Big pharma is looking to fatten profits with buyouts of weight-loss drug companies

 Even if they're not acquired, these small companies are developing promising obesity and diabetes treatments

A couple of big-picture trends in biotech could add up to a nice investment opportunity. First, corporate buyouts are back in style. Second, weight-loss drugs and the companies behind them are in high demand among consumers and investors.

The upshot: Smaller weight-loss drug companies are in the buyout sights of the big players. This trend ramped up in 2023, when biotech saw 32 M&A deals. That was 122% above the 2015-2019 average, according to analysts in the biotech research group at Jefferies. Big pharma did a record 22 deals worth $1 billion or more last year, Jefferies says.

"We believe the trend will continue in 2024, albeit with a focus on smaller, early-stage deals," says Jefferies biotech analyst Michael Yee. Big pharma is also in buyout mode to deal with patent rolloffs and government price controls on blockbuster drugs, kicking in under the U.S. Inflation Reduction Act.

Smaller companies developing obesity drugs could be priority targets, given the insatiable interest in glucagon-like peptide 1 (GLP-1) weight-loss drugs like Novo Nordisk's (DK:NOVO.B) (NVO) Ozempic and Wegovy. "We don't think pharma's enthusiasm for obesity and diabetes is dying down," Yee says. "There is an increasingly fierce competition in the space as most pharma want to be part of the $50 billion to $100 billion market."

Giants in the category such as Novo Nordisk and Eli Lilly (LLY) may well continue to build their weight-loss franchises by buying companies with alternative therapies - and also drugs that enhance their own GLP-1 therapies. Lilly, for example, bought Versanis Bio last year to gain access to a drug called bimagrumab, which may help preserve muscle mass in people using its GLP-1 drug. Muscle loss is one of the downsides of GLP-1 drugs.

Other big players in the weight-loss space, including Amgen (AMGN), Sanofi (SNY), Pfizer (PFE) and AstraZeneca (AZN) also might be joining the hunt.

Popular weight-loss drugs like Ozempic work by activating GLP-1 receptors. This helps lower blood sugar levels by boosting insulin and suppressing appetite. That's why they help treat diabetes and obesity.

Here are four smaller companies in the weight-loss space that look like attractive buyout candidates. Even if they aren't acquired, they each have promising weight-loss therapies that could propel their stocks higher. I'm putting the first two on this list. Yee at Jefferies suggests the last two.

1. Viking Therapeutics (VKTX): Viking Therapeutics (VKTX) has developed a weight-loss therapy with a twist. Code named VK2735, this therapy activates the GLP-1 receptor, just like the most popular weight-loss drugs on the market.

Here's the twist. Research show that GLP-1 drugs work better with the simultaneous activation of the glucose-dependent insulinotropic peptide (GIP) receptor. VK2735 activates both the GLP-1 and GIP receptors. Viking is developing VK2735 as a therapy for obesity and several other metabolic disorders. The company is working on both injectable and pill forms of this drug in two separate trails.

A Phase I safety trial of the injectable form of this drug found patients lost 13% of weight after 13 weeks. The injectable form of the therapy is now in Phase II trials. A Phase I safety trial of the pill version found that patients shed 5% of their body weight in a month. This one is slated for Phase II trials for use against obesity in the second half of 2024.

Viking also is developing a therapy to treat a fatty liver disease called nonalcoholic steatohepatitis (NASH), which is linked to obesity. Code named VK2809, this therapy may treat NASH by reducing liver fat, improving cholesterol and lipoprotein levels, and reducing LDL (low-density lipoprotein) cholesterol, sometimes called the "bad" cholesterol.

2. Structure Therapeutics (GPCR): The popular GLP-1 weight-loss drugs typically have to be injected. That doesn't seem to faze patients. But let's face it, a pill would be more convenient. That's what Structure Therapeutics (GPCR) is trying to develop. Pills offer another advantage: they are easy to make. This would address supply shortages of the injectable weight-loss drugs, which are trickier to produce.

