Amgen’s stock drops as obesity drug tests fail to match expectations

The Key Takeaways

• A Phase 2 study of Amgen's experimental weight-loss treatment didn't meet expectations of analysts.
• Concerns were also raised about the drug's side effects and the number of patients who dropped out of the trial.
• Amgen shares plunged after the news.

Amgen shares (AMGN), which are owned by the Biotech, plunged after a recent test showed that results were not as expected.

A Phase 2 trial of the injectable MariTide medication by Amgen showed that patients with obesity or excess weight without diabetes lost an average of 20% in one year. Amgen also noted that the results did not plateau and suggested even greater weight loss with continued use.

Analysts, however, were seeking better outcomes compared with treatments for obesity from Eli Lilly(LLY) or Novo Nordisk(NVO). The analysts have expressed concerns about the side effects of the drug and how many patients withdrew from the trial. Citi said in a recent note “concerns on pooled tolerability/discontinuation rates and overall competitiveness vis-à-vis Lilly or Novo has caused weakness in shares.”

The Jefferies analyst noted the expectations of a drop between 23% and 25% in weight. Still, they called the stock selloff was likely a "big overreaction" and an opportunity.

Amgen’s Chief Scientific Officer, Dr. Jay Bradner, explained that these results gave the company the confidence it needed to begin a MariTide Phase 3 trial. In addition, Amgen will be presenting the Phase 2 data "at a future medical congress and submitted for publication."

Amgen shares fell nearly 8% during recent trading, to the lowest levels since spring.

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