BioAge Labs is the latest pharmaceutical company looking to make waves in the weight loss space.
One of the hottest areas in the pharmaceutical industry right now revolves around blockbuster drugs used to treat diabetes and manage chronic weight.
Glucagon-like peptide 1 (GLP-1) agonists such as Ozempic, Wegovy, Rybelsus, Saxenda, Mounjaro, and Zepbound have generated billions of dollars in profits for their developers, Novo Nordisk and Eli Lilly. With GLP-1 therapeutics poised to become the next megatrend in healthcare, investors are looking beyond Novo and Lilly for the next big opportunity.
Now, a little-known biopharmaceutical company called BioAge Labs (BIOA 5.65%) is looking to bring a new twist to the weight loss space, having just completed an initial public offering (IPO).
Is this a once-in-a-lifetime opportunity to get early on your next big weight loss? Let’s take a look at some of the factors below to determine if BioAge Labs stock is a good opportunity right now.
Take a look at your financial situation
BioAge Labs raised $238.3 million in its IPO. Additionally, the company’s S-1 filing shows operating expenses of $28.1 million through the first six months of 2024, implying an annual run rate of approximately $56 million. For ease of calculation, these numbers mean that BioAge Labs has over four years of liquidity to fund its operational needs.
Of course, the company’s financial trajectory won’t be as linear as this. With BioAge Labs going public, I think the company will not only hire more people but also start investing aggressively in the clinical development of its drugs. Nevertheless, the company has a lot of cash on hand and appears well-positioned to start disrupting the industry’s incumbents.
Image source: Getty Images.
Why is BioAge Labs different?
A few months ago, I wrote an article analyzing several other pharmaceutical companies looking to enter the weight loss space. With names like Pfizer, Roche, and Amgen vying for a seat at the table, what exactly is BioAge Labs doing? And does the company really have a chance to take on Lilly and Novo?
One drawback to treatments such as Ozempic and Munjaro is that although patients eventually lose weight, they also tend to lose muscle mass. Losing too much muscle mass can be a health risk because it can have a major impact on energy levels, mobility, bone strength, and more.
BioAge’s weight loss candidate, AzeraPlug, is intended to help patients lose weight while maintaining adequate muscle mass.
Should you buy BioAge Labs stock now?
While we understand the need and key differentiators for Azela plugs compared to existing weight loss drugs on the market, there are some important ideas to consider.
First, BioAge Labs is not the first company looking to solve the problem of muscle loss. Protality, a protein shake from Abbott Laboratories, is intended to be taken as a complement to GLP-1 medications to help patients maintain muscle mass while losing weight.
Additionally, Altimmune’s pembidutide is another candidate being tested in obese patients looking to lose weight while maintaining adequate muscle mass.
Other than competition, my second concern with BioAge Labs is that it is an IPO stock. Broadly speaking, IPO stocks are highly volatile as investors buy more on the hype surrounding a hot new company.
Finally, BioAge Labs is still a clinical-stage company. The company has some interesting clinical trials in the pipeline, but it will likely take several years before its drug receives full approval from the Food and Drug Administration (FDA).
Until then, BioAge Labs is a high-risk, high-return opportunity that requires a lot of comfort with the unknown and speculation. In my eyes, investors are better off continuing to ride the growth wave of established players like Lilly and Novo.
Adam Spatacco holds positions at Eli Lilly and Novo Nordisk. The Motley Fool has positions in and recommends Abbott Laboratories and Pfizer. The Motley Fool recommends Amgen, Novo Nordisk, and Roche Holding AG. The Motley Fool has a disclosure policy.
