Virgin Falls Out Of Orbit

Plus: Another weight loss program turns to drugs ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

May 25, 2023

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TOGETHER WITH

Good morning.

At 7-foot-1-inch and 325 pounds, Shaquille O’Neal shouldn’t be all that difficult to find, and yet here we are.

For months, lawyers representing investors of the crypto-trainwreck that was FTX have been trying to serve Shaq a court summons concerning a class action lawsuit against celebrity endorsers. Processors visited his multiple homes, stopped by his studio, and even threw papers at his car as he sped away, The Wall Street Journal reported. They finally served him at the last place on the planet you’d expect an NBA legend to show up: Miami’s Kaseya Center — formerly the FTX Arena — during Tuesday night’s game between the Miami Heat and the Boston Celtics. Still, it probably stung Shaq less than getting dunked on by Derrick Coleman.

Morning Brief

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Noom adds medication options to battle obesity.

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Citigroup is leaving Mexico.

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Virgin Orbit crash lands.

Health

Weight-Loss Programs Push for Meds on Top of Diet and Exercise

(Photo Credit: Kenny Eliason/Unsplash)

Eat right, stay active, and tame your inner food demons — but also inject this syringe deep into your stomach to keep the pounds off.

Noom, the telehealth app that built itself on a mindfulness approach toward weight loss, announced it’s launching a new medication portal to prescribe weight loss pharmaceuticals to patients.

Mind Over Matter

Noom champions a weight loss strategy that integrates psychology into traditional diets and exercise. Perhaps you’re a stress eater, or maybe grandma’s baked ziti recipe is too good to pass up. Noom intended to address the habits that contribute to weight gain.

Then came Ozempic. Everyone from Hollywood celebrities to TikTok influencers to your single-and-ready-to-mingle aunt started injecting the diabetes medication with amazing results. Did all these people actually have diabetes? Irrelevant. The drug’s creator, Novo Nordisk, put its finger on the scale and pushed a repackaged formula through four, breezy, 68-week trials to rubber stamp its efficacy as an anti-obesity medicine (the first new weight loss drug approved by the FDA since 2014).

Seeing the strong demand for the drugs — which are classified as glucagon-like peptides (or GLP-1s) generically — Eli Lilly released its own variant, Mounjaro. Its sales for the first quarter reached $569 million, outpacing estimates. Even Pfizer, which specializes in vaccines and cancer treatments, is entering the fray. This week, a peer-reviewed study of Pfizer’s phase 2 clinical trials revealed that its oral GLP-1 delivered similar weight loss results to Ozempic. In the ensuing four trading sessions, Pfizer added a chunky ~$20 billion to its market cap.

After a pilot run last year, Noom is now debuting its drug portal, Noom Med, and offering Ozempic’s sister-drug Wegovy for roughly $120 a month:

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Technically speaking, the way Wegovy works falls in line with Noom’s initial weight loss via psychology strategy. It doesn’t break down fat, but rather makes you feel full and reduces your cravings.

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In addition to Noom, programs like WW (formerly WeightWatchers), Calibrate, and Ro have entered the realm of meds, too, offering Wegovy and other GLP-1s. According to market research, the GLP-1 market in 2021 was valued at $16.53 billion, and is expected to reach $24 billion by 2027.

Hey, Wanna Buy Some Drugs: These kinds of drugs-over-the-internet models have had setbacks. It’s hard to get the full sense of a patient’s needs strictly through online means, which can then lead to massive gaps in oversight. During the pandemic, telehealth companies like Cerebral became an easy place to score Adderall and Xanax, highly addictive drugs that can induce highs. This prompted a DOJ investigation in 2022, and Cerebral has since halted prescribing controlled substances. In February, the Biden administration proposed tighter restrictions for online prescriptions of certain controlled substances. GLP-1s have a litany of side effects such as vomiting, diarrhea, and in some cases, acute pancreatitis, but Noom says it has a layered vetting process that includes multiple video visits and text chats to correctly determine if a patient needs medication.

