Good morning and Happy Monday.

With TikTok on the ropes, an attention economy diaspora may be upon us. Meta wants the refugees to know it’s there for them. CNBC reported on Sunday that moderate-no-longer Meta is even paying content creators to venture into enemy territory — that’d be TikTok, Snapchat, and YouTube Shorts — to evangelize on the relative merits of Instagram, which has now surpassed Facebook to be No. 1 in Zuck’s empire. We have another idea of how social media denizens could better spend their time, like going for a walk. Or, meeting a friend for coffee. Or, going hog wild and reading a book. Or… who are we kidding, we can’t even count the number of times we scrolled writing this intro.

Energy

Rolls-Royce’s Nuclear Ambitions Mushroom

Photo of a nuclear power plant — Photo by Wim van’t Einde via Unsplash

Everything’s better under the sea. Including nuclear reactors.

Just ask Rolls-Royce (a.k.a. Rolls-Royce Holdings, the aerospace and defense manufacturer, not to be confused with the luxury carmaker that’s been a wholly-owned subsidiary of BMW since 2003). On Friday, the company notched its biggest-ever contract with the UK government’s Ministry of Defence, worth £9 billion ($11.2 billion), to build nuclear reactors for Royal Navy submarines. This fits into a broader picture of Rolls-Royce’s expanding nuclear ambitions, which are starting to go beyond the submarine market.

Going Small

Nuclear energy, which has in the past often suffered from much-missed deadlines and ballooning costs, is having a moment. The AI hypecycle is driving demand for data centers, which in turn is driving demand for electricity. With tech companies scrabbling for whatever supply they can lay their hands on, nuclear has emerged as a big winner from the electric gold rush.

Even before the AI craze kicked off, governments were starting to nose around nuclear, specifically a new kind of reactor called small modular reactors (SMRs) to fill in gaps for dispatchable energy in their decarbonization plans. Rolls-Royce, which has been making reactors for nuclear subs for 60 years, has hitched itself to the SMR wagon:

In May last year, Rolls-Royce announced it was partnering with the University of Sheffield to build an SMR manufacturing and testing facility.
Going beyond Albion’s shores, Rolls-Royce’s SMR division won approval in September from the government of Czech Republic to develop SMRs in the European nation.

Need for Speed: The problem is, you literally can’t build them fast enough. Goldman Sachs analysts released a report on Friday predicting electricity usage by data centers will double by 2030, and that by that deadline there would only be enough nuclear power online globally to fuel 10% of that demand. Of course, one quicker solution than building a power station from scratch is to fire up a retired one. That’s what Microsoft is doing to Three Mile Island, and last week, The Wall Street Journal reported South Carolina’s state-owned utility Santee Cooper is on the hunt for buyers to help it restart construction on two abandoned reactors that were mothballed in 2017.

Written by Isobel Asher Hamilton

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Healthcare

Novo Nordisk May Have Another Blockbuster on its Hands

Novo Nordisk has another shot at commercial riches.

On Friday, the Danish pharma giant released the stellar results from a phase 1/2 trial for a once-weekly jab in its pipeline that could be another blockbuster anti-obesity drug. The positive news comes just as investors were showing signs of losing their appetite for the entire industry.

Shots, Shots, Shots

The business of making people smaller may not be quite as big as initially thought. That was the consensus view of a once-banging industry entering the new year with a whimper. In December, Novo Nordisk released disappointing late-stage trial results of CagriSema, another anti-obesity drug in its pipeline, which showed the drug reduced patient weight by less than the company had projected. The bad news wiped as much as $125 billion off Novo’s market value. The competition wasn’t doing much better; to end the year, Eli Lilly reported its second straight quarter of lower than expected sales. And earlier this year, both of Novo Nordisk’s key products, Ozempic and Wegovy, were added to Medicare’s negotiation list, meaning Novo will likely be slashing US prices sometime around 2027.

The industry may not regain its image as a growth monster, but for Novo, at least, the best may be yet to come:

The Novo trial showed patients using amycretin lost 22% of their body weight after 36 weeks. That’s comparable to Eli Lilly’s Zepbound and enough for Bank of America analysts to say it could be “best in class” — with the drug possibly capable of delivering 25% weight loss.
In addition to targeting GLP-1 hormones, the bedrock foundation for existing weight loss drugs, amycretin also targets amylin, a hormone that makes people feel full after eating.

King of the Continent: Amycretin still wouldn’t hit markets until at least 2028 — assuming positive results in later stage trials. But Friday’s results were enough to get investors excited again. Shares of the company soared more than 8% before markets closed on Friday. That’s enough for the prescription drugmaker to once again reign as Europe’s most valuable company, after briefly losing the throne to LVMH earlier this month. Keeping thin and old-world luxury goods. What could be more European?

Written by Brian Boyle

Social Media

Banks Ready to Offload $3 Billion in Previously Unmoveable X Debt

There’s quite a large Elon Musk premium in the marketplace. The surge in his net worth since the presidential election has made him history’s first $400 billion-plus man.

But there’s a discount on the debt borrowed by Musk’s X. Banks are slated to offload as much as $3 billion in loans that helped finance the acquisition of the social media platform to investors this week. They expect to get 90 to 95 cents on the dollar. It’s actually not a bad deal, considering where things were just months ago.

Why Voting Matters (For Elon)

You certainly recall 2022, when Musk made a splashy $44 billion takeover offer for what was then known as Twitter. Likely more hazy are the details, namely that a group of banks including Morgan Stanley, Bank of America, Barclays, Société Générale, and BNP Paribas helped finance the deal with roughly $13 billion in debt, creating just under $1 billion in annual debt servicing fees for Twitter, now X, in the process.

It’s perfectly normal for banks to sell loans like these to investors after a deal is sealed, but X’s debt has proven difficult to offload. Musk laid off thousands and reined in content moderation, scaring off advertisers and hammering X’s revenues in the process. That left the banks struggling to find value, until a recent rebound:

When lenders tried to sell some of X’s debt towards the end of 2022, bids would have seen them take a 20% writedown on the debt, Reuters reported at the time. The loans have remained stuck on the banks’ balance sheets, or ‘hung’, for longer than any other similar deal since the 2008 financial crisis, according to PitchBook LCD.
But, as they say, fortune favors the bold: After President Donald Trump won the election with Musk as his top financial backer, banks began re-evaluating the debt’s prospects given his companies now have a line to the most powerful office in the world. Morgan Stanley, The Wall Street Journal reported, has phoned investors in advance of a planned sale of $3 billion in X debt holdings that could fetch 90 to 95 cents on the dollar this week.

X Marks the Denial: “Our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even,” Musk told X staff in an email recently, the WSJ reported. Or not: Musk claimed on X that he “sent no such email.”

Written by Sean Craig

Extra Upside

Harmonizing: Spotify and Universal Music Group, a.k.a. the world’s biggest music label, strike a new multi-year deal.
Caffeine Crunch: Trump threatened 25% retaliatory tariffs on Colombia, which would have spiked the price of a cup of coffee even more, but the countries arrived at a détente after Colombia agreed to accept deportees on US military planes.
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