Eli Lilly and Novo Nordisk are two of the biggest names in healthcare thanks in large part to some promising weight-loss drugs in their respective portfolios. In the past 12 months, Eli Lilly has doubled in value, while Novo Nordisk's stock is up around 50%. Those who haven't invested in these stocks may be inclined to pass on them given their high valuations now -- both are worth more than $500 billion.

There are other ways to invest in the growing weight-loss market, however. Provided that you're willing to take on some risk, one small biotech company is showing promise and could lead to some significant returns if its efforts work out.

A weight-loss drug that could steal significant market share

By now, you may have heard of Zepbound and Wegovy, or perhaps Ozempic, which is a diabetes medication people have been using for weight loss. But there's another weight-loss drug which isn't approved yet that investors should be keeping an eye on: pemvidutide.

Pemvidutide is a glucagon-like peptide 1 (GLP-1) agonist which helps curb people's appetites, similar to how other popular weight-loss drugs work. In clinical trials, it has been showing impressive results. Patients lost an average of 15.6% of their weight during a 48-week trial.

But the drug isn't made by Eli Lilly or Novo Nordisk. Instead, its developer is small-cap Altimmune (ALT -4.12%). The Maryland-based company is also hoping the drug may be a treatment for metabolic dysfunction-associated steatohepatitis (MASH), which is a type of liver disease.

Let's see where Altimmune's efforts stand and what it could mean for investors.

It isn't a large company, and it comes with risks

At a market capitalization of around $570 million, Altimmune is just a fraction of the size of Eli Lilly and Novo Nordisk. The much smaller healthcare company does also come with significant risk. Without an approved product in its portfolio, the company primarily generates revenue from grants and contracts it has with government agencies.

For investors, this means that losses on the company's bottom line are highly likely for the foreseeable future, and the risk of dilution (i.e., stock offerings) is also high. In 2023, the company incurred a net loss of $88.4 million on revenue totaling just $426,000. During the year, it also burned through $75.8 million in cash from its day-to-day operations.

But with nearly $200 million in cash and short-term investments on its books, the company isn't in a dire situation. However, as the cash burn continues, dilution is still likely if the company doesn't have a reliable source of revenue.

And that leaves investors with the hope that pemvidutide obtains approval and becomes a prominent weight-loss drug, one which can generate significant market share and be a game changer for the business. Unfortunately, the drug's encouraging results came from a phase 2 trial, so it still isn't at the finish line.

Also, it's conceivable that a larger healthcare company could acquire Altimmune given its low valuation and the potentially attractive asset it possesses.

Should you take a chance on Altimmune's stock?

Altimmune's stock has been struggling this year, but over the past 12 months, it remains up around 67%. It has been doing well amid the excitement surrounding GLP-1 drugs. If pemvidutide obtains approval from regulators for weight loss, shares of Altimmune are likely to skyrocket. If it doesn't get approval, of course, the outlook will look much worse for the stock.

Given the encouraging trial results and no significant concerns from the drug, this could be a calculated risk worth taking. While I wouldn't suggest investing in the stock if you are a retiree or someone who can't afford or isn't comfortable with the risk, this could make for an underrated growth stock to consider buying now.