Do you want to invest in the weight loss boom? Consider buying these 2 stocks

The ecosystem of companies competing to develop weight loss therapies is growing every day, and there is more than one competitor that is ready for investment. While many investors look to small, risky biotechs to gain exposure, there are also bigger, safer options.

Today, we will discuss two such options. Neither is yet a leader in weight loss, but with promising irons in the fire, they are positioned to have a shot at greatness down the line.

1. Amgen

Amgen (AMGN -0.69%) it’s not usually considered a weight loss drug stock, but it’s still a contender. It has only one program that is developed specifically for weight loss, called MariTide, which is in phase 2 clinical trials.

Results from the Phase 2 study should be available by the end of 2024, but management already plans to advance the candidate to Phase 3 development. There are also plans to initiate a parallel phase 2 clinical trial to treat type 2 diabetes before 2025.

If both trials are successful and the drug is eventually approved for sale, its addressable market size could thus be similar to that of successful drugs capable of treating both obesity and type 2 diabetes made by Eli Lilly and Novo Nordisk. In other words, it could theoretically bring in billions in revenue every quarter.

One factor that could set MariTide apart is its ability to provide patients with persistent weight loss so they don’t regain the pounds they lost once they stop treatment. In an earlier study, patients given the highest tested dose of the candidate were able to avoid regaining most of the weight they had lost for at least 150 days after the last dose, which meaning they still weighed 11.2% less than when they started the study.

Instead, most patients end up regaining the weight they lose after they stop taking the Lilly and Novo Nordisk weight loss drugs.

Time will tell if MariTide is actually as strong as early data indicates. But it’s just one program in Amgen’s pipeline, not to mention its portfolio of drugs on the market. The failure of this program won’t slow the company down much, but success could give it a massive boost. With the balance of risk and reward so skewed, it’s a decent stock to buy right now.

2. AstraZeneca

AstraZeneca (AZN -0.77%) considers weight management drugs to be a long-term ambition, seeing the category as one of the main drivers of its growth beyond 2030. It currently has only one program in development explicitly for weight management, AZD6234, which is in Phase 1 of clinical studies. These could end in the second half of 2025.

Importantly, AstraZeneca CEO Pascal Soriot believes the distinction between weight management and weight loss is a significant one, especially for this program. While drugs indicated to treat obesity could be excused for their difficult side-effect profiles, with the idea that patients should not take them forever, management’s perspective is that there is likely plenty of room in the market to accommodate a more gentle. which is suitable for long-term use and in the context of less severe overweight conditions.

This point of view makes a lot of sense, especially considering that tolerability can be an issue with the current leading weight loss drugs on the market. Therefore, if AstraZeneca’s program doesn’t report amazing levels of fat clearance, investors shouldn’t sweat it; The CEO has a point, and it’s undoubtedly a financially significant one.

The company also has another early-stage program being tested for metabolic-associated steatohepatitis (MASH) in the setting of overweight or obese patients who have type 2 diabetes, which has phase 1 trials ending in the same timeframe . This candidate aims to use the GLP-1 receptor as a target, just like successful drugs from Eli Lilly and Novo Nordisk. So there is a high probability that by using the same mechanism of action, it also causes weight loss.

Once the initial work is complete, AstraZeneca could easily advance to Phase 2 testing it for this purpose, assuming there is reason to believe it has some differentiating properties.

As with Amgen, AstraZeneca’s cardiometabolic programs are just one sliver of its massive research and development (R&D) pipeline. This makes its long road to market less risky than it would otherwise be. At the same time, his desire to look for candidates that offer fewer side effects, rather than just greater efficacy, is a very different approach from his peers, and a smart one.

If you’re willing to be patient while they work out the details — and it will be years — this stock is worth a shot.