Structure Therapeutics has two pills for weight loss in clinical trials. Both are GLP-1 drugs. The company is testing one, code named GSBR-1290, for use against obesity and diabetes. It's in Phase II trials. The company plans to publish data from its obesity trial late in the second quarter, which could be a catalyst for the stock. Structure Therapeutics is testing another drug, called ANPA-0073, for use in combination with GLP-1 drugs. It may help spare muscle loss, a problem with GLP-1 therapies. It also has several GLP-1 drug candidates in pre-clinical studies.

3. Scholar Rock (SRRK): A big problem with the GLP-1 obesity drugs is that about 30% of weight loss comes from the loss of muscle, Yee says. If patients go off these miracle weight-loss drugs, they don't regain the muscle.

So, it would be great to have a weight-loss drug that doesn't cut muscle mass. Several companies are developing therapies to help that happen. These therapies seem to work by reducing myostatin, a protein that inhibits muscle growth. Eli Lilly is the leader here. But Scholar Rock is in the game.

Scholar Rock has developed an antibody that acts as a myostatin inhibitor, called apitegromab. Code named SRK-439, the antibody will be tested in use alongside a GLP-1 drug. Scholar Rock's Phase II data won't be out until mid-2025, but there could be a catalyst for Scholar Rock this summer, says Yee. That's when Lilly should reveal some Phase II data on its own myostatin inhibitor, called bimagrumab. Positive results could boost Scholar Rock shares, Yee adds.

Scholar Rock is also testing its apitegromab for use against spinal muscular atrophy. Phase III trial data will read out in the fourth quarter.

4. Ventyx Biosciences (VTYX): Though it is at a very early stage, this smallcap biotech company has a weight-loss therapy that may work just as well as GLP-1 therapies without many of the side effects. Importantly, patients might not regain weight after they go off this drug, called VTX3232, according to early data.

Researchers think this potential obesity treatment works by suppressing a part of the body's immune system which can malfunction and cause too much inflammation. The drug works by suppressing NLRP3 inflammasomes. These are protein complexes programmed to spark an immune-system response to pathogens.

When this system goes berserk it can cause excess inflammation. Researchers think this could contribute to weight gain by causing inflammation in the hypothalamus, a part of the brain that regulates hunger. Reducing this inflammation may treat obesity.

Ventyx hopes to launch an obesity trial in the second half of the year. Investors wouldn't see data until 2025. But the stock could see a catalyst in May. That's when a private company called NodThera will release clinical-trial data on its own NLRP3 inhibitor called NT-0796. NodThera claims that early data from animal tests show NT-0796 is just as effective as Novo Nordisk's Wegovy. Confirmation of this from clinical trials could boost Ventyx shares, Yee says.

https://www.morningstar.com/news/marketwatch/20240420310/big-pharma-is-looking-to-fatten-profits-with-buyouts-of-weight-loss-drug-companies-here-are-4-candidates

Goofy Greens And Regulators Threaten Nuclear Revival

 by Duggan Flanakin via RealClear Wire,

Despite its commitment to “no more gas, oil, or coal,” Friends of the Earth has launched a campaign against one of the nation’s “greenest” governors, California’s Gavin Newsom. Their goal? To stop the U.S. Department of Energy from doling out $1 billion to keep the Diablo Canyon nuclear power plant (no gas, oil, or coal there) open past its planned 2025 closure date.

Newsom, whose policies are among the world’s most aggressive against gasoline- and diesel-powered vehicles and tools, last year stated that, “the Diablo Canyon power plant is important to support energy reliability as we accelerate progress towards achieving our clean energy and climate goals.” Diablo Canyon today supplies nearly a tenth of California’s electricity.

The aptly named FOE claims that “the environmental impacts from extending the lifespan of this aging power plant at this point in time have not been adequately addressed or disclosed to the public.” Other groups, too, spread fear about nuclear energy. But by far the most powerful obstacle for nuclear energy enthusiasts to overcome lies within the federal government.

