The GLP-1 weight loss market is poised for explosive growth, with some analysts predicting it could reach a staggering $200 billion by 2031. As weight loss drugs demonstrating over 20% body weight reduction gain traction, investor interest has surged. However, for those hesitant to pay a premium for established players like Eli Lilly, Amgen presents a compelling alternative with its promising GLP-1 drug, MariTide.
Amgen’s Monthly Dosage Advantage
One of the key differentiators for Amgen’s MariTide is its convenience. While most GLP-1 treatments available today require weekly injections, MariTide needs to be taken only once a month. This less frequent dosage not only simplifies treatment routines for patients but also has the potential to minimize side effects. Reducing the frequency of injections can significantly improve long-term adherence to the treatment, which is a crucial factor for achieving sustainable weight loss outcomes.
In recent phase 2 trials, MariTide demonstrated an ability to help patients lose up to 20% of their body weight within a year. While this result fell slightly short of analyst expectations of 25%, the absence of a weight loss plateau suggests that further reductions might be achievable over a longer duration. Additionally, some trial participants took the medication less frequently than once a month, which may have impacted the trial results. This highlights the potential for even greater efficacy if taken as prescribed.
Amgen’s Valuation Undervalues Its Potential
Despite the promising outlook for MariTide, Amgen’s stock remains relatively undervalued. Currently trading at 41 times its trailing earnings and just 15 times its projected future earnings, Amgen’s valuation appears modest compared to the Health Care Select Sector SPDR Fund average of 18 times future earnings. This discrepancy suggests that investors may not yet be fully accounting for MariTide’s potential to capture significant market share in the GLP-1 segment.
By comparison, Eli Lilly, a leading name in the GLP-1 market with its drugs Mounjaro and Zepbound, trades at a premium of 75 times trailing earnings. This steep price highlights Amgen’s appeal as a more reasonably valued alternative, particularly given the growing competition in the GLP-1 market.
Robust Financials Bolster Amgen’s Appeal
Amgen’s strong financial position further enhances its investment appeal. The company’s diversified drug portfolio reported over 30% revenue growth for several treatments in the fourth quarter of 2024. Additionally, Amgen generated $10.4 billion in free cash flow last year, comfortably covering its $4.8 billion in dividend payments. This financial stability not only supports the company’s ongoing operations and research efforts but also positions it well to invest further in MariTide’s development and commercialization.
The company’s prudent financial management underscores the safety of investing in Amgen, even as it pursues growth in the competitive GLP-1 market. The combination of a diversified portfolio and robust cash flow reduces the risks typically associated with biopharmaceutical investments.
A Promising Outlook for Amgen in 2025
Amgen’s MariTide has the potential to significantly disrupt the GLP-1 weight loss market if it secures regulatory approval. The drug’s monthly dosage advantage, coupled with promising trial results, makes it an attractive alternative to more frequently dosed competitors. Amgen’s current undervaluation, strong financials, and diversified product portfolio further reinforce its potential for a significant rally in 2025.
As the GLP-1 market continues to expand, Amgen’s strategic position and promising pipeline could transform it into a top contender, making it a stock worth watching closely in the year ahead.