7 Must-Buy Pharma Stocks Amid the Weight Loss Drug Revolution
It is entirely fair to state that weight loss treatments have massive transformational power. US FDA approval of weight loss medicines could help shrink millions of waistlines. All while boosting weight loss stocks, which we’ve already seen happen with Eli Lilly’s Zepbound, for example. The best part — there are even more weight loss stocks that could see a similar boost, including:
Novo Nordisk (NVO)
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Novo Nordisk (NYSE:NVO) produces Ozempic and Wegovy. Although the two drugs are similar, it’s the latter that has the ongoing potential to transform Novo Nordisk and its stock. Both drugs utilize the same active ingredient, semaglutide, with the latter approved for weight loss by the US FDA.
Better, its weight loss drug sales are increasing rapidly, up 31% and improving.
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Novo Nordisk has been plagued by manufacturing problems for the past several years. The company’s inability to supply and demand for Wegovy is well documented. To help, the company is buying three manufacturing facilities for $11 billion. That should help Novo Nordisk compete against Eli Lilly and capture even greater sales growth shortly.
Eli Lilly (LLY)
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Eli Lilly (NYSE:LLY) sales guidance for 2024 from the company is higher than what analysts had been expecting prior. That’s an excellent sign for the bulls. Further, tirzepatide, The active ingredient in Mounjaro (diabetes) and Zepbound (weight loss) have other pharmaceutical applications.
The company also continues to prove its utility in the treatment of a type of fatty liver disease. That opens the possibility of future revenue streams based on the active ingredient.
Viking Therapeutics (VKTX)
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Viking Therapeutics (NASDAQ:VKTX) continues to progress in the development of drugs intended to treat obesity and fatty liver disease. At the moment, the company expects Phase 2 results for its obesity treatment during the first quarter of 2024. The company also expects results from an ongoing study related to a drug for the treatment of non-alcoholic steatohepatitis, a form of fatty liver disease, in the first half of the year, as well.
Wall Street is unanimously on board with the firm which boasts a strong cash position. The $362 million of cash on hand is especially important. Pharmaceutical development is notoriously capital intensive And Viking Pharmaceuticals’ strong position thus serves as more evidence of its value.
DexCom (DXCM)
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DexCom (NASDAQ:DXCM) sells ambulatory continuous glucose monitoring systems for diabetics. That’s a fancy way of saying that the company sells blood sugar monitors to diabetics that are worn continuously. It would be logical to assume that DexCom is threatened by the emergence of weight loss drugs. After all, such drugs should theoretically decrease the prevalence of diabetes.
The company sought to allay investor fears That cropped up around the notion. Fortunately, data proved that patients taking weight loss drugs like Wegovy and Zepbound increased their usage of DexCom’s monitors after beginning the drugs.
DexCom continues to grow rapidly boasting multiple impressive metrics that should attract investors. Revenue has grown at more than 19% on average over the last 3 years. EBITDA growth has been even faster during the same period, at nearly 32%. Further, earnings per share growth outstrips both of those metrics, having grown at nearly 44% during the same time frame.
Pfizer (PFE)
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Pfizer (NYSE:PFE) can right its ship if it can get its obesity program back on track. The company is currently adjusting the dosing for its GLP-1 agonist danuglipron. The drug is taken orally rather than as an injection giving it distinct advantages. If the company can reduce the side effects of the active ingredient it could have a winner on its hands.
Amgen (AMGN)
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Amgen (NASDAQ:AMGN) is another well-known name in the pharmaceutical stock space and is also developing an obesity program. That program centers around a small molecule drug known as AMG 786. The company expects an initial data readout from that program during the first half of 2024. Phase 1 obesity drugs have a 59% rate of progressing into Phase 2. So, the odds are in favor of Amgen during the first half of 2024.
AstraZeneca (AZN)
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AstraZeneca (NASDAQ:AZN) first tried to develop its own GLP-1 agonist in-house. AstraZeneca discontinued that program and paid $185 million in November for a similar molecule developed by Eccogene. Further, the company dropped a few other developmental programs freeing up resources for obesity program development.
AstraZeneca is also combining the drug from Eccogene with its therapies. It is studying how those combined therapies will treat comorbidities associated with obesity and diabetes. That’s another interesting area of consideration for investors.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
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