While nuclear energy has accounted for about 20% of the electricity generated in the U.S., and in 2023 supplied nearly half the nation’s carbon-free electricity, a new report from the Government Accountability Office says the Nuclear Regulatory Commission must more fully consider possible impacts of climate change on the nation’s mostly aging nuclear power plants.

The message? The GAO report says that climate-related threats to nuclear power plants range from worsened droughts that dry up water supplies needed for cooling reactors to sea level rise and storm surge flooding. Despite its regulatory obtuseness, the report said the NRC should include “data” from future climate projections [scary scenarios?] in safety risk assessments along with the historical data the NRC relies upon. All this adds costs.

Douglas McIntyre, the former editor-in-chief of 24/Wall St., last month said that, despite the obvious need for nuclear power, “many Americans, perhaps remembering Three Mile Island, do not want nuclear energy to be part of the solution.” And a recent Pew Research poll found that, “Critics highlight the high cost of nuclear power plant projects and the complexities of handling radioactive waste.”

By contrast, the U.S. Department of Energy has argued that the U.S. will need an additional 550 to 770 gigawatts of clean, firm capacity to reach net-zero carbon dioxide emissions and that nuclear power is one of the few proven options that can fill this need. Moreover, nuclear power plants create high-paying jobs with concentrated economic benefits for the communities most impacted by the energy transition.

These dichotomous messages from the DOE and NRC are highlighted in a recent article by ThorCon International co-founder Robert Hargraves, who bluntly stated that the U.S. is not building commercial nuclear power plants – while 16 other nations are – “because NRC and EPA regulators are so misinformed about radiation.”

Regulatory overkill is a likely culprit in the failed six-reactor, 462-megawatt project NuScale had planned in cooperation with Utah Associated Municipal Power Systems, part of the DOE’s Carbon Free Power initiative for small modular reactors. Several towns pulled out and sank the project as the estimated price for power rose from $58 per megawatt-hour (MWh) to $89/MWh.

Misguided safety assumptions created a regulatory jungle so complex that startup Atomic Canyon is offering AI to help applicants navigate the NRC’s database of 52 million documents. U.S. nuclear energy regulators, Hargraves charged, do not analyze data about human health effects of radiation from nuclear power; instead, they rely on groupthink consensus evolved in NGOs originally misled in the 1950s by grant-seeking geneticists.

For decades these geneticists claimed radiation damage to chromosomes was increasing. But when children of the survivors of the Nagasaki and Hiroshima atomic bomb attacks exhibited no such effects, the anti-nuclear scientists switched to alleged cancer impacts. And a major flaw in their analysis is what caused the cost of nuclear energy to skyrocket.

While studies of those survivors found no excess cancers in people receiving less than 0.1 Gray (joules of energy absorbed by kilogram of tissue), regulators set public radiation limits 100 times lower, mistakenly limiting accumulated dose rather than dose rate. In the real world, setting a maximum daily dose of 0.02 Gray (rather than the current maximum cumulative annual dose of 0.001 Gray) would provide a large safety margin.

Salisbury University Professor of Finance Danny Ervin pooh-poohs the fears of nuclear foes, saying “the next wave of nuclear can’t come soon enough.” That “next wave” includes scalable nuclear reactors, notably the TerraPower initiative sparked by Bill Gates. This advanced facility, coupled with a molten salt energy storage system, will be capable of increasing output for nearly six hours during peak demand periods at a projected cost of about $4 billion.

The plant will be powered by an advanced Natrium reactor cooled with liquid sodium instead of water [eliminating one concern of skeptics]. With a capacity to generate up to 500 megawatts, it will provide ample energy to power approximately 400,000 homes.

Of equal importance is that its location at a former coal-fired power plant in Wyoming enables easy integration into the existing electric grid while stimulating the local economy. This contrasts with wind turbines and solar arrays, which often are located far from existing transmission lines, require massive footprints, and operate intermittently, thus requiring backup power generation.

Over in England, X-Energy, in partnership with Babcock International subsidiary Cavendish, has proposed to develop a 12-reactor plant using the company’s Xe-100 high-temperature gas-cooled reactor design.  The Teesside array, which should be operational by the early 2030s, is the first of what the companies hope will be a fleet of up to 40 of the 80 MWe power plants in locations across the United Kingdom.

