BioAge Labs (BIOA 4.94%) is a biotech company that you may be hearing a lot about over the coming years. Dedicated to developing medicines for closely linked problems like metabolic disorders and aging, BioAge has candidates that are, so far, not directly comparable to anything that’s on the market.
This makes it a business that’s worth watching. And, for a trio of reasons, it’s also worth buying hand over fist despite its relatively high level of risk. Here’s what makes it such a compelling pick right now.
1. It just raised plenty of capital from all the right investors
As BioAge is hot off its initial public offering (IPO) on Sept. 25, it isn’t wanting for cash at the moment. Its IPO raised gross proceeds of $198 million, and its series D funding round, which concluded in February, generated $170 million. It’ll be a while before it needs to raise additional capital, as its research and development (R&D) expenses were just $10.4 million in the second quarter.
In that last pre-IPO fundraising round, highly influential venture capital (VC) groups like Andreessen Horowitz (a16z) and RA Capital invested, as did the venture arms of biopharma titans like Eli Lilly and Amgen. That might pave the way for future drug development collaborations with those pharma companies, but for now the takeaway is that the biotech has the backing of some prestigious power brokers.
It’s likely to have a strong network, which will help it to recruit high-quality managerial and scientific talent, among other benefits. And for a pre-revenue biotech business, that’s a major asset.
2. It has a strategy for grabbing a slice of both today’s and tomorrow’s massive markets
The hottest pharmaceutical market today is for obesity drugs. One number that gets thrown around a lot for the size of that market is $100 billion in annual revenue by 2030, but some estimates call for even greater heights within roughly the same amount of time. BioAge’s lead candidate, a molecule called azelaprag, could theoretically have an addressable market size that’s consistent with those loftier estimates. Here’s why.
In a pair of phase 2 clinical trials, the biotech is investigating whether an oral formulation of azelaprag is useful for treating obesity when used as an adjunct to Novo Nordisk‘s drug semaglutide (Wegovy), and whether it’s helpful as an adjunct for Eli Lilly’s drug tirzepatide (Zepbound). A third earlier-stage trial will look at whether the candidate can help with insulin sensitivity; if that’s successful, it would pave the way for it to be tested for treating diabetes, perhaps alongside Novo Nordisk’s Ozempic, or Lilly’s Mounjaro.
So right off the bat, if those three trials deliver positive data, azelaprag could have an addressable market as large as the two leading medicines on the market right now. And it wouldn’t be in competition with them because it’d be an adjunct, improving their efficacy.
If azelaprag can boost the power of its companion drugs enough for patients to take lower doses of them, it could also lead to a combination therapy that causes fewer side effects; that could give it an edge against newer medicines that come out by the time it could launch. Preliminary evidence derived from animal models suggests that this potential is very much alive, though high-quality clinical data from human patients is needed before drawing any definitive conclusions.
The possibility of having that degree of future-proofing for its lead candidate is thus another reason to buy the stock.
3. Its lead candidate could have an outrageously long growth runway
BioAge also aspires to create therapies capable of expanding the human lifespan, as well as the health span. Such ambitions may seem like science fiction, but they’re much closer to being in reach than they might seem.
While making no explicit claims, the company’s materials imply that azelaprag may be capable of promoting longevity as well as healthy aging. It could do this by triggering an increase in the activation of a cellular receptor called APJ that’s associated with a wide swath of benefits to human metabolism and the maintenance of skeletal muscles, among other upsides.
But what’s more exciting is what BioAge is willing to say outright: that its candidate azelaprag “has the potential to recapitulate the effects of exercise.” That’s right, this biotech thinks it might be developing a drug that could be one of the holy grails of biopharma — something that delivers much of the benefits of physical exercise with minimal side effects, in pill form.
At this point, BioAge doesn’t even have a disclosed pipeline program investigating azelaprag for that specific purpose. It’s likely to be forthcoming in the next couple of years, assuming that there are no major clinical hiccups, and that data from clinical trials continues to look favorable. There’s no guarantee whatsoever that it would succeed in commercializing such a therapy.
Nonetheless, buying the stock today means getting exposure in the near future to the possibly unprecedented train of R&D on an exercise-substitute therapy. No doubt, the risks of an investment are significant, as with all pre-revenue biotech stocks, But for investors with a high risk tolerance, the potential upside makes it worth considering buying some shares today.
