Amgen Stock Loses $12 Billion in Market Value Amid Safety Concerns Over MariTide

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Amgen stock suffered a massive $12 billion loss in market value as safety concerns emerged about its experimental weight loss drug, MariTide. Shares of Amgen stock dropped over 7% following reports linking the drug’s higher doses to a 4% reduction in bone mineral density (BMD) during a 12-week Phase 1 trial. Despite this alarming development, some investment firms like Jefferies remain optimistic, maintaining their price targets and highlighting potential for recovery.

Bone Density Concerns Cast a Shadow on MariTide

MariTide has been touted as a game-changer in the competitive weight loss drug market, offering a monthly injection alternative to weekly treatments like Wegovy and Zepbound. However, data from Amgen's Phase 1 trial has raised significant questions. The study revealed a dose-dependent decline in BMD among participants taking the highest doses of the drug, potentially making bones more susceptible to fractures.

Cantor Fitzgerald analyst Olivia Brayer referred to the findings as a “big unknown” and pointed out the risks tied to MariTide’s mechanism of action, GIPR antagonism. This approach contrasts with competitors like Eli Lilly’s Zepbound, which activates GIP and GLP-1 receptors. While temporary bone density loss is common during significant weight loss, Brayer expressed concern over the possibility of sustained and dose-related effects, which could limit the drug’s market potential.

Analysts Debate: Is the Reaction Overblown?

Amgen stock might have overreacted to the news, according to some analysts. Jefferies analyst Michael Yee suggested that fluctuations in bone density are typical for weight loss drugs, particularly during initial use. He pointed out that lower doses of MariTide even showed slight increases in BMD before normalizing. Amgen stock’s decline may not fully account for these nuances, as Jefferies maintains confidence in the company’s handling of MariTide’s development.

Other analysts echoed this sentiment. Evan Seigerman of BMO Capital Markets advised against rushing to conclusions, emphasizing that the current data is insufficient to make definitive safety judgments. Seigerman suggested that investors focus on the forthcoming Phase 2 trial results, which will involve a larger group of participants and offer a clearer view of MariTide’s safety and efficacy.

Amgen Stock's Resilience and Broader Portfolio

Despite the challenges with MariTide, Amgen stock reflects the company’s strong underlying fundamentals. In its most recent quarter, Amgen reported a 23% increase in revenue, driven by strong performance in its oncology and rare disease portfolios. Products in these areas generated over $1.2 billion in sales, helping to offset uncertainties surrounding MariTide.

Moreover, Amgen stock continues to appeal to income-focused investors. The company has a 14-year history of dividend growth and offers a current yield of 2.8%, demonstrating a commitment to shareholder value even amid market volatility.

Will Phase 2 Results Revive Amgen Stock?

The future of Amgen stock hinges on the Phase 2 trial results for MariTide, expected before the end of the year. These findings will likely determine whether the safety concerns surrounding BMD loss are manageable or represent a significant barrier to the drug’s market potential. If the data supports MariTide’s safety and efficacy, Amgen stock could rebound significantly, regaining investor confidence in its weight loss ambitions.

Investment firms like Jefferies and BMO Capital Markets remain optimistic, maintaining price targets of $380 and $405, respectively. Their faith underscores confidence in Amgen stock’s broader pipeline, even as the company addresses challenges with MariTide.

While the recent sell-off highlights the market’s sensitivity to potential safety risks, it also underscores the immense stakes in the weight loss drug market. For investors, Amgen stock remains a high-risk, high-reward opportunity tied to the outcome of MariTide’s trials.

Will Amgen stock recover after the Phase 2 MariTide trial results? Let us know what you think!

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