Cavendish Nuclear managing director Mick Gornall boasts that, “a fleet of Xe-100s can complement renewables by providing constant or flexible power, producing steam to decarbonize industry, and manufacturing hydrogen and synthetic transport fuels. Deployment will also, he said, create thousands of high-quality, long-term jobs nationwide.

Uranium-rich Nigeria thinks it has a solution to the radioactive waste management issue that has been a big bugaboo for the nuclear energy industry worldwide. The solution relies on the NST SuperLAT, which NuclearSAFE Technology co-founder Dr. Jimmy Etti-Williams calls “a breakthrough in nuclear waste management.”

SuperLAT will, says Etti-Williams, process, package, load, store, and transport nuclear waste in casket containers to several thousand feet underground, yet able to be retrieved as needed for fuel in reactors to generate low-carbon-footprint energy. This geological nuclear waste disposal technology is designed to isolate and dilute nuclear waste in line with universal regulations.

The SuperLAT technology should, says Etti-Williams, satisfy International Atomic Energy Agency and other stakeholder concerns about nuclear waste storage accidents, leakages, or terror risks. He boasts that Nigeria can have its own uranium plants to boost its own and pan-African development efforts.

There’s an old saying, which first appeared in 1902 in Puck’s Magazine, with the message, “People who say it cannot be done should not interrupt those who are doing it.” It is high time, many now believe, for the nay-saying over-regulators to stop interrupting nuclear progress.

And on that front, too, there is good news. Nuclear Matters has announced an online gathering entitled, “The Path to Progress: Modernizing the NRC,” scheduled for May 2.

At the event, a four-person panel moderated by the Nuclear Energy Institute’s John Kotek will discuss the urgency of NRC modernization in order to unlock the benefits of nuclear technology innovation to revitalize the U.S. nuclear energy industry.

The anti-nuke FOEs (sic) will have little left to argue once these and other innovative nuclear projects prove successful and safe when brought to the fore in other nations – places like England and Nigeria. But those who seek reliable, safe, and clean technologies to generate the electricity in quantities needed tomorrow will only be satisfied if the archaic rules can be recrafted to accommodate them.

Duggan Flanakin is a senior policy analyst at the Committee For A Constructive Tomorrow who writes on a wide variety of public policy issues.

https://www.zerohedge.com/energy/goofy-greens-and-regulators-threaten-nuclear-revival

Gen-Zers Threaten DC Protest Ahead Of TikTok Ban Vote

 The US House of Representatives plans a vote early Saturday afternoon on several bills that would send critical aid to Israel and Ukraine and a possible bill that would force TikTok's Chinese parent company ByteDance to divest or risk being banned across the US. 

At 1300 ET, the chamber is scheduled to vote on three foreign aid bills. A fourth measure, unrelated to foreign aid, would require the federal government to force ByteDance to sell TikTok within nine months or face a nationwide ban. Republican Speaker Mike Johnson will need Democratic votes to get all four votes passed. 

If approved, the bills are expected to be consolidated and sent to the Senate, where a vote on the entire legislative package will be required before sending it to President Biden's desk for signature. The timeline for this is uncertain, but it will likely happen quickly. Majority Leader Chuck Schumer, D-NY, and Minority Leader Mitch McConnell, R-KY., have both supported the foreign aid bills. 

In a statement posted on the platform X, TikTok wrote, "It is unfortunate that the House of Representatives is using the cover of important foreign and humanitarian assistance to once again jam through a ban bill that would trample the free speech rights of 170 million Americans." 

In March, the House initially passed legislation to ban TikTok if it is not sold within six months, but the measure failed to go anywhere. The current version would extend the timeframe to nine months, with a three-month extension. 

'Free speech' crusader Elon Musk came out against the potential ban, writing on X, "TikTok should not be banned in the USA, even though such a ban may benefit the 𝕏 platform." 

