Amgen (AMGN) Drug Pipeline and Horizon Integration In Focus

Amgen (AMGN) reported adjusted EPS of $3.96 in Q1 on revenue of $7.45B that grew 22% Y/Y. The drugmaker had also tweaked its annual outlook at the time, guiding for adjusted EPS of $19 to $20.20 on revenue of $32.5B to $33.8B.

With the expectation of continued positive commentary on MariTide, the company’s injected GLP-1 weight-loss drug candidate, and recent wins across Imdelltra and Tezspire COPD data, AMGN is expected to post $4.98 earnings per share on revenue of $8.35B (+19.6% Y/Y).

In its Q1 earnings release, Amgen (AMGN) confirmed that topline Phase 2 data for MariTide is expected in late 2024, adding that it was planning Phase 3 trials for the drug across multiple indications.

So if we looked at the North America Anti-Obesity drugs market size growth, I believe there might be friendly competition rather than compete each other for their drugs. This is what Morgan Stanley believes. “We see obesity as a mega blockbuster category that can support multiple players, representing upside for AMGN if they deliver a competitive profile,”

Investors would focus significantly on upcoming pipeline readouts for MariTide in obesity and type 2 diabetes, Amgen’s OX40i rocatinlimab in AD and Uplizna in several indications, as mentioned by BMO Capital Markets in a note.

The first full-year following the Horizon transaction, investors will be looking for more on how Amgen expects to realize the full value of this deal, with a modest miss from Tepezza in -2% vs cons in Q1 overshadowed by news from the obesity program.

Over the past few decades, the prevalence rate of obesity has significantly increased, and it is now considered an epidemic. Obesity constitutes a severe public health problem, as it substantially increases the risk of chronic diseases such as type 2 diabetes, cardiovascular disease, blood pressure, and certain cancers. This has raised the awareness level among the population regarding severe chronic disease, which can be avoided by following appropriate action plans, including the following:

In March 2023, the World Obesity Federation started a new campaign on obesity under the name “Changing Perspectives: Let’s Talk About Obesity” on the occasion of World Obesity Day with an aim to correct misconceptions with constructive communication and pave the way toward a healthier future.

Such initiatives made by international organizations and strict implementation will increase awareness regarding disease conditions. Several industry players developing and engaged in launches of effective therapeutics are strategically endorsing their products to tackle the problem, propelling the growth of the anti-obesity drugs market during the forecast period.

In June 2023, Retatrutide, an investigational drug of Eli Lilly Company with the potential to treat obesity and type 2 diabetes and is suitable for once in a week injection. These diabetes drugs work by appetite suppression to induce weight loss.

Based on 17 Wall Street analysts offering 12 month price targets for Amgen in the last 3 months. The average price target is $328.60 with a high forecast of $380.00 and a low forecast of $235.00. The average price target represents a 1.04% change from the last price of $325.22.

So I would expect the market to take a positive view to Amgen’s new obesity drugs, and look forward to the approval, and with the market size set to grow over the next five years at least, we could be expecting Amgen to continue to grow.

Hence, I would think the price target of $380 might be possible.

With this significant returns of 14% to investors on its share price, we could be looking for a bigger gain, as the obesity market size is setting to grow and we should be seeing Amgen being a significant player.

Hence, we could be seeing a more than 25% return by end of year (2024).

If we were to look at the sell off impact from last week and Monday (05 Aug), AMGN seem to have least impact to its share price. This show the confidence and sentiment market have on healthcare drug companies.

So I am expecting AMGN to be trading pretty positively before its earnings today, as we could be seeing some potential upside forming from MACD and KDJ.

I am expecting healthcare and drug companies to start a small rally after the sell off rout, we could be seeing AMGN trading in the positive territory before its earnings.

Appreciate if you could share your thoughts in the comment section whether you think AMGN would provide a positive earnings and their pipeline and integration right on target?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.