BioAge Labs (BIOA 0.92%) is a small drugmaker whose shares have caught fire this year. The company has made clinical progress in the hottest therapeutic area in the industry right now: Weight management. BioAge Labs' shares are up by 122% year to date.
Even after recent developments, however, BioAge Labs' shares remain unattractive for investors focused on the long term. It'd be best to stay far away from the stock. Here are two reasons why.
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1. Not even a mid-stage candidate
As a rule, clinical-stage biotech companies are high-risk investments. But they aren't all the same. The more positive clinical trial results they have for their candidates, the less speculative they tend to be. So, a pre-commercial biotech with one or several products in phase 3 studies that have already produced strong results across multiple clinical trials is less risky (all else being equal) than one with products that haven't even advanced to mid-stage studies yet.
Unfortunately, BioAge Labs only has a single candidate in clinical trials, and it is still in phase 1. That alone makes the stock incredibly risky, even if the candidate in question, BGE-102, has produced positive interim results.
NASDAQ: BIOA
Key Data Points
2. The competition will be fierce
BioAge Labs is developing BGE-102 as a potential medicine for patients with obesity and cardiovascular risk factors. Analysts have projected that the industry's weight management niche will grow rapidly in the coming years, thanks to breakthroughs in the field and soaring demand for these medicines, given the high prevalence of obesity and associated health risks.
However, BioAge Labs is stepping into a ring where many major pharmaceutical companies and some smaller ones are looking to make a dent. None of that means that BioAge Labs can't be successful. What will matter the most is whether its medicine is safe and effective. But we don't know whether it is yet. Betting on BGE-102 to pass phase 3 studies, hit the market, and carve out a niche in the anti-obesity market is little more than speculation at this point. Day traders may profit from the significant volatility the stock will experience, but for long-term investors, there is little to see here.
There are better options for investors
Even investors with an appetite for risk can do better than BioAge Labs. Consider Viking Therapeutics, a clinical-stage biotech that's also developing weight loss medicines. It has completed phase 2 clinical trials for its lead candidate, VK2735, which is now in phase 3. Viking Therapeutics remains somewhat risky, but it is far less so than BioAge Labs.
True, the latter may also have more upside potential, but there is the very real possibility that those who invest in BioAge Labs today may end up with worthless shares in a few years. That's why it's best to stay away from BioAge Labs.