Musk continued, "Doing so would be contrary to freedom of speech and expression. It is not what America stands for." 

X user OSINTdefender noted, "While I would usually Agree [with Musk on free speech], I think the Danger that a Platform like TikTok provides in Influencing the Youth of America, especially when it has Clear Links to the Chinese Government, is Too Great and thus it need to either be Restricted, Banned, or Totally Regulated; else we may have a Serious Domestic Issue on our Hands when we eventually do go Toe-to-Toe with China in the Pacific, similar to what we are already seeing in America's Youth today with their Support for Anti-Western Ideals and literal Terrorist Groups like Hamas and Hezbollah." 

Another X user said not just TikTok, "Exacy same videos are on insta reels, youtube shorts etc. Are you afraid of something else besides the content?" 

Meanwhile, Tiktokers are threatening to protest today "the signing of that piggybacked omnibus bS war bill that simultaneously will push the TikTok ban through." 

https://www.zerohedge.com/political/furious-gen-zers-threaten-dc-protest-ahead-tiktok-ban-vote

Truflation Claims Inflation is 2.06 Percent, Anyone Believe That?

 Would you believe believe year-over year inflation is barely over two percent? That’s the Truflation claim as of April 17, 2024.

The above chart is courtesy of the Truflation Dashboard. Here’s the Truflation Methodology.

Truflation provides a set of independent inflation indexes drawing on as many as 30+ data sources and 13+ million prices of goods and services at a country level. These indexes are released daily, making them one of the world’s most up-to-date and comprehensive inflation measures.

OK, but what are the weights and how good are the sources.

Truflation Weights

Truflation weights housing at 23.2 percent.

BLS Weights

The above chart is as of March 2024. There’s no need to break it down further because I want to focus on housing.

The BLS has housing at 36.18 percent. The Truflation weight is 23.2 percent. Truflation’s rate is more than a bit questionable.

Half of American Renters Pay More Than 30% of Income On Housing

PBS reports Half of American Renters Pay More Than 30% of Income On Housing

Rental prices are unaffordable for a record number of Americans, with half of all renters paying more than 30 percent of their income on rent and utilities. That’s according to a new report from Harvard’s Joint Center for Housing Studies that examined 2022 census data.

Read that carefully. That 30 percent figure is from 2022. The average was 25 percent. Rent calculators use 30 percent as an average. I suspect it is now well above 30 percent, but let’s use 30 percent.

As of the third quarter of 2023, the Census Department had the Homeownership Rate at 65.7 percent. That means 34.3 percent of people rent.

The weight for people who rent should be .343 * .30 = 0.1029. Thus, the overall weight for renters should be something like 10.29 percent.

Truflation vs BLS

The above graph from the Truflation March 2023 report BLS Housing Data Discrepancies & Adjusting Our Model

The majority of categories in the BLS estimate were broadly consistent with our own price change predictions. The only outlier was the housing category, where estimates were wildly different from other reputable industry sources whose data we rely on.

The BLS has a particular way of calculating the costs of housing, or “shelter”, which is different from other sources. Firstly, it considers rent and housing costs to be one and the same. In other words, it assumes that homeowners will be paying an equivalent amount in mortgage as renters would pay for the same property, adjusted for size and location. The only difference is that for homeowners, this figure strips out utilities. The utility costs of rental properties are also included if they are part of the rent paid by the tenant. This is known as the Owner’s Equivalent Rent (OER).

With this method, the BLS intends to measure the cost of the consumption value of a home, rather than the changes in value of a house or the actual monthly mortgage repayments. This method has obvious flaws, since there are likely to be a significant number of homeowners who have paid off a portion of their mortgages. For these individuals, the costs would be lower than for property renters.

Meanwhile, when it comes to tenant rent, the BLS includes any government subsidies paid to the landlord in the total cost of the rent, which is also likely to skew the data to the upside. The BLS does take some measures to keep its sample representative, however. It adjusts for the quality of the properties it observes based on age, neighborhood improvements and physical renovations to the home, and it replaces one-sixth of the sample each year.

