Cosmetic Dermatology Offers Savvy Investors Some Compelling Stocks

Cosmetic radio-surgery

It should come as no surprise that dermatology is a huge industry in the United States. After all, 85% of people suffer from acne at some point in their lives, causing millions of people to seek care from the best dermatologist in the area for this and other skin conditions. However, few people seem to realize how profitable the field is: as new skin care innovations push this practice beyond tried-and-true procedures like Botox, it only grows more and more successful. This is especially true for cosmetic dermatology treatments, which now make it easier than ever to correct perceived flaws and problems.

Now, financial experts are predicting that one procedure in particular could have sales potential ranging into the billions when it becomes available at dermatologists’ clinics and on the stock market.

The Jefferies Group recently conducted a conference call with one of the best dermatologists in the industry today: Dr. Jeffrey Dover, a published author and cosmetic dermatologist in Chestnut Hill, MA. Dover predicted that the biggest, most profitable change in the industry would come from body contouring treatments, which use minimal or non-invasive methods to reduce fat and which could see potential peak sales in the billions. Analysts at The Jefferies Group agreed and pointed to three stocks they believe could reap the profits of this new technology: Kythera Biopharmaceuticals (NASDAQ: KYTH), Valeant Pharmaceuticals International (NYSE: VRX) and Zeltiq Aesthetics (NASDAQ: ZLTQ).

Kythera Biopharmaceuticals
While this biopharmaceutical company is still in the clinical stages, it offers great promise for future prescription products with aesthetic intentions. This is largely due to its drug ATX-101, which is currently undergoing significant clinical development around the world. The drug’s patented formula of a pure, non-animal-derived deoxycholic acid allows the product to break down dietary fat. Dover reported that the clinical data looks promising, and would be used to treat submental fat, such as double chins. The Food and Drug Administration (FDA) is expected to issue an action on ATX-101 by May 12. However, because the organization’s Dermatologic and Ophthalmic Drugs Advisory Committee previously voted to support the product’s approval, experts are predicting a positive outcome.

As of Tuesday, April 21, NASDAQ: KYTH was trading at $49.74.

Valeant Pharmaceuticals
This Montreal-based company has been in operation since 1960 and now develops, manufactures and markets a variety of drugs and medical devices around the world. It generally focuses on neurology and infectious diseases, producing well-known products like the depression medication Wellbutrin and Provenge for prostate cancer, but the company also has interests in dermatology. One of these products, the LipoSonix treatment, uses ultrasonic technology to reduce body fat. Because this method can be painful, Dover is skeptical about its success, especially when compared to other products. However, with the legacy of the company behind it, LipoSonix still has potential.

As of Tuesday, April 21, NYSE: VRX was trading at $210.05.

Zeltiq Aesthetics
Zeltiq Aesthetics is a medical technology Dover considers a leader in the field of body contouring and fat reduction. Like Kythera Pharmaceuticals, they only have one treatment right now, but it is currently available on the market. Called the CoolSculpting system, the treatment is designed to selectively target stubborn fat that may not respond to diet or exercise. As its name suggests, this technique is based on the scientific concept that fat cells are more sensitive to cold than the overlying skin and surrounding tissues. The CoolSculpting system therefore uses carefully controlled cooling to reduce the temperature of fat cells, causing the body to eliminate them through a process called apoptosis. This product not only has an early lead on the market, but is more comfortable than LipoSonix and has a reasonable price point of $750 per application.

As of Tuesday, April 21, NASDAQ: ZLTQ was trading at $34.05.

The industry that brings you your skin care regimen might seem like an odd investment choice. However, as new innovations continue to shape the market, delivering more effective results and better profits, aggressive growth investors could see a number of benefits in the coming years. Next time you visit your dermatologist, consider asking for more than just a new product recommendation.

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