Investing.com -- Shares of Amgen (NASDAQ: NASDAQ:AMGN) dropped 12% Tuesday following the release of Phase 2 trial results for its obesity drug candidate, MariTide (formerly AMG 133).
While the study demonstrated notable weight-loss potential, investor expectations for the drug's efficacy may have been higher, contributing to the stock's decline.
Amgen reported that MariTide, a monthly or less frequent injectable, delivered up to 20% average weight loss at 52 weeks in patients without Type 2 diabetes and 17% in those with the condition.
Notably, no weight-loss plateau was observed, suggesting further potential with continued use. Additionally, MariTide is said to have improved key cardiometabolic parameters such as blood pressure and triglycerides while reducing hemoglobin A1C by up to 2.2 percentage points in diabetic patients.
However, analysts had set a benchmark of at least 20% weight loss in the trial, with some hoping for results closer to 25%. The Phase 2 outcomes fell short of these higher expectations, prompting skepticism about MariTide's ability to compete in the increasingly crowded obesity drug market.
Amgen's announcement comes amid heightened focus on the sector. Rivals Eli Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO) have drugs competing in the space. Shares of both companies rose roughly 4% following Amgen's update.
Despite the stock reaction, Amgen remains optimistic about MariTide's future, with plans to launch a Phase 3 program, MARITIME, to explore the drug's applications in obesity and related conditions.
CEO Jay Bradner emphasized the drug's "differentiated profile" and "potential new treatment option for patients."
"These results are adequate to position MariTide in the obesity landscape for the broad ph.III development in obesity/obesity-related conditions that AMGN plans to initiate," said RBC Capital reacting to the news. "We also see this as a sufficiently-competitive profile to sustain the program value long-term as we reiterate our Outperform rating."
BMO Capital said that overall, the "results appear positive, but placebo-adjusted weight loss may be slightly lower than investors initially expected (lower end of our Positive scenario to slightly Negative), assuming placebo weight loss of 2% to 3%." They added that "questions remain on rates of nausea and vomiting, which may continue until full data is released."
Despite their base case for this scenario calling for Amgen shares to rise, Morgan Stanley (NYSE:MS) analysts said that at a high level their "recent investor conversations suggest that many have been debating risk/reward into catalysts given the recent policy uncertainty that has caused a broader selloff in the sector."
Leerink partners highlighted that in the press release, "MariTide showed 'no significant increases in free fatty acids' whereas free fatty acids decreased by 7.5% with pooled groups of tirzepatide in
the Ph3 SURMOUNT-1 trial."
Deutsche Bank (ETR:DBKGn) offered a more clear cut view for the stocks decline, stating: "In our view, MariTide's Ph2 press release underwhelms with 20% weight loss from Cohort A (non-T2D) and 17% weight loss from Cohort B (T2D) at 52-weeks - unclear if these are placebo adjusted. Nonetheless, MariTide's weight loss appears to miss the Street's bogey of ~25% weight loss and we think will weigh
down AMGN shares."