Key Points
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The company just released positive phase 3 results for VDPHL01, an oral extended-release formulation of minoxidil.
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Veradermics is a late-stage clinical pharmaceutical company.
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The company went public via an initial public offering in February.
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Veradermics (NYSE: MANE), a pharmaceutical company specializing in skin therapies, is up 268% since its initial public offering (IPO) on Feb. 4. The late-stage clinical healthcare company’s lead therapy, VDPHL01, could be the first non-hormonal oral therapeutic for pattern hair loss.
On the plus side, VDPHL01 could soon be headed to approval by the Food and Drug Administration (FDA). On the downside, the company isn’t profitable and only has one drug in its pipeline.
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Here are three reasons why the stock may still have more upside.
Strong trial results for its lead therapy
The company just released positive phase 3 data for VDPHL01, which is an extended-release minoxidil formulation. The drug met all primary and secondary endpoints in the study. The company said that 78.8% of patients on the daily dose and 85% on the twice-daily dose reported improvements in hair coverage on the Androgenetic Alopecia Impact Rating Scale (AAIRS), compared with just 35.3% in the placebo group.
If VDPHL01 is approved, it would be the first oral minoxidil approved, a big deal since there hasn’t been a new FDA-approved hair restoration drug in almost three decades. It would serve as an alternative to finasteride, the only approved oral prescription for hair loss, which works hormonally but has some unwanted side effects.
The company hasn’t mentioned a timeline for its New Drug Application with the Food and Drug Administration (FDA), but said that part B of its top-line data is expected sometime later this year.
VDPHL01 has a huge upside
Nonscarring alopecia is the most common form of hair loss. An estimated 50 million men in the U.S. and 30 million women are affected by pattern hair loss, and more than 50% of men and 40% of women have some degree of hair thinning by age 50. According to Veraderm, that equals a market worth more than $30 billion by 2028.
Minoxidil is the active ingredient in the household hair-loss brand Rogaine. VDPHL01 is delivered in an extended-release gel matrix formulation to achieve sustained absorption, improving efficacy and safety. The method is designed to avoid side effects associated with peak minoxidil concentrations, allowing more time for hair growth.
The company said it expects quick adoption for VDPHL01 among healthcare professionals and their patients. It ultimately sees the drug garnering a 48% market share among current hair restoration therapies.
It is in a good place to launch VDPHL01
The company doesn’t have any revenue coming in, but thanks to its successful IPO, it has, as of the second quarter, $820 million in cash, enough to fund operations into 2030, Veradermics said.
This strong liquidity position fully funds its upcoming regulatory submissions and preparations for the commercial launch, mitigating the risk of short-term stock dilution.
The biggest concern about a potential trial failure seems to have abated considerably, and the therapy’s biggest advantage is its superior safety profile compared to competing drugs.
Wall Street analysts have an average price target of $170 for the stock, all with either a buy or strong buy rating. However, until the company begins making revenue, the stock is likely to be volatile.
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James Halley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
