The biotech Amgen (AMGN 0.43%) isn't exactly known as a growth stock. Over the past few years, the company's organic revenue hasn't been increasing at a particularly impressive rate. The drugmaker has tried to improve on that front through acquisitions and developing newer products.
Though these initiatives have had a positive effect, there is still room for more progress. Here's the good news: Amgen is currently working on medicines in an exciting and fast-growing therapeutic area. If the biotech can be successful, it could be its next big growth opportunity. Let's find out more.
An increasingly crowded field
Business success tends to attract competitors. Novo Nordisk (NVO 0.16%) and Eli Lilly (LLY +0.80%) are making small fortunes from their dominance in the weight loss market thanks to GLP-1 medicines such as Wegovy and Zepbound.
Many drugmakers are looking to take a slice of this growing pie: According to some estimates, the weight loss market will be worth $44 billion by 2030 -- it was valued at just $2.5 billion in 2022.
Amgen is one of those companies developing brand-new obesity therapies. Even though this space is getting crowded, it could carve out a niche.
Consider the biotech's leading weight loss candidate, MariTide. This product is currently undergoing phase 2 studies. Amgen plans to release topline data from this trial later this year.
NASDAQ: AMGN
Key Data Points
MariTide produced highly promising results in a phase 1 study. In a paper published in Nature Metabolism, Amgen reported that patients treated with MariTide lost weight and kept it off for up to 150 days after the last dose.
Many patients are worried that they will regain their weight once they stop taking GLP-1 medicines. Early data suggests that MariTide might be able to help with that, at least somewhat. Of course, there is still a long way to go before this product hits the market, but it looks highly promising.
The research company Evaluate Pharma recently ranked MariTide as one of the 10 most valuable research-and-development projects in the pharmaceutical industry, with projected 2030 sales of $2.1 billion and a net present value of $12.4 billion.
Considering MariTide wouldn't earn approval for at least a couple of years, if it can indeed generate that much by 2030, it would become an important growth driver for Amgen well into the next decade.
Is Amgen stock a buy?
What if MariTide fails in clinical trials? Even if it fails to make a name in the weight loss market, Amgen will earn approval for brand-new therapies in other areas. The company's pipeline features more than 50 ongoing programs. They won't all clear the clinical and regulatory obstacles needed to obtain approval, but even a modest 25% success rate will lead to many brand-new drugs and various label expansions.
Amgen is still dealing with some of its older products that are losing steam. Medicines such as Enbrel, which treats rheumatoid arthritis; Neulasta, used to prevent infection in cancer patients receiving chemotherapy, and immunosuppressant Otezla are practically ancient. Enbrel has been on the market for well over 20 years. But thanks to Amgen's pipeline, the company should eventually be able to move on from these products.
And the biotech is an excellent dividend stock. In the past 10 years, the company has increased its payout by almost 269%. Its forward yield tops 2.7%, and its cash payout ratio, at about 65%, is still manageable.
This might not be a top growth stock, but it has other qualities. It is a steady and reliable business that should perform well in the long run since the need for innovative medicines won't disappear anytime soon. And, of course, Amgen is also an excellent pick for income seekers.
