Could New Sleep Drugs Be the Next GLP-1?

The biopharma industry is developing a new class of drugs that could represent one of the biggest advances in sleep medicine in decades. Therapies based on orexin—a chemical produced by the brain that helps keep people awake and alert—could treat millions of people with disorders characterized by excessive daytime sleepiness.

If those new drugs prove successful in the treatment of such conditions as narcolepsy, Morgan Stanley’s Global Sleep Model sees a potential $16 billion market emerging by 2035. That number could be even higher if the therapies fulfill their early potential to be used for a broader range of issues, including attention-deficit/hyperactivity disorder (ADHD).

“Orexin drugs could do for sleep disorders what GLP-1s did for obesity: Start in a small, well-defined patient population and potentially expand into a multi-billion-dollar category that reshapes an entire therapeutic area,” says Terence Flynn, who leads coverage of U.S. pharma and biotech industries for Morgan Stanley Research. “These new therapies represent a promising emerging class in neuroscience, with the potential to transform treatment across sleep disorders and build a mega-blockbuster market.”

How Orexin Works

Orexin is a neuropeptide that signals to the body that it is time to stay awake. For people with different types of narcolepsies, idiopathic hypersomnia (IH) and other disorders characterized by impaired wakefulness, orexin-based therapies are designed to restore the brain’s ability to send that signal.

By doing that, the new therapies could address the root of the problem, rather than just the symptoms, as has been the case for decades. So far, daytime sleepiness conditions have been treated with stimulants and wake-promoting agents, including dopamine-based therapies and amphetamines. These treatments can improve daytime alertness but often fail to normalize wakefulness and may be associated with cardiovascular or psychiatric side effects.

Studies also show that orexin can play a role in appetite control, energy balance and mood behavior.

“The bigger investment question is not simply whether orexins work in the treatment of narcolepsy and similar conditions: That biology is now increasingly validated,” Flynn says. “The key question is whether the class can expand into larger, underdiagnosed populations. Success there would turn orexins from a highly effective orphan sleep therapy into a broader hypersomnolence platform.”

Expanding the Diagnosed Population

Although narcolepsy and other daytime sleepiness conditions are classified as rare diseases, their clinical and economic burden is substantial. Untreated symptoms can impair educational attainment, reduce workforce participation, increase accident risk and significantly diminish quality of life.

Morgan Stanley Research estimates that nearly 350,000 people in the U.S. and potentially more than 3 million globally have narcolepsy or IH. As few as 50% of people with these conditions have been diagnosed.

“Among the diagnosed population, many remain treated inadequately because of limitations of existing therapies, creating opportunities for novel mechanisms such as orexin-targeted medicines,” Flynn says. “More compelling efficacy of orexin-based drugs, increased physician and patient awareness and greater referral for formal sleep testing could bring additional patients into care.”

The Next 18 Months Could Define the Market

Clinical experience with orexin therapies remains relatively limited but continues to grow. Successful commercial adoption will depend on evidence that the drugs can sustain daytime wakefulness while preserving nighttime sleep and minimizing safety and tolerability issues.

A steady stream of milestones for orexin-based drugs is anticipated through the end of 2027, after the first approval by the U.S. Food and Drug Administration in early August, Flynn notes. Multiple additional pivotal and mid-stage clinical readouts are likely to emerge over the coming years.

“The next 18 months should define the class as the commercial debate on orexin therapies is shifting quickly,” Flynn says. “Increasing investment from biopharma companies underscores growing confidence that orexin could become an important therapeutic category over the next decade. Investors are focused on differentiation among the various orexin pipeline assets, and potential expansion beyond narcolepsy into broader hypersomnolence disorders.”