If Soranus of Ephesus were alive today he’d be mighty surprised.
Like his modern-day counterparts in the medical field, the 2nd Century Greek physician considered obesity to be a disease, and he prescribed a regimen of laxatives, purgatives, exercise, heat, and massage to address the problem.
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While centuries have passed, the quest for anti-obesity treatments has continued and now major pharmaceutical companies are competing with each other to get piece of a market that is forecast to reach $100 billion by the end of the decade.
“The chronic weight management market is undergoing an inflection, in our view, with potential for solid growth ahead and a peak opportunity that, by our estimates, could ultimately yield some of the highest-grossing drugs of all time,” said Chris Shibutani, senior biopharmaceuticals analyst in Goldman Sachs Research, in a 2023 report.
Eli Lilly LLY has seen some impressive results from tirzepatide, which is marketed under two different names.
Mounjaro, which is sold for diabetes, totaled $1.8 billion in the first quarter, while Zepbound revenue reached $517 million in its first full quarter on the U.S. market as an obesity treatment.
Meanwhile, Novo Nordisk’s (NVO) Wegovy reached $865 million in first-quarter sales. Ozempic, the company’s diabetes treatment that is also used for weight loss, reported $3.99 billion in revenue in the quarter.
And now Amgen (AMGN) is stepping into the anti-obesity medicine arena.
The Thousand Oaks, Calif.-based company reported first-quarter results on Thursday, including an update on its weight loss drug in development, which led analysts to update their Amgen stock price targets.
Analysts react to Amgen’s first-quarter results.
Company ‘confident’ in obesity drug
Amgen posted first-quarter earnings of $3.96, down from $3.98 a year ago but beating the FactSet consensus of $3.88 per share. Revenue totaled $7.4 billion, up from $6.1 billion yesterday and matching FactSet’s forecast.
While the company makes various medicines, Wall Street seemed most interested in the status of MariTide, Amgen’s experimental obesity drug.
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“We recognize the significant interest in obesity,” CEO Robert Bradway said on a call with investors, according to Bloomberg. “We are confident in MariTide’s differentiated profile and believe it will address important unmet medical needs.”
Investors are interested in MariTide because it’s taken less frequently than the top-selling weight-loss treatments from Novo Nordisk and Lilly. Patients given a monthly injection of the drug lost up to 14.5% of their body weight in 12 weeks, according to a small early-stage study published in February in the journal Nature Metabolism.
Shares surged 12% to $312 at the last check on May 3, while Novo Nordisk was off 1% and Eli Lilly was down 2.8%.
Analysts reacted to Amgen’s quarterly results, with many of them highlighting the MariTide update as they adjusted their ratings and stock price targets.
Jefferies analysts said Amgen reported a “good” in-line quarter, but believes the stock is up due to the positive Phase II obesity “interim” readout that suggests positive differentiation and safety-tolerability, as well as expanding into more investment in manufacturing.
The company stated they had a careful review of data, which should ease investor concerns, said the analysts, who think the stock should work higher as it “remains mostly under-owned across [healthcare] and generalist investors.”
Jefferies has a buy rating and a $375 price target on Amgen shares.
UBS raised the firm’s price target on Amgen to $307 from $284 and kept a neutral rating on the shares.
The MariTide interim was completed earlier than expected, with management providing positive qualitative commentary. However, given a lack of specifics, UBS encouraged investors to “take a leap of faith” that management’s thresholds to characterize the data as “very encouraging” with a “differentiated profile” would align with their own.
In the near term, UBS said it expects the stock to remain buoyant.
Barclays upgraded Amgen to equal weight from underweight with a price target of $300, up from $230.
Analyst: lower rating ‘untenable’
The firm says that MariTide’s Phase 2 data framing and upcoming move to Phase 3 make an underweight rating “untenable” in the near term. The firm says a “key binary” event is set for year-end 2024 for the shares.
William Blair upgraded Amgen to outperform from market perform.
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The earnings were a little light overall, as forecast by management given typical seasonality, but the firm said the print was “significantly overshadowed” by management’s comments regarding an interim analysis of the Phase II trial with MariTide.
While specific details from the interim analysis were not shared, management is “very encouraged with the results” and “confident in MariTide’s differentiated profile,” Blair analysts wrote.
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The firm has grown more confident in the therapy’s potential to meaningfully differentiate it from other therapies in development, particularly in regard to treatment intervals.
Blair said that it sees MariTide as having multi-blockbuster potential despite needing to penetrate the current duopoly of Eli Lilly and Novo Nordisk with significant competition in clinical development.
Morgan Stanley analyst Terence Flynn raised the firm’s price target on Amgen to $310 from $271 and kept an equal weight rating on the shares.
Flynn cited the company’s update for MariTide, or AMG-133, a key pipeline diabesity drug, and noted that they are pleased with the results thus far, see a differentiated profile, and are moving into Phase 3 after a recent interim analysis of Phase 2 data.
As a result, Flynn said he is raising its MariTide odds of success view to 60% from 50%, but is awaiting further data to more fully understand the competitive profile relative to existing and future diabesity medications.
And TheStreet Pro’s Bruce Kamich wrote, “The question that needs an answer is where do I recommend the purchase of AMGN.”
“I am not sure of a level, but investors could probe the long side of AMGN after a few days of sideways price action,” he said. “Maybe we’ll see support in the $305 area as some traders take profits.”
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