Novartis AG Sponsored ADR (NVS.US) cardiovascular therapy trial "explosion" drags down Amgen (AMGN.US): stock price plummets to a ten-year low, BMO rapidly downgrades rating.

Novartis AG Sponsored ADR (NVS.US) recently announced that its collaboration with Ionis Pharmaceuticals (IONS.US) on a heart disease therapy has encountered setbacks in late-stage clinical trials, leading to a decline of over 10% in Amgen's (AMGN.US) stock price on Tuesday, marking its largest single-day drop since 2016. At the same time, BMO Capital Markets downgraded this pharmaceutical giant's rating from "Outperform" to "Market Perform," citing that its candidate drug pelacarsen failed to meet expectations in the Phase III clinical trial. The drug is an injectable formulation aimed at reducing the generation levels of lipoprotein (a), or Lp(a), which is a significant risk factor for cardiovascular diseases. Baird analyst Brian Skorney pointed out that this failure is a negative signal for another Lp(a) inhibitor, olpasiran, under Amgen. This drug is being developed in collaboration with Arrowhead Pharmaceuticals (ARWR.US) and Royalty Pharma (RPRX.US), and the study design is similar to the previous trial. Skorney maintained an "Outperform" rating for Amgen in his report but acknowledged, "Despite key differences between the two projects that could support Amgen's ultimate success, we believe a similar adverse outcome is more likely." BMO analyst Evan David Seigerman explained in the downgrade report that Amgen's current stock price carries a premium compared to several rapidly growing large pharmaceutical peers. Although the company has a robust commercialization execution capability, the pressure from losing market exclusivity on its core products cannot be overlooked. Seigerman wrote, "We do not expect a sudden revenue decline, but factors such as pricing pressure, intensified competition, and looming patent expirations cumulatively limit the visibility of Amgen's medium- to long-term growth prospects." He maintained a price target of $450 for Amgen. Regarding Amgens weight-loss therapy candidate MariTide, Seigerman added that although the drug aims to offer differentiated treatment options with a lower dosing frequency, the Phase II data has raised market concerns about whether this monthly treatment regimen can hold its ground in competition with existing established obesity medications. Seigerman concluded, "As market consensus expectations continue to rise, we believe that for Amgen's stock price to further increase, it will either need to rely on sustained above-expectation commercial performance or achieve substantial risk alleviation from pipeline assets. Its risk-reward ratio will become more balanced in the next 12 months."