Amgen shares rise on obesity drug plans

Amgen's stock experienced a significant surge on Friday after the company revealed that its developing obesity drug has shown enough promise to progress into late-stage testing. During an earnings call on Thursday, CEO Robert Bradway expressed confidence in the drug's unique profile, based on an internal review of interim Phase 2 study results. Full data from these studies are expected by the end of the year, which the company believes will justify moving into Phase 3 trials.

Despite this positive news, Amgen's obesity drug is likely at least two years away from regulatory consideration. By then, competitors Eli Lilly and Novo Nordisk may have already introduced successors to their popular weight-loss medications, Wegovy and Zepbound. Additionally, proving that the drug can protect heart health, a crucial factor for gaining reimbursement from commercial and federal insurers, will require even more time and data.

Following the announcement, Amgen's market capitalization increased by $20 billion, a reflection of the high investor interest in new weight loss treatments. The company's leading candidate, maridebart cafraglutide or MariTide, targets the same hormones as Zepbound, known as GLP-1 and GIP. However, unlike Zepbound, which stimulates GIP, MariTide blocks it. Amgen aims to demonstrate that its drug can effectively reduce weight with a once-monthly injection, as opposed to the weekly injections necessary for Wegovy and Zepbound.

Publicly available information on the drug's potential is still limited. "We've seen a small amount of data, so anything is possible," commented Daniel Skovronsky, Lilly’s chief scientist, during an earnings call. He added, "We've placed our bets and we like the data we have." Amgen, however, is showing enough confidence to make a substantial investment in late-stage studies. During Thursday's conference call, Amgen executives did not disclose specific data but mentioned that all 11 study arms of the two-stage, placebo-controlled trial are still active. They also noted that patients have not discontinued treatment due to side effects.

The trial includes individuals with obesity or who are overweight and have another health condition, with separate testing for diabetics to better understand the drug's effects on this population. While Amgen's executives have reviewed the interim data, the trial investigators and participants remain blinded to ensure the scientific integrity of the study.

Amgen is discontinuing another obesity drug prospect, AMG 786, due to early data indicating it does not have the same potential as MariTide. If MariTide advances into Phase 3, it will likely need to be tested in a trial lasting over a year, similar to the trials conducted for Wegovy and Zepbound. To remain competitive, Amgen will also need to conduct large, multiyear trials to prove whether MariTide can protect heart health.

Meanwhile, Novo Nordisk and Eli Lilly are expected to strengthen their market positions. Wegovy generated $1.3 billion in sales in the first quarter, while Zepbound brought in $517 million. Both drugs are seeing increasing prescription numbers and substantial investment in manufacturing. Novo and Lilly are also approaching Phase 3 readouts for their next-generation drugs, which, if successful, could set a higher standard for competitors.

"I think they will remain dominant players, not only because of their existing leadership position but also due to the rebate wall they have constructed," noted Umer Raffat, an analyst with Evercore ISI, in a note to clients.