Amgen shares tumbled more than 10% on Tuesday, marking their worst single-day decline since 2016, after Novartis AG revealed that a heart disease therapy it is developing with Ionis Pharmaceuticals encountered setbacks in late-stage clinical trials. The dramatic selloff prompted BMO Capital Markets to downgrade the pharmaceutical giant from "Outperform" to "Market Perform," citing the failure of its candidate drug pelacarsen in a Phase III clinical trial that missed its primary endpoints.

Pelacarsen, an injectable therapy designed to reduce production of lipoprotein(a) — or Lp(a) — a key risk factor for cardiovascular disease, failed to demonstrate sufficient efficacy in the trial. Baird analyst Brian Skorney noted that this setback casts a shadow over Amgen's own Lp(a) inhibitor, olpasiran, which is being developed in partnership with Arrowhead Pharmaceuticals and Royalty Pharma, given the similar trial design between the two programs.

Skorney maintained an "Outperform" rating on Amgen but acknowledged in a note: "While there are key differences between the two programs that could ultimately contribute to Amgen's success, we believe a similar unfavorable outcome is more likely."

BMO analyst Evan David Seigerman explained in his downgrade report that Amgen's current valuation commands a premium compared to several high-growth large-cap pharmaceutical peers. Despite the company's solid commercial execution capabilities, the pressure from its core products gradually losing market exclusivity cannot be overlooked. "We do not anticipate a sudden decline in revenue, but the combination of pricing pressure, intensifying competition, and patent expirations limits the predictability of Amgen's medium-to-long-term growth outlook," Seigerman wrote. He maintained a $450 price target on the stock.

Regarding Amgen's investigational weight-loss therapy MariTide, Seigerman added that while the drug could offer a differentiated treatment option with its lower dosing frequency, its Phase II data have raised concerns among investors about whether this once-monthly regimen can hold its own against established obesity medications. "As consensus estimates continue to trend upward, we believe further upside in Amgen's share price will require either sustained outperformance in commercial results or substantial risk reduction through pipeline assets. Over the next 12 months, its risk-reward profile will become more balanced," Seigerman concluded.