We recently compiled a list of the 10 Best GLP-1 and Weight Loss Stocks to Buy Now.In this article, we are going to take a look at where Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) stands against the other GLP-1 and weight loss stocks.
According to WHO, more than one billion people worldwide are obese, including 650 million adults, 340 million adolescents, and 39 million children. A brand-new class of weight-loss drugs that don't require diets or intense exercise appears to be revolutionary. With the help of these revolutionary drugs, overweight and obese individuals can reduce their body weight by 15% to 20%. "This could be the biggest opportunity that we've ever seen in the pharma industry," says Andy Acker, portfolio manager at Janus Henderson Investors. Without question, weight-loss drugs are popular. Investors are comparing the US weight-loss medicine pioneer, to the leader in artificial intelligence chips.
Morgan Stanley Research, in light of this surge in demand, now projects that the global obesity drugs market will reach $105 billion in 2030, up from a previous estimate of $77 billion. In 2023, branded obesity drugs generated $6 billion in sales.
In 2023, the obesity drug market leader Semaglutide (the generic name for Ozempic, Wegovy, and Rybelsus) was the most prescribed Glucagon-Like Peptide-1 GLP-1 agonist , accounting for more than 88% of all new prescriptions, as per Forbes. The only GLP-1 drugs for weight control that have FDA approval to date are tirzepatide, liraglutide, and semaglutide.
J.P. Morgan Research estimates that the GLP-1 market will reach $100 billion by 2030, fueled equally by diabetes and obesity. By 2030, there may be 30 million GLP-1 users in the United States, or around 9% of the total population. The growing demand for obesity medications will have a wide-ranging impact, benefiting sectors such as biotech while generating headwinds for others, including food and beverage.
Chris Schott, a Senior Analyst covering the U.S. Diversified Biopharma sector stated:
“GLP-1s have been used to treat T2D since 2005, starting with the approval of Byetta, with follow-on products continually improving on efficacy. The most recent, Ozempic and Mounjaro, offer significant advantages over previous products and have accelerated class growth,” “Indeed, the newest generations of GLP-1s and combos lead to 15-25+% weight loss on average, well above prior generations of products.”
Regarding the treatment of obesity, some are hailing the newest generation of GLP-1 medications as "miracle drugs." However, not everyone with obesity can use GLP-1s due to their high cost and restricted insurance coverage. According to Jonathan Gruber, Professor of Economics and Chairman of the Economics Department at MIT, if 40% of Americans with obesity took these treatments at present pricing (about $15,000 per person), the annual cost would exceed $1 trillion. This nearly equals the amount of money the government spends on the whole Medicare program. That's an astounding number, then.
Over the past ten years, the usage of GLP-1 drugs, such as semaglutide, for weight loss has doubled, but among those with type 2 diabetes, its use has decreased by almost 10%, according to research published on Monday in the Annals of Internal Medicine. The prolonged medication scarcity that followed, the researchers caution, may restrict the medications' accessibility to those with diabetes. Dr. Yee Hui Yeo, a clinical fellow in the Karsh Division of Gastroenterology and Hepatology at Cedars-Sina, highlighted that as demand for obesity medications rises, it is critical to guarantee that diabetic patients have access to GLP-1 medicines.
The FDA claims that the shortages are the result of rising demand. Not only do the shortages impact the United States: The European Medicines Agency cautioned that the GLP-1 drug shortage is a "major public health concern" that is unlikely to be remedied in 2024. People with diabetes have struggled to obtain their prescriptions due to shortages, with some limiting their drugs to manage, according to NPR.
The experts on the panel "Weighing the Future of Obesity Drugs," including Debra Netschert of Jennison Investments, Julia Angeles of Baillie Gifford, and Gentry Lee of Fayez Serofim, discussed the potential of GLP-1 drugs, which were initially developed for treating diabetes but are now being used to treat obesity. Netschert emphasized the progression of GLP-1 medication delivery, ranging from weekly dosages to several daily injections, as well as continuous attempts to reduce injection frequency further and minimize adverse reactions. Netschert pointed out that 1.5 million out of the 110 million eligible patients in the United States are currently undergoing treatment with GLP-1 drugs, despite their outstanding performance, because of production limitations. Netschert and Angeles argued over who pays the expense, with Angeles claiming that the majority of patients pay out of pocket while Netschert cited considerable reimbursement from Medicare/Medicaid and insurance. Netschert stated that outside the borders of the United States, these drugs may be needed by as many as 700 million individuals worldwide. Notably, the panel discovered that U.K. payors, who are typically strict, authorized GLP-1 drugs faster than any other country, highlighting their perceived value.
The obesity drugs market is a high-growth industry and since it's in its early innings, now may be a time to add some weight loss stocks to your watchlists.
Our Methodology
We sifted through holdings of weight loss ETFs and online rankings to form an initial list of 20 weight loss and GLP-1 stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them.
We used the companies' year-over-year revenue growth as a tie-breaker in case two or more stocks had the same number of hedge fund holders. Also, we only considered stocks that received "Buy" or "Strong Buy" recommendations from analysts.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A pharmacist in a white coat with a range of drugs on shelves behind her.
Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN)
Number of Hedge Fund Investors: 36
The goal of Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is to create revolutionary life sciences products. Following Pfizer's acquisition of its parent firm in 2022, Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) was founded and has given priority to several medication candidates undergoing various phases of clinical testing. Among its many pipeline products, Taldefgrobep Alfa (BHV-2000) is particularly noteworthy for its potential to treat obesity.
Taldefgrobep Alfa is scheduled for Phase 2 studies for obesity in 2024 and is presently undergoing Phase 3 clinical trials for Spinal Muscular Atrophy (SMA). This medication, a myostatin inhibitor, works to prevent muscle loss disorders by preventing the myostatin protein, which normally prevents the development of muscle. Given that increasing muscle mass might help weight reduction and improve metabolism, the drug is a good choice for treating obesity.
Taldefgrobep Alfa received a rare pediatric disease classification for SMA from the FDA, which might hasten the licensing process and signal a more favorable regulatory position. In order to ascertain the drug's safety and effectiveness for managing weight, the Phase 2 obesity study, which is set to begin in 2024, will be crucial.
Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) has roughly $283.42 million in cash as of Q1 2024. Given the potential of Taldefgrobep Alfa, particularly in the event that Phase 2 findings are favorable, investor confidence and stock value may rise for BHVN. The stock is placed 8th on our list of the best GLP-1 and weight loss stocks to buy now.
Analysts have given BHVN a “Strong Buy” rating. The average price target for Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is $54.7, which presents a 41.26% upside potential from the current price of $38.73. According to Insider Monkey's Q1 2024 database, 36 hedge funds held a position in the company.
In light of BHVN's relatively limited cash reserves and the possibility of future dilution, investors should exercise caution. Any unfavorable trial findings for Taldefgrobep Alfa can have a detrimental effect on the stock and raise the danger of dilution. Though there are challenges involved, you cannot overlook the company's drug's novel approach to treating obesity and the continued progress made in other treatment opportunities.
Overall BHVN ranks 8th on our list of the best GLP-1 and weight loss stocks to buy. You can visit 10 Best GLP-1 and Weight Loss Stocks to Buy Nowto see the other GLP-1 and weight loss stocks that are on hedge funds’ radar. While we acknowledge the potential of BHVN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BHVN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
