Amgen stock dipped Monday after an analyst downgraded shares, saying the $5 billion opportunity for its weight-loss drug, MariTide, has already been baked into the stock.
Truist Securities analyst Srikripa Devarakonda expects Amgen's drug to show consistent weight loss in midstage testing.
But "given this is a Phase 2 asset and the competitive landscape, we believe that current levels bake in the opportunity," she said in a report. Devarakonda downgraded shares to a hold rating from buy, but raised her price target to 333 from 320.
On today's stock market, Amgen stock fell 1.1%, closing at 324.62.
Amgen Stock: Taking On Lilly
Amgen is taking a different tact with its obesity drug. Like Eli Lilly's Zepbound, it focuses on hormones called GLP-1 and GIP. But, instead of stomping on the gas with both, MariTide activates GLP-1 while also hitting the brakes on the GIP receptor.
In earlier testing, patients with obesity but not type 2 diabetes lost up to 14.5% of their body weight at the highest dose over 12 weeks.
The company is now running a Phase 2 study in patients with and without diabetes. The test focuses on 11 different doses.
"Amgen expects to gain experience with lower exposure to MariTide in various ways," Devarakonda said. "The added part two to the study allows them to explore more durable weight loss beyond 52 weeks in four dose cohorts as well as dosing schedules (potentially monthly or longer interval dosing)."
Amgen stock has trended higher this year, climbing 14% over the past 10 months. Devarakonda projects $5 billion in peak sales for the company's weight-loss drug. Each additional $1 billion is could add 6 to 7 to her price target on shares.
"If MariTide has better (effectiveness)/safety than Zepbound, we could see the market assigning up to $10 billion to the peak opportunity, or an update of 40 per share," she said. "If the data are in-line with a profile that is not clearly differentiated, we expect the stock to trade sideways given the crowded obesity landscape."
But if the safety is worse than expected, Amgen stock could take a 10% to 20% hit, she said.
Crowded Weight-Loss Drugs Arena
Lilly isn't the only threat to Amgen in the weight-loss drugs space.
Viking Therapeutics is also working on a shot that activates both GLP-1 and GIP. But, unlike Zepbound from Lilly, Viking says it's exploring a monthly dose as well. That could help it take on the leading shots, which are both weekly doses.
There are also myriad oral options in testing, including pills from Pfizer, Structure Therapeutics, Roche, AstraZeneca and others.
Amgen stock is forming a flat base with a buy point at 346.85, according to MarketSurge.
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