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 Structure Therapeutics Inc. (NASDAQ:GPCR) 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 scientist in a lab coat observing a beaker with colored liquid as it bubbles and hisses.
Clinical-stage biotechnology company Structure Therapeutics Inc. (NASDAQ:GPCR) is based in South San Francisco and has its headquarters in the Cayman Islands. Its primary emphasis is developing drugs that employ their oral small molecule platform to treat chronic illnesses. One program, GSBR-1290, is being advanced by the company to treat obesity and type II diabetes. Founded in 2016, Structure went public in February 2023.
The favorable GSBR-1290 findings recently caused shares of Structure Therapeutics Inc. (NASDAQ: GPCR) to rise by more than 50%, even though the drug's 12-week effectiveness was not as good as that of amycretin. Nonetheless, it continues to face competition in the market for obesity treatments, which has led to a second capital raise. It is one of the best GLP-1 and weight loss stocks to buy, since Wall Street is in complete favor of Structure and GSBR-1290. Despite fierce competition, analysts highlight GSBR-1290's potential to take a sizable portion of the market because of its oral formulation and encouraging interim results.
The 6 Wall Street analysts with 12-month forecasts for GPCR stock have an average price target of $82.17 and a consensus Buy rating. This average price target points to an upside of 132.05% from the current stock price of $35.41. At the end of Q1 of 2024, Structure Therapeutics Inc. (NASDAQ:GPCR) was held by 27 hedge funds.
On June 3, 2024, Structure announced a secondary offering and saw a spike in its stock price to $54.29, giving it a current market valuation of $2.02 billion. These events followed encouraging GSBR-1290 data.
An oral substitute for subcutaneous GLP-1 treatments is intended with GSBR-1290, a biased G-protein coupled receptor agonist. Its design focuses on the GLP-1 receptor without involving β-arrestin signaling, which may lead to improved glycemic management and weight reduction with fewer adverse effects.
As of March 31, 2024, Structure had $436.4 million in cash and investments, up 81.20% from the same quarter the previous year when it had no debt. Especially after using the stock market boom to generate more money, this strong cash position offers a runway well beyond 2027. Even though it is still negative, the EPS has steadily increased over the last two years, suggesting that the company is headed towards profitability.
Numerous oral weight-loss next-generation options are being advanced by the two main market leaders. For example, by week 12, amycretin showed a 13.1% weight loss. At 36 weeks, Lilly's orforglipron indicated a 14.7% decline. At week 12, Structure's GSBR-1290 demonstrated placebo-adjusted weight reductions ranging from 6.2% to 6.9%, placing it in line with orforglipron.
Although Structure Therapeutics Inc. (NASDAQ:GPCR)’s two main competitors possess formidable treatments and robust market positions, the oral formulation of GSBR-1290, together with encouraging preliminary data, presents competitive advantages. The road to defending Structure's valuation is difficult, though, given the intense competition and the need for more effectiveness and tolerability evidence. Their financial position is strengthened by the recent capital raise, which enables them to progress their clinical studies and maybe carve out a place in the growing market for obesity therapy.
Overall GPCR ranks 9th 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 GPCR 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 GPCR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
