Interested in Weight Loss Stocks Besides Novo Nordisk and Eli Lilly? You Might Want To Check Out This New IPO Stock

One of the hottest areas of the pharmaceutical world right now revolves around blockbuster medications used to treat diabetes and chronic weight management.

Glucagon-like peptide-1 (GLP-1) agonists such as Ozempic, Wegovy, Rybelsus, Saxenda, Mounjaro, and Zepbound are raking in billions for their developers, Novo Nordisk and Eli Lilly. With GLP-1 medications looking poised to become a new megatrend in healthcare, investors are looking for the next big opportunity outside of Novo and Lilly.

Well, a little-known biopharmaceutical company called BioAge Labs (BIOA 5.65%) is looking to bring a new spin to the weight loss space, and it just completed its initial public offering (IPO).

Is now a once-in-a-lifetime opportunity to get in early on the next big thing in weight loss? Let's look at several factors below and determine if BioAge Labs stock is a good opportunity right now.

Taking a look at the financial picture

BioAge Labs raised $238.3 million in its IPO. Moreover, the company's S-1 Filing shows that operating expenses were $28.1 million through the first six months of 2024 -- implying an annual run rate of approximately $56 million. To keep the math simple, these figures imply that BioAge Labs has over four years of liquidity to fund its operational needs.

Of course, the financial trajectory of the company will likely not be this linear. Now that BioAge Labs is public, I suspect the company will begin investing aggressively in more clinical development for its medications as well as hiring more people. Nevertheless, the company has a solid amount of cash on hand and looks well positioned to start disrupting its industry incumbents.

Why is BioAge Labs different?

A couple of months ago I wrote a piece analyzing several other pharmaceutical companies looking to make inroads in the weight loss space. With names such as Pfizer, Roche, and Amgen are vying for a seat at the table, what exactly is BioAge Labs doing that is so unique and does the company really have a shot at encroaching on Lilly and Novo?

One of the downsides of treatments such as Ozempic or Mounjaro is that even though patients wind up losing weight, they also tend to shed muscle mass. Losing too much muscle mass can be a health risk as it significantly impacts energy levels, mobility, bone strength, and more.

BioAge's weight loss candidate, azelaprag, aims to help patients lose weight while also retaining appropriate muscle mass.

Should you buy BioAge Labs stock right now?

While I see the need and key differentiator of Azelaprag compared to existing weight loss medications on the market, there are a few important ideas to explore.

First, BioAge Labs is not the first company looking to solve issues pertaining to muscle mass reductions. Abbott Laboratories' protein shake, Protality, is meant to be taken as a complement to GLP-1 medications so that patients can retain muscle mass while also losing weight.

Furthermore, pemvidutide from Altimmune is another candidate being tested in obesity patients looking to lose weight while preserving appropriate muscle mass.

Outside of competition, my second point of concern with BioAge Labs is that it's an IPO stock. Broadly speaking, IPO stocks carry outsized volatility as investors buy more into the hype around a hot new company.

Lastly, BioAge Labs is still a clinical-stage company. While the company has some exciting clinical trials in its pipeline, it will likely be years before any of its medications receive full approval from the Food and Drug Administration (FDA).

Until then, BioAge Labs is more of a high-risk, high-reward opportunity that requires a lot of comfort with unknowns and speculation. In my eyes, investors are better off continuing to ride the growth waves of established players such as Lilly and Novo.