Shares of Eli Lilly and Novo Nordisk surged on Tuesday following news that the Biden administration plans to propose a rule allowing the federal government to cover a significant portion of the tab of “miracle” weight-loss drugs. However, news from Amgen about clinical trial results of its weight-loss drug, while meeting Wall Street expectations, failed to outperform Eli Lilly’s blockbuster treatment, Zepbound.
Let’s begin with Amgen shares crashing 12% after the Phase 2 study with MariTide showed only a 20% average weight loss at 52 weeks in 592 obese patients.
Wall Street analysts forecasted MariTide would be able to shed about 25% of the patient’s body weight on average over the course of one year and exceed the performance of existing drugs offered by Lilly and Novo. About 11% of patients discontinued MariTide during the trial, a much higher discontinuation rate versus the other medications on the market.
“Given already excellent efficacy with both Lilly and Novo, difficult to know how MariTide fits in the market other than as a niche player for patients adamant about taking an injection less often than weekly,” Mizuho’s Jared Holz told Bloomberg via email.
Amgen wrote in a press release, “Nausea and vomiting were predominately mild, transient and primarily associated with the first dose,” adding, “The incidence of nausea and vomiting was substantially reduced with dose escalation.”
Other Wall Street analysts commented on MariTide’s results (courtesy of Bloomberg):
Jefferies (Buy, $294)
- “The results are on the lower end of the expectations of 20-25% and the company noted there was no plateau of weight loss so there is more pot’l weight loss beyond 52 weeks,” analysts led by Michael J. Yee wrote in a note
- Says there will be some “relative investor disappointment on the overall topline efficacy at 20% appreciating that we do not know the individual arms and more to be disclosed”
- “Bulls will be a little disappointed today – while bears will say AMGN is no longer a major player here to be concerned on”
Citi (Neutral, PT to $310 from $335)
- Says data on monthly dosing was not reported, and “will likely weigh on shares until more is disclosed,” analysts led by Geoff Meacham wrote
- “Without monthly dosing, there could be headwinds in MariTide carving a long-acting injectable niche in the market”
- “We anticipate AMGN trading downwards of $25+ on these data and take our TP to $310 (-$25)”
Amgen shares crashed 12% – the largest daily decline since the October 2000 DotCom bust…
Meanwhile, Lilly and Novo shares moved higher after the Biden administration proposed a rule that would require the Medicare insurance program—already footing the bill for weight loss drugs for health conditions such as diabetes—to expand coverage to an estimated 3.4 million older Americans on Medicare and four million more adults in Medicaid programs.
Bloomberg cited a White House official who said the plan would “slash out-of-pocket costs by as much as 95% for the drugs that can carry a price tag of $1,000 a month.”
This new proposed coverage would cost taxpayers $25 billion over ten years, adding $11 billion in federal Medicaid costs and $4 billion in state costs. The goal of the incoming Trump administration will be to slash spending, not increase handouts to big pharma.
Trump’s pick of Robert F. Kennedy Jr. to lead the Department of Health and Human Services would ensure that healthy food would be the most affordable solution to “solve the obesity and diabetes crisis” instead of big pharma’s GLP-1 drugs.
Tracking the GLP-1 craze in markets, Goldman’s index of companies with high exposure to GLP-1s reversed much of the gains before and after the election on RFK Jr. risks. As a result, companies at risk from GLP-1s’ success are now outpacing on the year.
The key takeaway is that competition in the GLP-1 market is heating up. Meanwhile, RFK Jr.’s move to solve the obesity and diabetes crisis won’t be with pharma drugs, but through a focus on clean, healthy food.
Tyler Durden
Tue, 11/26/2024 – 11:05