Truflation does not count rent subsidies. If the cost of rent goes up 10% but the government pays all of that, Truflation says there was no price increase.

Logically, that is ridiculous.

Second and more important, Truflation looks at mortgage rates. Those are relatively constant so Truflation essentially wipes out mortgages expect for new home buyers.

Heaven forbid Truflation look at things from the point of view of a renter looking to buy a home facing 7.5 percent mortgage rates on top of housing prices that have doubled since 2020.

The BLS makes the same mistake on grounds that a home is a capital expense not a consumer expense. This has gotten the Fed in numerous messes including the one right now where nearly everyone with a mortgage is trapped in their home unwilling if not unable to move.

Inflation goes well beyond consumer prices and neither the Fed, nor the BLS, nor Truflation has figured this out.

Third, the Truflation housing inputs are suspect.

Truflation uses Zillow, Trulio, Redfin, Apartment List and CoreLogic. It claims “Our methodology for calculating rental price changes incorporates both new rental agreements and rental renewals, which provides us with a balanced view of price changes over time.”

But Zillow, Redfin, and Apartment List all have a huge flaw. They only capture new leases when only about 9 percent of the people move each year.

According to the U.S. Census Bureau, the mover rate remained at a historic low across the country. Data shows that in 2022 the mover rate was 8.7%.

For example, Truflation assigns a weight of 8.1 percent to rental. Only 9 percent of that 8.1 percent should go to Zillow, Redfin, Apartment list, and if I am correct Trulio. If Truflation is weighting all of it’s rental sources equally, that is a huge error.

Corelogic

Corelogic’s Single-Family Rent Index year-over-year was 3.4% in February.

That is much lower than the BLS measure of 5.7 percent but it is way higher than Truflation’s 2.37 percent. And please note that it shot up from 2.6 percent in January

Apartment List, OER, CPI Rent, Zori

Apartment List says year-year-over-year rent is -0.9 percent. Zillow says it is 3.7 percent.

Which is it?

Is averaging the right thing to do when Apartment List suffers from an additional problem that it does not use seasonal adjustments.

What About OER?

Truflation makes a big stink about OER. I side with this view.

I understand the claim against OER. No one really pays it. People pay mortgages. But the calculation attempts to measure inflation as if owners rented.

But ignoring OER creates another problem, and it’s a big one. The cost of housing is going up, people are trapped in their own homes, unable or unwilling to move because it is too costly to do so.

Debate Over Lags, OER, and Rent: Is More Inflation On the Way?

Case-Shiller home price index, CPI rent index, and the index of hourly earnings for production and nonsupervisory workers.

I discussed the above chart in my post Debate Over Lags, OER, and Rent: Is More Inflation On the Way?

Look at that graph of home prices.

Truflation sweeps that under the rug as does the Fed and economists in general.

Auto and Home, Insurance & Maintenance Costs Soaring

Insurance, repairs, and maintenance costs are up for both homes and autos. Some homeowners are skipping home insurance. What’s going on and who is to blame?

On April 19, I commented Auto and Home, Insurance & Maintenance Costs Soaring and People Are Angry

Those who live in flood zones, hurricane zones, or fire zones have seen their rates rise 50-100 percent or more. A quote from $3,200 to $31,000 is shocking.

Ask anyone in a hurricane zone, anyone in school, and anyone who buys their own health insurance what their inflation rate is.

The BLS averages all of this. Economists wonder why so many people are angry.

The Fed (economists in general) view home prices as a capital expense, not a consumer expense. Thus home prices are not in the CPI nor in the PCE (Personal Consumption Expenditures) measure of inflation. The latter is the Fed’s preferred measure.

This is a serious ongoing economic mistake by the Fed. The Greenspan Fed and the Bernanke Fed both ignored home prices. Asset bubbles brewed, culminating in the Great Recession.

Powell made the same mistake. However, because there were no liar loans this time, the result is people are trapped in their homes unwilling to trade a 3.0 percent mortgage for a 7.0 percent mortgage.

Truflation makes the same mistake and compounds them by lowering its weights of rent and OER.

