The “explosion” of Novartis (NVS.US) cardiovascular therapy trials dragged down AMGN.US (AMGN.US): Stock prices plummeted to the highest level in ten years, and BMO quickly downgraded its rating

The Zhitong Finance App learned that due to Novartis Pharmaceuticals (NVS.US)'s recent announcement that a heart disease treatment developed jointly with Ionis Pharmaceuticals (IONS.US) was affected by setbacks in late-stage clinical trials, AMGN.US (AMGN.US) stock price fell more than 10% on Tuesday, the biggest one-day decline since 2016.

Meanwhile, BMO Capital Markets downgraded the pharmaceutical giant's rating from “outperforming the market” to “in sync with the market” because the phase III clinical trial of its drug candidate Pelacarsen failed to meet the expected goals. The drug is injectable and aims to reduce the production level of lipoprotein (a), or Lp (a), which is an important risk factor for cardiovascular disease.

Baird analyst Brian Skorney pointed out that this failure was bad for Olpasiran, another Lp (a) inhibitor under Amgen. The drug was developed by Amgen in collaboration with Arrowhead Pharmaceuticals (ARWR.US) and Royalty Pharma (RPRX.US), and the research design is similar to the previous trial. Skorney maintained Amgen's “outperforming the market” rating in the report, but confessed: “Although there are key differences between the two projects that may help Amgen's ultimate success, we think similar adverse results are more likely.”

BMO analyst Evan David Seigerman explained in the downgrade report that Amgen currently has premiums in many large pharmaceutical companies with rapidly growing stock prices. Although the company's ability to execute commercialization is steady, the pressure brought about by the successive loss of market monopoly on its core products cannot be ignored. Seigerman wrote, “We don't expect a sudden drop in revenue, but the combination of factors such as pricing pressure, increased competition, and patent expiration limits the predictability of Amgen's medium- to long-term growth prospects.” He maintained his target price of $450 for Amgen.

Regarding MariTide, a weight loss treatment currently being developed by Amgen, Seigerman added that although the drug is expected to provide differentiated treatment options with a lower dosage frequency, its Phase II data raises market concerns — whether this monthly treatment plan can gain a foothold in competition with established obesity drugs.

Seigerman concluded by saying, “As market expectations continue to rise, we believe that if Amgen's stock price is to rise further, we will either rely on business performance that continues to exceed expectations, or it will be achieved through substantial risk release from pipeline assets. Over the next 12 months, its risk-reward ratio will be more balanced.”