After the global pharmaceutical industry saw a record boom thanks to obesity treatments, it is now betting on new hair-loss drugs. In a market that has not seen a new medicine since the late 1990s, shares of companies tied to these drug candidates have jumped by as much as nearly 500% this year.
Bloomberg said on the 29th that shares of the U.S. hair-loss drug developer Veradermix, which listed on the New York stock market in Feb., have surged nearly 500% in half a year. Veradermix is a startup based in New Haven, Connecticut. The company listed on the New York Stock Exchange (NYSE) in Feb. at an offer price of $17, raising $256 million (about 352.6 billion won). The stock rose to $40 on its debut. It then traded last month around $130, more than eight times the offer price, and closed at $98 on the 29th. That is up 476% from the offer price.
The company's lead drug candidate, VDPHL01, is an oral minoxidil pill. Minoxidil was originally introduced as a blood pressure–lowering drug, but after hair growth was identified as a side effect, it established itself as a topical hair-loss treatment. However, the topical form must be applied to the scalp twice a day, and absorption varies widely by person. Physicians have therefore prescribed the oral antihypertensive minoxidil in low, split doses. But even this method peaks in blood concentration in two hours and loses most of its effect within four hours, making its persistence clearly limited. In particular, side effects such as rapid heartbeat and hair growth all over the body were pronounced, posing serious problems for some recipients.
Veradermix improved minoxidil into an oral form and designed it to release slowly in the stomach throughout the day, extending the time the drug reaches hair follicles. In the phase 2/3 trial the company disclosed in April, 519 people participated, and after six months, hair counts per 1 square centimeter increased by 30.3 strands in the once-daily group and 33.0 strands in the twice-daily group. The placebo group saw only 7.3 strands, less than a quarter as many. No cardiac-related adverse events or side effects were reported. Veradermix also confirmed efficacy in a mid-stage trial last month in women.
Shares of Appsai, which designs new drugs with artificial intelligence (AI), have more than doubled this year. Appsai's ABS-201 is an antibody injection. Unlike existing hair-loss drugs that act on the male-hormone pathway, this drug blocks the receptor that the hormone prolactin binds to. Prolactin is known to stimulate milk production, but in hair follicles it acts as a signal to move into the shedding phase.
Appsai said it cut off this signal upstream of male hormones, preventing side effects from hormonal disruption. In experiments using human scalp tissue, the injection restored shrunken hair follicles. In animal studies, its hair-regrowth effect was statistically significantly greater than minoxidil. Appsai is currently conducting a phase 1/2a trial of the injection with up to 227 participants. Interim results are expected in the second half of this year.
Closest to market is a new hair-loss drug being developed by Cosmo Pharmaceuticals, listed on the Zurich stock exchange in Switzerland: a topical called clascoterone. Finasteride, the most widely used current hair-loss treatment, reduces the body-wide production of DHT, the hormone that drives hair loss, leading to systemic side effects such as reduced libido. When clascoterone is applied to the scalp, it occupies the binding sites on hair follicle cells to block the signal, and it is broken down in the skin into an inactive substance, so it scarcely spreads throughout the body.
Cosmo called the drug "the biggest opportunity" in its entire portfolio during an investor relations (IR) presentation and said it will apply for U.S. new drug approval in the first quarter of 2027. U.S. investment bank Jefferies estimated that, assuming Cosmo secures a commercialization partner, "the drug will generate $3 billion (about 4 trillion won) in global sales."
In the United States, the number of people with hereditary hair loss is estimated at 80 million, combining 50 million men and 30 million women. Even so, U.S. regulators have not approved a new hair-loss drug since the late 1990s. Unlike other medicines, hair-loss treatments are not covered by insurers. Because baldness is not a health-threatening condition, U.S. health insurance does not in principle cover hair-loss treatment. In Korea, neither hair-loss drugs nor hair transplants are covered by health insurance, so patients must pay the full cost.
Wall Street investors believe that if a new hair-loss drug comes out, the consumer base that has paid out of pocket for hair-loss drugs approved 30 years ago will shift over intact. Jeff Xu, a portfolio manager who runs BioTech Growth Trust at healthcare-focused investment firm OrbiMed, told Bloomberg, "If you find a safe and effective hair-loss drug, an enormous market opens up."
The key is which company survives to the end. New drug development can grow a company overnight or topple it entirely. Before Wegovy and Mounjaro arrived, earlier obesity drugs failed to gain a foothold in the market. Some companies went bankrupt in the process. At least the GLP-1 class of obesity drugs succeeded in persuading both insurers and consumers on the grounds that obesity threatens health.
But hair loss is not a disease that threatens health. Hair-loss drugs will likely continue to be paid for entirely out of pocket by consumers, not only in the United States but worldwide. It will be at least a year before the first new hair-loss drug actually reaches U.S. pharmacy shelves. Gil Blum, an analyst at investment firm Needham, told Bloomberg, "This is a go-to-zero or become-a-hero story," adding, "People fly all the way to Turkey to transplant a few strands of hair. What if you could do that without getting a hair transplant?"