Many billionaire investors are going all-in on artificial intelligence (AI). That's understandable. AI is rapidly being integrated into companies' daily operations. Being a leader in this field could bring huge benefits. However, there are other attractive investment opportunities. Consider Renaissance Technologies, the hedge fund led by Jim Simmons. The fund's holdings include several healthcare stocks. These include his two prominent pharmaceutical companies: novo nordisk (NYSE:NVO) and Exelixis (NASDAQ:EXEL).
Should investors follow Simons' lead and invest in these companies? I think so, and here's why.
1. Novo Nordisk
Novo Nordisk is the genius behind Wegovy, one of the leading anti-obesity drugs on the market, and Ozempic, a diabetes drug. The hype surrounding these drugs is backed up by data. It was difficult for Novo Nordisk to keep up with the demand for Wigoby and Ozempic. Sales of both products have skyrocketed, and Novo Nordisk's sales have grown rapidly in recent years. The company's net sales for the first quarter were Danish kroner 65.3 billion ($9.41 billion), an increase of 22% year-on-year.
Ozempic and Wegovy saw revenue increase by 42% and 106%, respectively. There are some promising signs that could help boost Ozempic's sales even further. Last year, he passed a clinical trial to treat kidney disease in obese patients. It is also being developed as a potential treatment for non-alcoholic steatohepatitis, another very promising growth area.
Novo Nordisk's expertise in developing diabetes and obesity treatments is a major advantage. A number of big pharma companies are currently trying to get a piece of this big pie, including: pfizer, some candidates have failed clinical trials and find it difficult. Meanwhile, Novo Nordisk continues to move forward. The company is working on developing an oral obesity drug called amicretin, which has had very promising Phase 1 results. In a 12-week study, the drug led to an average weight loss of 13.1%, performing even better than Wegovy in a similar study.
It's too early to tell whether amicretin will be Novo Nordisk's next big hit. But importantly, the company continues to innovate in areas beyond diabetes and obesity. Novo Nordisk has made a sincere effort to expand its lineup, with multiple candidates in areas such as rare diseases and neuroscience. Ozempic and Wegoby will remain the company's biggest growth drivers for some time, but the company's innovative capabilities make it a very attractive stock to buy and hold for long-term investors. It highlights that.
2. Exelixis
Exelixis specializes in cancer drugs. Thanks to the company's most important product – Cabometics, it has gained quite a reputation. Cabometyx has proven to be something of a drug pipeline. Its two most important markets are renal cell carcinoma (RCC, a type of kidney cancer) and hepatocellular carcinoma (HCC, a type of liver cancer). Cabometyx is a tyrosine kinase inhibitor (TKI), a type of treatment that prevents cancer cells from growing and spreading. Cabometyx has been his most prescribed TKI in RCC and second-line HCC for some time, and that remains the case.
Still, Cabometyx is losing some momentum, as evidenced by Exelixis' not-so-impressive sales growth. The company's total revenue for the first quarter was $425.2 million, up just 4% year over year. Additionally, over-reliance on Cabometyx can also be a problem. Exelixis is addressing these issues. Cabometyx is currently being tested in various clinical trials and, as before, has the potential to open up new uses and improve sales growth.
Recent positive Phase 3 results for Cabometyx include metastatic castration-resistant prostate cancer (CRPC). According to the company, men diagnosed with CRPC typically have up to two years to live, highlighting the need for new treatment options in this field. Exelixis is also developing new drugs, the most advanced of which is zanzarintinib, which is in late-stage studies as a potential treatment for metastatic colorectal and advanced RCC.
Exelixis has targeted areas where there is unmet need. For example, colorectal cancer has a high survival rate in its early stages, but a significant proportion of patients are diagnosed once the disease has metastasized, at which point survival rates drop significantly. Beyond that, Exelixis has several promising early-stage candidates. The company's success in developing anti-cancer drugs cannot be ignored.
While Exelixis' first quarter results weren't stellar, the company continued to achieve significant approvals and label expansions, which should provide patient investors with solid results.
Should you invest $1,000 in Novo Nordisk right now?
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Prosper Junior Bakinny has a position in Exelixis. The Motley Fool has a position in and recommends Exelixis and Pfizer. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
Billionaire Jim Simmons owns these two healthcare stocks.Originally published by The Motley Fool
