Amylin Stays Neutral - Analyst Blog

We recently reiterated our Neutral recommendation on Amylin Pharmaceuticals, Inc. (AMLN). Amylin reported a net loss of $0.31 per share in the third quarter of 2010, three cents below the Zacks Consensus Estimate but well above the year ago loss of $0.19. Lower revenues resulted in the wider loss. Both Byetta and Symlin revenues declined on a sequential as well as year-over-year basis.

Moreover, Amylin faced a huge setback when it failed to gain approval for its lead pipeline candidate, Bydureon, for the second time. Amylin and its partners, Eli Lilly and Company (LLY) and Alkermes, Inc. (ALKS), were looking to get Bydureon approved for the treatment of type II diabetes.

The latest complete response letter (CRL), which came a few days ahead of the US Food and Drug Administration (FDA) action date, was a complete surprise. At the time of issuing the first CRL, the FDA had not asked the companies to conduct additional studies. At that time, the FDA had only asked for additional information that was subsequently submitted by the companies.

However, in its latest CRL, the FDA has asked the companies to conduct a thorough QT study. We believe the FDA may have asked for this study based on the recent concerns regarding the cardiovascular safety profile of diabetes drugs. The agency has also asked Amylin and its partners to submit data from the DURATION-5 study, which was conducted to compare the safety and efficacy of Bydureon versus Byetta. Amylin said that the QT study will be conducted once the protocol is approved by the FDA.

While we are disappointed with the delay in Bydureon's approval, we are excited about the obesity pipeline at Amylin. The most interesting obesity pipeline candidate is pramlintide acetate (AC137), the active ingredient of diabetes drug Symlin. Pramlintide in combination with metreleptin is scheduled to move into phase III development in 2011.

Amylin is also looking to submit the clinical and non-clinical sections of a rolling biologics license application (BLA) for the use of metreleptin for the treatment of severe lipodystrophy.

We are also positive on Amylin's partnership agreement with Takeda Pharmaceutical for the development and commercialization of pramlintide and davalintide. This deal is a major boost for Amylin and should help the company advance its obesity programs in an expeditious manner while reducing the financial and technical risk to Amylin.

Obesity is an attractive market that could be worth many billions of dollars. It is estimated that obesity affects over 400 million people worldwide. Moreover, obesity is linked to increased health risk of several medical conditions. The successful development of the obesity pipeline would help drive long-term growth at Amylin.

 
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