Amgen's obesity drug puts stock on pace for best day since 2009 as analysts predict big gains to come

By Eleanor Laise

Experimental weight-loss drug seen as having 'multi-blockbuster potential'

Fueled by upbeat management comments on an experimental obesity treatment, Amgen's stock jumped more than 12% early Friday - and analysts see more gains ahead as the company maps out late-stage trials for the drug.

Amgen is "very encouraged" by the results thus far from an interim Phase 2 analysis of its investigational obesity drug MariTide, CEO Robert Bradway said on the company's quarterly earnings call late Thursday. The company is "very confident in MariTide's differentiated profile," he added, and is planning a broad Phase 3 trial to test the drug not just in obesity but also obesity-related conditions and diabetes.

"I think we are in an early innings of a large move," Evercore ISI analyst Umer Raffat said in a note Thursday, saying Amgen remains his top pick in the large-cap biopharma universe.

Amgen's gains won't come at the expense of weight-loss giants Eli Lilly & Co. (LLY) and Novo Nordisk (NVO), Raffat wrote. But even the assumption that Amgen takes a modest share of the massive obesity market would likely result in a significant boost in investors' longer-term earnings projections for the company, he said.

While investors will have to wait for the full Phase 2 trial data, management's comments "should allay fears and probably take the worst-case scenarios off the table," making it easier to own the stock, Jefferies analysts said in a note Thursday. Amgen could gain a $5 billion to $10 billion slice of the market, the analysts said.

Amgen signaled that patients in its MariTide trial haven't experienced many unpleasant side effects - an issue that has plagued other developers of weight-loss drugs. "Patient dropout has not been an issue," Amgen chief scientific officer James Bradner said on the earnings call Thursday, adding that the company is on track to have top-line 52-week data from the Phase 2 study late this year.

MariTide could stand apart from potential competitors with monthly or even less frequent dosing, analysts said, a factor that could also help tame gastrointestinal and other side effects.

Based in part on the promising signals on treatment intervals, William Blair analysts on Friday upgraded their rating on Amgen's stock to outperform. "We see MariTide as having multi-blockbuster potential" despite having to contend with the Lilly and Novo duopoly, the analysts wrote.

As Lilly and Novo Nordisk have struggled to manufacture enough of their popular weight-loss drugs to meet demand, Amgen said Thursday that it has launched efforts to further expand its manufacturing capacity.

Seeing a higher probability of success for MariTide, Leerink Partners analysts on Friday raised their price target for Amgen's stock to $352 from $324.

BMO Capital Markets analysts boosted their price target for Amgen shares to $355, from $336 previously, saying they see a 35% chance of success for MariTide in both obesity and Type 2 diabetes.

Amgen shares (AMGN) are up 8.2% in the year to date, while the S&P 500 SPX has gained 7.4%.

-Eleanor Laise

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-03-24 1009ET

Copyright (c) 2024 Dow Jones & Company, Inc.