According to Google, the search terms that increased the most in England in 2023 were ‘Temu’ and ‘ChatGPT’. Searches for Chinese shopping app Temu rocketed 2,850% year on year while those for ChatGPT jumped 2,700%. This interest was reflected in the stock market.
PDD Holdings, Temu’s owner, saw its share price surge nearly 80% in 2023. Meanwhile, the market cap of Microsoft, part-owner of ChatGPT’s parent company, rose by a staggering $1trn.
What other investing themes might take off in 2024? Here are two areas I’m watching.
Next-generation medicines
First, I think mRNA-based therapeutics might attract more investor interest. These essentially teach the body how to make its own medicine. Like software, the code can be tweaked and improved. It’s revolutionary stuff.
Shares of mRNA pioneer Moderna (NASDAQ: MRNA) shot up when its Covid vaccine based on this technology started generating billions of dollars in 2021.
But the stock has struggled badly as those pandemic sales have started drying up. In fact, it’s down around 75% in 28 months.
In 2023, Moderna expects to generate sales of at least $6bn from its Covid booster shots, then $4bn in 2024.
However, by 2025, it anticipates doubling the number of Phase 3 programs and launching up to 15 products in five years across cancer, rare disease, and infectious disease. Up to four of those launches, including a flu/Covid combo, could come by next year. This should reignite growth.
Of course, this is biotechnology, so clinical disappointments are an unavoidable risk. But the firm already has the global manufacturing capacity and $12.8bn in cash and equivalents (as of September) to fund its growth.
Plus, Moderna just announced incredible results for its experimental skin cancer vaccine. In combination with Merck’s therapy Keytruda, it lowered the risk of death or relapse in patients by half after three years. It also reduced the risk of melanoma spreading by 62%.
Each vaccine is personalised to a patient’s specific tumor and approvals could come within the next two years.
To me, this appears transformational for both patients and likely Moderna. That’s why I recently added to my holding for the first time in over three years.
Potential wonder drugs
The second area I’m bullish on this year is weight-loss treatments. Specifically Novo Nordisk‘s Ozempic (for type 2 diabetes) and Wegovy, as well as versions of the same treatments from Eli Lilly (NYSE: LLY).
According to the World Obesity Federation, more than 4bn people will be obese or overweight within the next 12 years. That’s why these could become the best-selling drugs ever.
This potential is reflected in forward price-to-earnings (P/E) ratios of 32.5 and 50 for Novo Nordisk and Eli Lilly, respectively, for FY 2024. These aren’t cheap stocks.
However, new data suggests these drugs may also cut the risk of stroke or heart attack, and may delay kidney disease progression in diabetes patients. So the market opportunity could be a lot larger than previously anticipated.
Additionally, researchers have found that patients taking Eli Lilly’s treatment regained roughly half their previous weight one year after stopping treatment.
After both stocks dropped in response to this news I swooped in to invest. My thinking is that long-term sales may prove even stronger if patients have to continue taking the drug to keep their weight down.