The Fed’s Big Problem, There Are Two Economies But Only One Interest Rate

I described the Fed’s role on February 20 in The Fed’s Big Problem, There Are Two Economies But Only One Interest Rate

And as a direct result of soaring home prices, insurance and maintenance costs had to rise. The only surprise is the lag in which that happened.

Some of the lag is due to regulators prohibiting insurers to raise prices.

Who Fits the Truflation Model?

If you are a renter, someone looking to buy a home, someone who pays their own health insurance, or someone with escalating college expenses, you probably think Truflation is nuts.

If you own your own house, are on Medicare, and are not in a flood, hurricane, or fire zone, congratulations, you fit the Truflation model. I am actually in the group of lucky ones (although I would prefer to be 40 again).

A Better Measure of Inflation?

Truflation wants to be a better measure of inflation. It isn’t. In attempting to fix some issues, it introduced others.

And it ignores the big elephant by insisting rising home prices have no part of inflation.

The 34 percent of the nation who rents would laugh at Truflation percentage weight of rent at 8.1 percent with a strangely calculated OER at 13.8 percent.

And so do I even though I personally fit their model. I do not believe I am the average person, nor do I believe that averaging wildly differing measure makes much sense in the first place.

We don’t need a better CPI, we need something that will take into consideration the issues I brought up starting with the huge mistake of ignoring housing bubbles as if they are not part of the inflation problem.

https://mishtalk.com/economics/truflation-claims-inflation-is-2-06-percent-anyone-believe-that/

School district responds to rumors of kids identifying as 'furries' after student protest

 Utah's Nebo School District is pushing back on allegations from students about "furries" – people who identify as animals – in their middle school, with some rumors of animal-like "licking" and "biting."

About 75 parents and students at Mt. Nebo Middle School protested "furries" Wednesday, chanting during a walkout, "We the people, not the animals," "Compelled speech is not free speech," "Stop brainwashing us!"

At the same time, a petition circulated calling out the "furries." The petition, "Students for Humans at School, not animals aka furries," as of Thursday had over 1,800 signatures. 

The petition asks the district to enforce its dress code policy which prohibits any "elements of a student's appearance that draw undo attention, distract, disrupt, or otherwise interfere with the learning atmosphere at school or at school activities and events, or that create a health, safety or welfare issue are prohibited."

Utah school district responds to allegations about "furries" in their middle school.

"Please help us in taking care of our children's well being and safety while at school," the petition concludes. 

The district denied that students were wearing full animal costumes, while students at the protests alleged some were wearing full animal face masks.

The district sent out an email to parents in response to the protest. 

"We expect ALL students to be respectful towards each other while we are here at school. We hope you will treat others how you would like to be treated. Outstanding behavior might demonstrate curiosity, understanding, patience and tolerance," the district said. "One of our goals is to ensure that you are able to come to school, each day to learn the academic curriculum and appropriate citizenship. As responsible citizens, we hope you will look out for each other, take care of each other and treat each other with kindness."

About 75 parents and students protested rumors about "furries" in the middle school.  (FNC)

In a statement to Fox News Digital, the district called the allegations "misinformation that had been circulated online."

"We want to assure you that rumors circulating online about student behavior are completely untrue," the district said. "These are 11 and 12-year-old students, and while sometimes these children may come to school with a headband that has ears, sometimes with giant bows, and sometimes dressed as their favorite athlete, there have been no students attending school wearing masks, animal costumes, or acting like animals." 

Three furries talking at a conference. (Photo by Jens Kalaene/picture alliance via Getty Images)

The district added that rumors of "biting, licking, costumes, or animal behavior" were "unfounded and are not occurring in our schools."

"We promptly address distractions to learning as well as dress code violations to maintain a positive learning environment for everyone… We encourage open communication. If parents or patrons have concerns, we encourage them to please reach out to the school administration or myself. Our top priority is a safe and supportive environment for both students and parents," the district said. 

https://www.foxnews.com/media/school-district-responds-rumors-kids-identifying-furries-student-protest