Life Beyond GLP-1s: Piper Sandler's top stock picks amid shifting biotech landscape

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In a Friday note to clients, Piper Sandler analysts focused on “life beyond GLP-1s,” short for Glucagon-like Peptide-1 agonists – a class of medications primarily used in the treatment of type 2 diabetes and obesity.

These treatments are at the early stages of what many believe will be a significant growth trajectory.

However, there's growing apprehension that GPL-1s, despite reliably promoting a 15-20% weight reduction within a year, may lead to a considerable loss of lean muscle mass—about 20-40% of the total weight lost, Piper Sandler pointed out in its note.

In addition, emerging evidence suggests that weight tends to be rapidly regained once treatment ceases. In response to these concerns, the industry is increasingly turning towards a polypharmacy approach, aiming to address both weight loss and the preservation of lean muscle.

“While some have debated that this can be addressed by exercise and diet, we think a pharmacological approach would address this emerging unmet need as well,” analysts wrote.

Against this backdrop, the analysts highlighted Biohaven Pharmaceutical Holding Co Ltd (NYSE:BHVN), Regeneron Pharmaceuticals (NASDAQ:REGN), and Scholar Rock Holding (NASDAQ:SRRK) among the few companies focused on this emerging unmet need.

Their approaches generally target the signaling of key regulators of muscle growth: myostatin and activin, Piper Sandler explained.

“On our lists,