If you want to invest in the fast-growing weight loss industry, going with stocks such as Eli Lilly or Novo Nordisk can seem like a great idea. They have leading weight loss products and possess some promising long-term growth opportunities. But they are already among the most valuable healthcare stocks in the world (their valuations are in excess of $500 billion). At some fairly high valuations, the potential upside from these stocks may not be as high as it may be for other, more modestly valued investments.
One stock that may end up generating stronger returns for investors is pharmaceutical company Amgen (AMGN 0.02%). At a market capitalization of less than $200 billion, it's by no means a small stock to invest in, but it could still have room to double or triple in value given that it may become a big player in the glucagon-like peptide-1 (GLP-1) weight loss market.
NASDAQ: AMGN
Key Data Points
Amgen could have a game-changing GLP-1 drug in its portfolio
Among the most popular GLP-1 injectables on the market for weight loss today are Eli Lilly's Zepbound and Novo Nordisk's Wegovy. Both drugs can help patients lose around 15% to 20% of their body weight, or even more in some cases. But they are weekly injections, and patients who stop taking the drugs also risk gaining back some or all of the weight they lost from using them.
Amgen has a drug, however, that may only need to be taken on a monthly basis (or even less frequently than that), and a study has shown that users may not gain weight back if they stop treatment. According to an early phase 1 trial, MariTide helped patients lose around 15% of their body weight after a 12-week period. It's an early-stage trial, but it is an encouraging one nonetheless, especially since it can potentially achieve similar results to other top GLP-1 drugs and it may need to be taken less frequently.
Should Amgen end up obtaining approval for MariTide, that could drastically improve its growth prospects, and lead to much more excitement and bullishness surrounding the stock.
The company's existing operations also look great
It's not just the potential for Amgen in the GLP-1 market that could make the healthcare stock a good buy, its existing operations are robust and diverse as well, making it an ideal option for long-term investors.
In recent years, Amgen has been using acquisitions to bolster its portfolio. It has purchased cancer company ChemoCentryx and last year it acquired Horizon Therapeutics, which gave it access to a treatment for thyroid eye disease, Tepezza, which could bring in close to $4 billion in peak annual revenue.
During its second quarter, Amgen generated sales totaling $8.4 billion, which were up 20% year over year. Amgen had multiple drugs that grew at rates of more than 20%, including cholesterol drug Repatha, whose sales totaled $532 million and were up 25% year over year.
Given the company's broad portfolio and some strong assets that can help Amgen's business grow far higher in the future, the stock has the potential to become an excellent growth investment to hang on to for the long haul.
Amgen could make for an underrated buy right now
Shares of Novo Nordisk and Eli Lilly are up more than 25% this year, while Amgen's stock has rallied but at a much more modest rate of 11%. There isn't as much excitement around the stock but that could change if it ends up obtaining approval for MariTide. That isn't a certainty by any means -- there is always going to be some risk with investing based on hopes of a drug coming to market in the future.
But with Amgen, it's a calculated risk I think that's worth taking, as this isn't solely a GLP-1 investment. Amgen's broad and growing business make it one of the safer healthcare companies to hold in your portfolio today. And with the stock trading at just 16 times its estimated future earnings (based on analyst expectations), it's a possible steal of a deal at its low valuation.
