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Dear Fellow Investor,
It’s time to buy down, but not out obesity stocks, we said just weeks ago.
With more drug trial data expected, related stocks could rocket even higher – especially with obesity rates still bursting at the seams. At the moment, according to the U.S. Centers for Disease Control and Prevention, “Obesity is a serious, common, and costly chronic disease. More than 2 in 5 U.S. adults have obesity.”
We also have to consider that demand for weight loss drugs is off the charts, too.
“Blockbuster growth in weight-loss drugs was the main driver of a 13.5% increase in spending on prescription medications in the U.S. in 2023, according to ASHP's (American Society of Health-System Pharmacists) report,” as noted by the American Society of Health-System Pharmacists. “Spending on weight-loss drugs — originally marketed as diabetes treatments —will likely continue to climb as supplies catch up with the huge demand, the report predicted. The trend will escalate further as additional similar drugs come to market and as the FDA approves the medications for more conditions.”
Even now, some of the biggest obesity drug stocks to consider include:
Company: Viking Therapeutics (SYM: VKTX)
Viking Therapeutics said that pending FDA feedback from a meeting this year, VK2735, a dual GLP-1/GIP receptor agonist similar to Eli Lilly's blockbuster weight loss drug Zepbound, is still on track to reach late-stage development.
Helping, analysts at B. Riley says VKTX’s VK2735 has “long-term disruptive potential,” as quoted by Seeking Alpha. The firm added, that “VK2735 could set itself apart from existing weight loss drugs as it is a GLP1/GIP agonist being developed for an induction (injection [SQ] weekly) and maintenance (oral [PO] or SQ monthly) paradigm.”
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Company: Altimmune (SYM: ALT)
The company and the U.S. FDA reached an agreement on the efficacy and safety measures to be evaluated in the company’s Phase 3 obesity drug trials. “The phase 3 program will encompass four randomized, double-blind, placebo-controlled trials lasting 60 weeks and enroll a total of 5,000 participants. Three dosage strengths will be tested -- 1.2 mg, 1.8 mg, and 2.4 mg -- and the company said it is aiming for approval of all strengths,” noted Seeking Alpha.
UBS analysts also initiated a buy rating on ALT, noting, “With what we estimate as a large potential opportunity for pemvidutide in obesity and MASH combined and ALT at a roughly $508M cap, we think ALT is undervalued.”
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Company: Structure Therapeutics (SYM: GPCR)
Morgan Stanley just initiated coverage of Structure Therapeutics with an overweight rating, believing there is room in the diabetes and obesity drug market for oral GLP-1 drugs.
The firm added that early data suggests Structure’s oral drug candidate GSBR-1290, an GLP-1R agonist, has a competitive profile. It sees a potential U.S. launch in 2028, with the drug reaching worldwide sales of $6.3 billion in 2040. Morgan Stanley says it expects Phase 2b data for the drug in obesity, anticipated by the end of 2025, to be the next catalyst for the program.
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Are there any other biotech stocks with upcoming drug trials you think are worth looking into? Hit "reply" to this email and let us know!
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