(Bloomberg) -- Amid the stock market frenzy surrounding weight-loss medicines, one Belgian biotech company is rewarding investors by focusing on a much more low-profile area of drug development: Treatments for skin disease.

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Shares of UCB SA have more than doubled this year, lifting its market value to €32.2 billion ($35 billion). The stock is the best performer in Europe’s Stoxx 600 Health Care Index after obesity-drug developer Zealand Pharma A/S, largely reflecting optimism around the blockbuster potential of UCB’s Bimzelx medicine.

Sales of Bimzelx have been surprisingly strong since it was approved in the US a year ago to treat psoriasis. The drug is also available in Europe for hidradenitis suppurativa, a debilitating disease that causes painful skin abscesses and scarring, and US regulatory approval is expected by the end of the year.

“Bimzelx is key to UCB’s investment thesis and the ongoing launches will be a growth driver for the stock,” Stacy Ku, an analyst at TD Cowen, said in an email. “We have high conviction in the hidradenitis suppurativa opportunity, which is why we think UCB will continue to outperform.”

While obesity is an enormous market, with Goldman Sachs Group Inc. predicting a potential $130 billion of sales globally by 2030, skin ailments are less prevalent: Some analysts cite estimates for the psoriasis market at $25 billion and up, while hidradenitis suppurativa is seen as growing to more than $10 billion by 2035. Some of UCB’s rivals are already making big money treating the ailments.

AbbVie Inc.’s Humira and Novartis AG’s Cosentyx are already on the market to treat hidradenitis suppurativa, but analysts who are bullish on UCB say the clinical data shows that its drug has higher efficacy and is more durable.

Brokers are optimistic about Bimzelx’s money-making potential, with TD Cowen estimating peak sales of more than €6 billion, including more than €3 billion just from hidradenitis suppurativa.

Cimzia — for the treatment of illnesses including rheumatoid arthritis — is UCB’s best-selling product, generating almost €1 billion in sales in the first half of this year. The drug has lost patent protection in the US, but doesn’t yet face competition from copycat medicines.

UCB, which focuses on treating neurological and immunological diseases, is also developing experimental medicines for areas such as Alzheimer’s and Parkinson’s, with trial results expected this quarter. Psoriasis, like rheumatoid arthritis, is thought to stem from the immune system.

The biotech company’s rally also has benefited Financiere de Tubize SA, a listed investment vehicle for the family of Emmanuel Janssen, who founded UCB as a Belgian chemical producer almost 100 years ago.

Tubize, which owns more than a third of UCB’s equity, has gained 84% this year, helping to pave the way for its inclusion in the benchmark Stoxx Europe 600 Index last month. It’s now the third-best performer in the health care subgroup in 2024.

Not everyone is as optimistic about UCB shares. Suzanne van Voorthuizen, an analyst at Van Lanschot Kempen, downgraded her rating on the stock to neutral from buy this month, citing “better value elsewhere.”

UCB shares trade at about 26 times expected earnings. That means it’s about 50% more expensive than the Stoxx 600 Health Care Index and about 40% above its own average valuation over the past decade. By comparison, shares of Novo Nordisk A/S trade at about 29 times expected earnings.

There may be some challenges ahead, with companies such as Sanofi and MoonLake Immunotherapeutics also developing potential treatments for hidradenitis suppurativa. Meanwhile, copycat versions of Johnson & Johnson’s top-selling psoriasis drug Stelara “could pose an indirect threat to Bimzelx,” Michael Shah, an analyst at Bloomberg Intelligence, wrote.

Still, analysts are largely bullish, giving the stock 14 buy ratings, seven holds and two sells. JPMorgan Chase & Co.’s Richard Vosser in August raised his rating on the stock to overweight and set a price target of €200, matching Deutsche Bank AG’s Emmanuel Papadakis for the highest on the Street.

“Our pipeline estimates continue to leave risks to the upside,” Peter Verdult, an analyst at Citigroup Inc. who also recommends buying the stock, said in a note last week. “We continue to have high conviction in the equity story.”

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