Is Kailera Therapeutics a Buy After Its Sizzling IPO?
Key Points
The GLP-1 drug market could be worth $190 billion by 2035.
Kailera Therapeutics has several weight-loss drug candidates in its pipeline.
It had a strong IPO debut but the stock price has recently dipped.
In the biotech sector, private companies are moving from the sidelines into the spotlight through initial public offerings (IPOs). One of the most recent is Kailera Therapeutics (NASDAQ: KLRA), a potential competitor to Eli Lilly and Novo Nordisk in the obesity treatment market with its weight-loss drug candidates.
The company priced its initial public offering (IPO) at $16 per share, opening to the public on April 17 at $26 per share. The stock price has recently cooled, but with its promising drug pipeline, investors are wondering whether this is an opening for buying shares for the long term.
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Kailera's potential after the IPO
According to Morgan Stanley research, the GLP-1 drug market, targeted at weight loss, could reach $190 billion by 2035 -- double 2025 levels.
Kailera is building out a weight-loss drug pipeline with both injectables and pills, with four candidates in various trial stages. Its lead-drug candidate, the once-weekly injectable Ribupatide, is in phase 3 trials. The company says it "has the potential to be a category-leading treatment for people living with obesity."
The risks of biotech investing
Given the lack of new biotech offerings over the last few years, Kailera offers a fresh opportunity. Unlike some other companies in the space, it also has at least one drug candidate that is further along in clinical trials.
Still, this is a notoriously risky sector, especially when investing in a company without any commercial products. There's no guarantee Ribupatide, or any of the drugs Kailera is working on, will be approved.
This is an investment geared toward more aggressive investors who are prepared to handle setbacks and stumbling blocks and believe the rewards will eventually outweigh the risks.
Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.