Forget GLP-1 stocks, baldness drugs are Wall Street’s next goldmine

Drugmakers found a promising cure for the obesity epidemic and their stocks were rewarded for it. Now, investors are salivating over a new crop of companies tackling a more purely aesthetic problem: baldness.

Pattern hair loss affects an estimated 50 million men and 30 million women in the US, but there have been no new approved drugs since the late 1990s. The promise of novel treatments has sent shares of Veradermics Inc., which trades as “MANE,” up nearly 500% since the company went public in February, while Absci Corp.’s stock has more than doubled so far in 2026. Cosmo NV also had positive results for an experimental male hair-loss treatment, though its Zurich-listed shares have been weighed down by the success of US competitors.

Those who are ineligible for hair transplant surgery — or can’t afford it — are left with two main options: over-the-counter topical minoxidil, the active ingredient in Rogaine, or prescription finasteride, branded as Propecia. They can come with some debilitating side effects; minoxidil is linked to heart palpitations while finasteride is known to lower sex drive. Wall Street sees new treatments as an untapped goldmine, full of consumers who are willing to pay out-of-pocket for better options, reminiscent of the boom in GLP-1 weight-loss drugs. 

“People will fly all the way to Turkey to have some hair moved around on their head,” said Needham analyst Gil Blum, who rates Absci a buy. “Can you imagine if you could do that without getting a hair transplant?”

Drugmakers and investors alike are hoping for a repeat of the successes of the weight-loss drugs that vaulted Eli Lilly & Co.’s market value across the $1 trillion threshold and made Novo Nordisk A/S, briefly, the most valuable company in Europe. 

One of the closest to market is Cosmo’s topical medicine, clascoterone, which targets the root cause of male-pattern hair loss by blocking a hormone that causes it directly at the hair follicle. 

The company says the treatment could be the “single biggest opportunity” in its portfolio and plans to submit a new drug application to US regulators in the first quarter of 2027. Clascoterone 5% topical solution leverages the same active ingredient used in Winlevi, Cosmo’s acne treatment product.  

While new medicines are likely more than a year away from hitting US shelves, analysts expect Cosmo shares to nearly double over the next 12 months.

Jefferies analysts estimate sales for Cosmo’s male hair-loss therapy reaching $3 billion globally, “assuming a capable commercial partner is successfully found.” The brokerage said the company may find a partner before the year is over, which could help bolster the share price. 

Like obesity drugs, there’s room for more than one winner. Analysts tracked by Bloomberg are universally bullish on both Cosmo and Veradermics.

“This space definitely can accommodate multiple drugs,” said Jefferies analyst Roger Song, who holds the Street’s highest price target on Veradermics. “Many hair loss patients tend to use multiple drugs, either prescription or over-the-counter — as long as they can afford it — because it’s a cash-pay market.”

Veradermics announced positive results for its lead candidate, a tablet formulation of minoxidil, in male-pattern hair loss in April. The company also reported promising mid-stage data for women with thinning hair in July. If it’s able to win a nod from the Food and Drug Administration, the drug could become the first approved pill for female-pattern hair loss. 

Absci, meanwhile, is developing its early-stage drug candidate ABS-201, an AI-designed shot to treat pattern hair loss. The firm expects interim data in the second half of this year.

“Both obesity and hair loss are large consumer markets and that’s one reason why both of those categories can offer significant revenue potential,” OrbiMed’s Geoff Hsu, portfolio manager of the Biotech Growth Trust Plc, said in an interview. “If you do find a safe and efficacious drug for hair loss, that would unlock a significant addressable market.”

Of course, drug development is high risk, with the potential for big returns counterbalanced by the products and companies that flop. Before GLP-1s won over insurers and consumers alike, a whole generation of obesity drugs failed to reach blockbuster status; some instead went to bankruptcy court.

There’s also a major difference with weight-loss drugs: going bald is not a health crisis. GLP-1s, as a weapon in the battle against obesity, were able to secure insurance coverage while also attracting consumers primarily interested in meeting modern beauty standards. Hair-loss drugs are likely to remain out-of-pocket expenses for consumers, but many in the industry remain upbeat on future sales. 

“If you can make it easier on the patient — that is pain-free and simple like taking a pill — I think it opens a whole new avenue of potential patients to treat,” said Ryan Isherwood, who with his wife owns three Gameday Men’s Health clinics in Wisconsin. 

Despite high-flying valuations and the risk of failure, analysts remain upbeat on room for future gains.

“This is a zero or hero story. I would buy it now because it’s still cheap,” Needham’s Blum said of Absci.

This story was originally featured on Fortune.com