Amgen Targets a Share of the Booming Obesity Market

With rising predictions for the obesity drug sector, Eli Lilly (LLY) and Novo Nordisk (NVO) have seen a significant boost in market value. While this boom is undeniable, the dominating duo in obesity treatment now holds a hefty valuation. Enter Amgen (AMGN), which presents an intriguing investment alternative in the obesity arena. Currently valued lower than the average U.S. stock, Amgen trades at a forward earnings multiple of 13.9, in contrast to Lilly’s 46.6.

While Amgen trails the developers of Ozempic and Mounjaro, the growing obesity drug market leaves space for additional contenders. Amgen plans to unveil findings from two obesity drug trials next year. Should the results prove favorable, investor interest for Amgen’s obesity pipeline may surge.

It’s not that Amgen is on track to surpass Lilly or Novo, who have already established strong footholds. However, in a market potentially worth over $100 billion annually, even securing a fraction can be monumental. As the next year unfolds, Amgen’s commitment to the obesity sector will become more evident. Notably, the company will release an early-stage study on an undisclosed oral medication and later, data from a mid-stage trial on an injectable treatment.

Similar to Mounjaro and Ozempic, this injectable interacts with the GLP-1 receptor, influencing appetite. Interestingly, while Mounjaro stimulates an additional GIP receptor, Amgen’s solution inhibits it. This strategy is grounded in genetic studies indicating reduced receptor activity correlates with lower body weight. A potential edge? Amgen’s drug requires monthly dosing, as opposed to weekly doses of other GLP-1 solutions.

Murdo Gordon, Amgen’s EVP of global commercial operations, emphasized the company’s expansive approach in an interview, hinting at the exploration of various compounds targeting obesity.

Despite their ventures, Amgen’s stock isn’t heavily influenced by their obesity efforts, especially as some of their top-sellers approach patent expiry. However, the tide seems to be turning post a better-than-expected Q2 performance.

Further boosting investor confidence is Amgen’s impending $27.8 billion acquisition of Horizon Therapeutics, anticipated to add around $5 billion to annual sales. This move will likely balance the impact of looming patent expiries.

Although Amgen trails in the obesity drug race, the vast market and hefty price tags of these treatments suggest ample room for competition and opportunity.