Investing in the most popular players in the space is not the only right approach.
The ecosystem of companies competing to develop weight loss therapies is growing every day, and there is more than one competitor ready for investment. While many investors look to small and risky biotechs for exposure, there are also larger and safer options.
Today we will discuss two such options. Neither of them are yet leaders in the weight loss field, but with their promising irons in the fire, they may have a chance to excel in the future.
1. Amgen
Amgen (AMGN -0.69%) It is not usually considered a weight loss drug, but it is a competitor nonetheless. It only has one program designed specifically for weight loss, called MariTide, which is in Phase 2 clinical trials.
Results from the Phase 2 trial are expected to be available by the end of 2024, but management is already planning to advance the candidate to Phase 3 development. It is also planned to launch a parallel phase II clinical trial for the treatment of type 2 diabetes before 2025.
If both of these studies are successful and the drug is ultimately approved for sale, its targeted market size could therefore be similar to the market size of the company’s products. Eli Lilly AND New Nordisk. In other words, it could theoretically bring in billions in revenue every quarter.
One factor that may set MariTide apart is its ability to provide patients with lasting weight loss so that they do not regain the weight they lost once treatment is discontinued. In the earlier study, patients given the highest tested dose of the candidate were able to avoid regaining most of their lost weight for at least 150 days after taking their last dose, meaning they still weighed 11.2% less than at the start of the study.
On the other hand, most patients regain the lost weight after they stop taking Lilly’s and Novo Nordisk weight loss medications.
Time will tell whether MariTide is actually as effective as early data indicates. But this is just one program in Amgen’s vast portfolio, not to mention its portfolio of drugs on the market. Failure in this program won’t slow down your company significantly, but success can give it tremendous growth. Given that the balance of risk and reward is so out of whack, it’s worth buying a decent stock now.
2. AstraZeneca
AstraZeneca (AZN -0.77%) sees weight management drugs as a long-term ambition, seeing the category as one of the main drivers of growth beyond 2030. There is currently only one program in development specifically for weight management, AZD6234, which is in Phase 1 clinical trials. They may end in the second half of 2025.
Importantly, AstraZeneca CEO Pascal Soriot sees the distinction between weight management and weight loss as significant, especially for this program. While drugs indicated for the treatment of obesity could potentially be justified by their difficult side effect profile, assuming that patients would not need to take them forever, from a management perspective there is probably plenty of room in the market for a milder drug suitable for long-term use and in the context of less serious conditions related to being overweight.
This point of view makes a lot of sense, especially considering that tolerance can be an issue with today’s leading weight loss medications on the market. Therefore, if the AstraZeneca program does not see stunning levels of fat loss, investors should not worry; the CEO is right and it undoubtedly has financial significance.
The company also has another early-stage program investigating metabolic steatohepatitis (MASH) in overweight or obese patients with type 2 diabetes, with Phase 1 trials completing at the same time. This candidate aims to use the GLP-1 receptor as a target, similar to blockbuster drugs from Eli Lilly and Novo Nordisk. Therefore, there is a high probability that using the same mechanism of action, it will also cause weight loss.
Once early work is completed, AstraZeneca could easily move to phase two trials testing it for that purpose, assuming there is reason to believe it has some differentiating properties.
Like Amgen, AstraZeneca’s cardiometabolic programs are only a fraction of its massive research and development (R&D) effort. This makes the long route to market lower risk than it would otherwise be. At the same time, its willingness to look for candidates that offer fewer side effects, not just greater effectiveness, is a completely different approach from the partners’ approach and is a wise one.
If you’re willing to be patient while the details are worked out – and that will take years – it’s worth taking a chance on this stock.
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