– Griffin Kelly

Banking

Citigroup Plans Spin-out, IPO of Mexico-based Banamex

One way or another, Citigroup is ready to bid adiós to its Mexico-based Banamex unit.

After an attempt to sell Banamex proved fruitless, Citigroup announced Wednesday it now plans for a separation and eventual IPO of the consumer bank, the fourth largest in Mexico by assets and loans, in a process that may take years to complete.

Don’t Bank on It

Citigroup has been in the Mexico game since acquiring Banamex for $12.5 billion in 2001, which made it the only major US banking player to establish a significant Mexican foothold throughout the past two decades. But analysts and shareholders have long urged the company to rethink its Banamex commitment due to its shrinking value amid steep competition, especially since the bank found itself ensnared in an alleged fraud scheme in 2014. Efforts to back out of Mexico have only intensified since Jane Fraser took over Citibank’s CEO reins in 2021, pushing a “slim down” mantra of focusing the company’s efforts on domestic retail banking and other core banking services.

By early 2022, Citigroup announced it was pursuing a two-pronged process of exiting the bank, either via a sale or an IPO. Stringent sale stipulations from Mexico’s left-wing president Andrés Manuel López Obrador — such as job protections for its 38,000 employees and the guarantee of a Mexican buyer — complicated the former strategy:

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In February, the Financial Times reported that Citibank was engaged with infrastructure conglomerate Grupo México in a possible $8 billion sale for the bank, though those talks have seemingly fizzled out.

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Meanwhile, the Mexican government itself explored a possible acquisition, with President López Obrador suggesting the government could offer $3 billion while Mexican citizens could buy another $2 billion worth of shares.

Too Slow: On Wednesday, Citigroup took that possibility off the table. “After careful consideration, we concluded that the optimal path to maximizing the value of Banamex for our shareholders and advancing our goal to simplify our firm is to pivot from our dual path approach to focus solely on an IPO of the business,” Fraser announced in a statement. Any IPO of Banamex isn’t likely until at least the end of 2025, though Citigroup did throw a bone to shareholders in the meantime: the bank will be resuming stock buybacks by the end of June, roughly a half-year earlier than most analysts predicted.

– Brian Boyle

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Space

Virgin Orbit Shuts Down Following Liquidation Sale

Branson, we have a problem.

Richard Branson’s bankrupt Virgin Orbit announced it is shutting down for good after a liquidation of most of its assets. Consider it a SPAC disaster.

SPAC Oddity

Spun out of space-tourism venture Virgin Galactic in 2017, Virgin Orbit’s business was geared specifically toward a satellite-launching service. But the company didn’t exactly find immediate success, successfully completing just two of its three launches in 2020 and 2021. Still, in a market still gripped by SPAC fever, that proved plenty good enough to go public.

In December 2021, Virgin Orbit underwent a SPAC merger with NextGen Acquisition Corp. at a valuation of $3.7 billion — a mark that now looks hilariously sky-high in light of its recent liquidation firesale:

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In total, auction bids earlier this week for various pieces of Virgin Orbit equipment and facilities amounted to a measly $36 million. That includes a $16 million sale of the company’s Long Beach, California headquarters to Rocket Lab and a $17 million sale of the orbit-achieving 747 jet “Cosmic Girl” and other aircraft jets to Stratolaunch, a Cerberus portfolio company.

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The company has yet to sell roughly six rockets in varying stages of manufacturing as well as its intellectual property, a Virgin Orbit spokesperson told CNBC.

Earth to Branson: With the satellite-launching company down for the count, Branson seems to be turning his attention back to the Virgin Galactic mothership even if it’s seeing similar struggles. The company’s shares remain well down from its 2021 peak, and took a tumble of as much as 10% Wednesday on news of Virgin Orbit’s demise. Still, it’s returning to space for the first time in two years on Thursday — where no one can hear you sob.

– Brian Boyle

Extra Upside

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Out with the old and in with the older: Gen Z is hot on cash and cold on credit.

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Broadway’s Back: Filled seats finally reach pre-pandemic levels again.

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Just For Fun

Hold my beer.

Showdown.

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