
Sami Inkinen:
Well, I'll say two things. I do think, let's just say four or five years out, we will have three main tools in an obesity toolkit. It's one, I don't think [inaudible 00:49:54] sugar is going to go away, but the volume is probably going to go down, but it's like 0.1% probably in the market, and maybe it has its place. Two, we will have more potent and maybe even lower side effects GLP-1 class drugs, so we have those drugs. And then thirdly, we have nutrition still is the foundational treatment, and hopefully, it gets even more attention. So I would say that's the bag of tricks to address obesity, bariatric surgery, certain drugs, most likely different types of GLP-1 drugs. And then nutritional lifestyle change, the foundational tool. And then secondly, my bigger point is, this is not a political statement, but I will say that the Make America Healthier Again Movement, and specifically the part where the statement has been that we have to get rid of chronic disease by address in America.
Most chronic diseases, particularly diabetes, and obesity, by addressing the root cause with the nutrition-first approach. I think whatever people think about the MAHA, Make America Healthier Again Movement, I think that thesis is absolutely spot on. And over the next four years, the more we get attention that reversing chronic disease, particularly Type 2 diabetes is possible, it's possible with nutrition. I think the more attention, the better off we will be. I'm cautiously optimistic that we'll get tailwinds for companies like Virta and all kinds of nutrition approaches that are evidence-based and work.
Charles Rhyee:
Yeah, no, it definitely seems like if there's a time, that this is a better time than any given sort of the focus that we're seeing from some folks, obviously that are paying a lot of attention to this. Well, great. Sami, as always, really great to talk with you, and thanks for joining us today. I hope everyone listening to this took something away here because obviously, it's something that everyone's going to be very focused on over the next several years. So I think with that, we'll end it. And thanks everyone for joining us for this episode and look forward to you joining on a future episode. Thank you very much.
Sami Inkinen:
Thank you, Charles. That was super fun and enjoyed.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.

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