The ecosystem of companies competing to develop therapies for weight loss is growing every day, and there's more than one competitor that's investment-ready. While many investors look to small and risky biotechs to get exposure, there are larger and safer options, too.
Today, we'll discuss two such options. Neither is a leader in the weight loss space just yet, but with promising irons in the fire, they're positioned to have a shot at greatness down the line.
1. Amgen
Amgen (NASDAQ: AMGN) isn't typically considered as a weight loss drug stock, but it's a contender nonetheless. It only has one program that's being developed explicitly for weight loss, called MariTide, which is in phase 2 clinical trials.
Results from the phase 2 trial should be available by the end of 2024, but management is already planning to advance the candidate into phase 3 development. There are also plans to initiate a parallel phase 2 clinical trial for treating type 2 diabetes before 2025.
If both of those trials succeed and the drug is ultimately approved for sale, its addressable market size could thus be similar to that of the blockbuster 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 might differentiate MariTide is its ability to offer patients persistent weight loss such that they don't regain the lost pounds once they discontinue treatment. In an earlier study, patients administered the highest tested dose of the candidate were able to avoid regaining most of the weight they shed for at least 150 days after the last dose, meaning that they still weighed 11.2% less than when they started the trial.
In contrast, most patients end up regaining the weight they lose after they stop taking Lilly's and Novo Nordisk's weight loss drugs.
Time will tell if MariTide is actually as potent as the early data indicate. But it's just one program in Amgen's massive pipeline, not to mention its portfolio of medicines on the market. Failure with this program won't slow the company down much, but success could offer it massive growth. With the balance of risk and reward skewed so much, it's a decent stock to buy right now.
2. AstraZeneca
AstraZeneca (NASDAQ: AZN) views weight management drugs as a long-term ambition, seeing the category as one of the main drivers of its growth after 2030. It presently has just one program in development explicitly for weight management, AZD6234, which is in phase 1 clinical trials. Those could wrap up in the second half of 2025.
Importantly, AstraZeneca's CEO, Pascal Soriot, views the distinction between weight management and weight loss to be a meaningful one, especially for this program. Whereas drugs indicated to treat obesity could potentially be excused for their difficult side effect profiles, with the idea being that patients wouldn't need to take them forever, management's perspective is that there's likely a lot of room in the market to accommodate a gentler drug that's suitable for long-term use, and in the context of less severe overweight conditions.
That viewpoint makes a lot of sense, especially considering that tolerability can be an issue with the current market-leading weight loss drugs. Therefore, if AstraZeneca's program doesn't report stunning levels of fat liquidation, investors shouldn't sweat it; the CEO has a point, and it's doubtlessly a financially meaningful one.
The company also has another early-stage program that's being tested for metabolic-associated steatohepatitis (MASH) in the context of patients who are overweight or obese, and who have type 2 diabetes, which has phase 1 trials concluding in the same time frame. That candidate aims to utilize the GLP-1 receptor as its target, just like the hit drugs by Eli Lilly and Novo Nordisk. So, there is a high probability that by using the same mechanism of action, it will also cause weight loss.
Once the early work is done, AstraZeneca could then easily advance into phase 2 trials testing it for that purpose, assuming there's a reason to believe that it has some differentiating property.
Much like with Amgen, AstraZeneca's cardiometabolic programs are only a sliver of its massive research and development (R&D) pipeline. That makes its long trek toward entering the market lower-risk than it would be otherwise. At the same time, its willingness to seek candidates that offer fewer side effects, rather than just higher efficacy, is a very different approach to that of peers, and it's a smart one.
If you're willing to be patient while it works out the details -- and it'll be years -- it's worth taking a chance on this stock.
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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool recommends Amgen, AstraZeneca Plc, and Novo Nordisk. The Motley Fool has a disclosure policy.
