Prediction: The Next Big Biotech Stock Boom Will Be in Longevity Drugs

I predict that a gold rush in longevity medicines is going to start in the next half-decade or so. That's right: Biotech and pharma companies are going to try developing drugs that can extend human lifespan. And eventually, they're going to succeed, at least somewhat.

The early competitors are already getting down to work. Soon enough, there will surely be great opportunities for investment -- as well as a sea of opportunities to lose your money. Here's a road map for how to invest in the best companies within this new area of medicine, starting with an overview of the playing field as it is today.

Getting started with longevity-adjacent therapies

The boom in longevity drugs is going to have three distinct phases. The first phase, in which pharma businesses develop therapies for the most severe and most widespread aging-associated illnesses, is already underway.

Eli Lilly (NYSE: LLY) and Biogen (NASDAQ: BIIB) both have medicines that are approved to treat Alzheimer's disease, and neither of their products will be the last to reach the market, as the illness remains uncured. In phase one, there won't be much explicit branding of the interventions as "life extension" or "pro-longevity" drugs, even though the practical effect will be that patients who are treated will live longer and healthier lives. The focus will be on addressing the pathologies that are more likely to occur as people grow older.

There will probably also be some attempts to rebrand existing medicines as supporting improved longevity, perhaps including products like Eli Lilly's weight loss drug Zepbound. The angle will be that those drugs can support a longer health span by lowering risk factors for aging-associated illnesses.

Lilly, for example, is currently seeking approval for Zepbound to be prescribed to treat heart failure and reduce cardiovascular risks in the context of obesity. It's hard to deny that preventing heart problems is one way to promote a longer lifespan, even if Zepbound isn't branded as a longevity drug.

Keep in mind, however, that many people are able to age in fairly good health, and there won't be anything on offer that can address the core physiological processes that cause aging. Part of the reason there won't be therapies capable of targeting the root causes of aging is that there are many scientific and medical questions that can only be answered by basic research.

That research is ongoing, and accelerating. Once it matures enough to support actual research and development (R&D) by biopharma businesses, the second phase will begin.

Picking up momentum

The second phase is when most investors will start to hear a lot about longevity-promoting medicines in development. Expect biotechs, especially micro caps that are too "out there" to have backing from traditional biopharma venture capital, to be where the majority of the activity occurs.

Unfortunately, this will be a phase of great risk to investors.

There are bound to be all sorts of claims of breakthroughs and wonder drugs, sending valuations soaring . But there will also be many overly exuberant claims, failed clinical trials, and companies that may be fraudulent or scientifically unsound. The model, roughly, will be an entire industry throwing everything at the wall to see what sticks.

Here, the focus is likely to be on the coarsest metrics possible, like increasing the number of years a person can expect to live beyond their natural lifespan, even if good health is lacking.

It's very probable that at least a couple of companies will produce a modest version of a drug that can actually slow the aging process across enough features of the human body to matter clinically. There won't be any fountain of youth, just a halting series of baby steps beyond what's possible today. Disillusionment regarding these stocks is practically guaranteed at some point, as the (in all likelihood) mediocre cost-to-benefit proposition of the resulting medicines will probably not make for much enthusiasm among potential patients.

During this phase, the big pharma developers of the first phase's winning medicines will continue their work to improve their products and offer more effective solutions for more and more aging-associated conditions. Expect Biogen and Eli Lilly to have more effective treatments for Alzheimer's hitting the market, and expect them to capture a larger share of the addressable market as a result of the refinements they will have made.

Don't expect any company to develop a silver bullet that halts the aging process -- but do expect the competitors with the most resources to quietly think about trying. The most promising biotechs from this phase will become fodder for acquisition by the bigger players, as well as for licensing and development collaboration deals.

Looking into the distance

The third phase, which may happen in the early to mid-2030s, is when things will get exciting.

With the many failures of the second phase in the rearview mirror, and with most of the low-hanging fruit in treating or preventing aging-associated conditions being picked by big pharma, the next-easiest place to look for growth will be developing therapies that slow or halt the aging process. By this point the basic science will be considerably more advanced, and the idea of using pharmaceuticals to promote longevity will be mainstream.

During this period, the market for longevity medicines will become massive: It will include all of the refined treatments for aging-associated illnesses, as well as those intended to extend both lifespan and health span beyond what's naturally possible. The more effective the lifespan-enhancing drugs are, the more expensive they'll be, and that'll lead to tremendous growth.

Invest carefully, especially at first

The safest way to benefit from the coming longevity-drug boom will be to invest toward the very end, when the winners are clear, and the remaining growth is set to come from incremental improvements and refinements of existing products. But for more enterprising investors, making a move in phase two, or even in phase one, could lead to much larger returns.

The best balance of risk and reward will be found in the big pharma businesses that start to dabble in longevity as an explicit part of their strategy, while producing medicines that address aging-related pathologies. Developers of Alzheimer's drugs, especially Eli Lilly, are where you may want to start searching.

Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool recommends Biogen. The Motley Fool has a disclosure policy .