Seema Khaneja MD
Updated on: October 11, 2024 9:19 am GMT
Investors are eyeing exciting opportunities in the weight loss pharmaceutical market, notably with stocks like Amgen, Eli Lilly, and Novo Nordisk. However, Amgen, with its promising drug candidate MariTide, presents a compelling case for consideration, especially for those looking to diversify their portfolios.
Amgen: A Rising Contender in the Weight Loss Market
Founded in 1980, Amgen is a leading biotechnology company known for its innovative therapies. Its entry into the glucagon-like peptide-1 (GLP-1) market for weight loss could position it as a formidable competitor to established players Eli Lilly and Novo Nordisk. While these companies dominate with their products like Zepbound and Wegovy, Amgen’s MariTide offers a unique proposition.
Currently, many weight loss drugs require weekly injections, which can be a deterrent for patients. In contrast, Amgen’s MariTide may only need to be administered monthly or less frequently. Preliminary data from a phase 1 trial suggests that patients could lose approximately 15% of their body weight over 12 weeks without significant risk of regaining it post-treatment. This potential for less frequent dosing could attract more patients, enhancing MariTide’s market appeal.
Comparative Advantage of MariTide
The competitive landscape showcases some key differences between MariTide and its rivals:
- Dosing Frequency: While Eli Lilly and Novo Nordisk’s drugs require weekly administration, MariTide’s monthly dosing could lead to higher patient compliance.
- Weight Maintenance: Initial findings indicate that patients may maintain weight loss more effectively after cessation of MariTide compared to existing treatments, which often lead to weight regain.
- Market Potential: If approved, MariTide could tap into a rapidly growing market currently valued at billions, providing substantial revenue opportunities for Amgen.
The increased interest in weight management solutions further emphasizes the significance of potential growth in this sector. Gaining traction in the GLP-1 market could enhance Amgen’s growth trajectory and overall stock performance.
Amgen’s Strong Financial Foundations
In addition to the potential of MariTide, Amgen boasts a robust portfolio that reinforces its investment appeal. The company recently reported sales of $8.4 billion for the second quarter, marking a 20% increase year-over-year. This growth is supported by multiple products showing impressive sales growth, including the cholesterol-lowering drug Repatha, which recorded $532 million in sales, a 25% increase compared to the previous year.
Strategic Acquisitions Fueling Growth
Amgen’s strategy includes acquiring promising companies to expand its product offerings. In recent years, Amgen has made significant acquisitions, including:
- ChemoCentryx: This acquisition enhanced Amgen’s portfolio in cancer treatments.
- Spectrum Pharmaceuticals: Focused on rare diseases, adding valuable assets to its lineup.
- Horizon Therapeutics: This deal provides Amgen with access to Tepezza, a treatment for thyroid eye disease, expected to generate up to $4 billion in peak annual revenue.
These expansions not only diversify Amgen’s offerings but also bolster its long-term revenue prospects, allowing it to be less reliant on any single product.
Comparative Stock Performance
While Eli Lilly and Novo Nordisk have each seen their stocks rise over 25% this year due to heightened attention towards their GLP-1 products, Amgen’s stock has lagged slightly with an 11% increase. This discrepancy may present a buying opportunity for investors seeking growth in the health sector without the inflated valuations that come with the more hyped stocks in the weight loss market.
Valuation Insights
Amgen is currently trading at approximately 16 times its estimated future earnings, suggesting a potentially undervalued investment compared to competitors. This valuation could allow for substantial upside potential should MariTide receive regulatory approval and successfully enter the market.
Investment Considerations
Investing in pharmaceuticals, especially with drug candidates yet to gain market approval, carries inherent risks. Nevertheless, Amgen’s strong fundamentals, diverse portfolio, and promising trial results for MariTide collectively create a case for investors to consider.
While Eli Lilly and Novo Nordisk are well-established in the weight loss market, Amgen’s diversification and lower valuation could make it a compelling investment for those looking to capitalize on the burgeoning weight loss sector. Its potential to provide a more user-friendly administration option for patients could position it favorably in a highly competitive landscape.
Amgen is doing well by making money from its current products, and it’s also working on new drugs for the future. This could be a good choice for people looking to invest in health-related companies. To make smart investment choices, it’s important for investors to keep an eye on how MariTide gets approved and how well Amgen’s new products are doing.
