Ask most patients in the event that they prefer to receive medicine by swallowing a pill, by injection or infusion, and most will likely go for the pill. But that is not at all times possible for drugs that use delicate molecules that may’t tolerate the physical and chemical conditions in the gastrointestinal tract. That is where quite a lot of early-stage drug delivery firms are available — and most are flying under investors’ radar. Drug delivery tends to be a “roll-up sector,” explained Edward Nash, an analyst at Canaccord Genuity. “Historically, when you began to get a superb, critical mass of biotechs focused on drug delivery, once they really began to point out positive proof of concept data, you’ll see Big Pharma … swoop in and take them over,” he said, reflecting on past industry cycles. Larger firms often look to expand the pool of patients using their drugs by offering a more accessible, or effective, delivery method. Additionally they see drug delivery innovation as a possible method to extend their exclusive patent protection, said Nash, who suspects the industry could also be at the dawn of a recent wave of drug delivery technologies coming to market. Nash recently checked out 4 firms operating in drug delivery: Rani Therapeutics , Biora Therapeutics , Avalyn Pharma and Elektrofi. Nash rates Rani shares a buy, but doesn’t cover Biora. Each Avalyn and Elektrofi are privately held. RANI YTD mountain Rani shares have fallen about 36% yr thus far. Based on FactSet, all six analysts that follow Rani rate the stock a buy. Nash’s $26 price goal is higher than the $22 average goal, and implies 568% of upside for the stock from Friday’s close. A 36% decline in its value up to now in 2023 puts its market capitalization at just below $188 million. Biora, which is valued at $41 million, is just covered by two analysts, in line with FactSet. Their average price goal is $34, or greater than 1,000% above where the stock closed on Friday. ‘An injection by other means’ Rani and Biora use capsules of their drug delivery systems. These “robot pills” could be swallowed like several other regular pill, but include capsules that protect the payload stored inside until the compounds arrive at the right spot in the body. In the case of Rani, its capsules dissolve in the gut. As that happens, a balloon is released that expands to direct a sugar needle into the wall of the patient’s small intestine. As the sugar dissolves, the drug stored in the needle is released into the bloodstream. Unlike other needles, it is not painful because the nerve receptors in the gut aren’t very sensitive. “This is admittedly just an injection by other means,” Rani CEO Talat Imran said in an interview with CNBC. “We’re injecting in a single a part of your body where you’re feeling no pain.” Rani has studies in the works to deliver drugs for osteoporosis, psoriatic arthritis, hypoparathyroidism and psoriasis. Nevertheless it says its technology could work with a spread of medicines, including popular ones based on the gut hormone GLP-1, which are used to treat diabetes and obesity. Obesity drugs have been an area of intense focus for the industry. Although the category is currently dominated by Novo Nordisk , the maker of Ozempic and Wegovy, and Eli Lilly , which has developed Mounjaro, Evercore ISI is tracking 33 firms working on 47 different clinical stage programs on this area. Although this activity involves greater than 22 different mechanisms, about half involve GLP-1 in some form, and there is a big emphasis on creating GLP-1 medications that could be delivered orally to patients, Evercore said. At the moment, the best GLP-1 medications for weight reduction are delivered via a subcutaneous injection. Each Novo and Lilly are having trouble maintaining with demand for his or her medications, and some imagine it could be faster to fabricate the drugs in pill form. Canaccord Genuity’s Nash stressed that delivery methods can influence the size of a drug’s market. Take osteoporosis , the commonest bone disease. Characterised by weak bones liable to fracture, it’s estimated that about 1.5 million bone fractures annually are connected to the condition . Although medications exist to enhance bone density, many individuals who would profit aren’t taking the drugs since they require an injection. A neater way of recieving the therapy could increase compliance, potentially boosting revenue because patients won’t be cycling on and off on a continuous basis, Nash said. BTIG analyst Julian Harrison expects Rani’s RT-102 has the potential to develop into the preferred treatment for osteoporosis. The verstility of the Rani pill is also encouraging, in line with Harrison, because it could be used with a wide selection of medicine. He noted that Rani’s delivery mechanism has the potential to make some drugs even more practical. Biora’s technology only works with a liquid, and there are two sorts of therapies it’s developing. One is for medicines targeted to the GI tract and the other is for more systemic use of biotherapeutics, Nash said. The corporate has several programs in the works, including one for ulcerative colitis and one other with adalimumab for autoimmune diseases. It is also developing a delivery mechanism for a GLP-1 agonist. As for Avalyn Pharma, its focus has beeen on delivering medications via inhalation, while Elektrofi is working on concentrating drug formulations, in line with Nash. Elektrofi’s technology could be useful for cancer drugs that are delivered via a time-consuming infusion in a clinic or hospital. If the dosage was in a position to be successfully concentrated, a patient might have the ability to receive an injection as an alternative of an intravenous infusion — possibly at home. Next few months are critical The direction of Rani and Biora’s stock will depend upon how their programs progress from here. Analysts say the next few months can be very necessary for Rani. The corporate will begin its phase 2 trial for osteoporosis by the end of the yr, starting in the European Union. Even perhaps more critical can be the launch of U.S. trial sites, possibly in the fourth quarter, once it gets the nod from the Food and Drug Administration. If that stays heading in the right direction, topline results are expected around the second quarter of next yr. “The [phase 2] data expected to read out mid-next yr has the potential to significantly de-risk the platform and bring the company closer to commercialization, in our view,” Cantor Fitzgerald analyst Olivia Brayer wrote in a recent research note. Rani ended the second quarter with $74.6 million in money equivalents, which it says is sufficient to fund operations through at the least the next 12 months. It also has partnerships with firms like Celltrion . Imran, the Rani CEO, said partnerships are a critical a part of its strategy, and that its technology could make existing drugs higher. The pc science grad stressed the wide-range of uses for its robot pills, from carrying therapeutic peptides and proteins to antibodies and nucleotides. “We’re not in the business of creating drugs,” he said.