Amylin Update Post ADA Meeting

This past weekend, Amylin Pharmaceuticals (AMLN - Analyst Report) presented several abstracts and oral presentations at the American Diabetes Association (ADA) meeting in New Orleans. At the meeting, Amylin presented long-term follow-up data from the 74-week open label portion of the DURATION-1 program that demonstrated clear and sustained improvement in HbA1c for patients taking exenatide once weekly long-acting release (LAR).

The data also show improvements in fasting plasma glucose and weight loss while on LAR. Data from the previously reported DURATION-2 program also demonstrate that once weekly LAR offers greater glycemic control, with an added weight loss benefit over Takeda’s Actos and Merck’s (MRK - Analyst Report) Januvia. Exenatide LAR remains extremely well positioned to capture significant market share in the type-2 diabetes market if it is approved in March 2010.

"If" remains the operative word, however. Lingering concerns over the potential that exenatide causes pancreatitis, and newly found fears on potentially increased risk in C-cell malignant carcinoma of the thyroid in the GLP-1 class, have knocked Byetta (exenatide twice daily injection) significantly down off its previous growth trajectory.

Amylin management presented interim results from a retrospective safety analysis at ADA, seemingly quashing the pancreatitis risk. Data on over 25k patients taking Byetta shows no significant increased risk of developing pancreatitis at the 95% confidence interval. Still, however, the big risk to Amylin’s stock is that FDA may ask for additional data on the LAR formulation prior to granting approval.

Longer-term, intense competition in type-2 diabetes market may limit Amylin’s profitability. In the next few years, the potential exists that we will see up to three more GLP-1 molecules: Novo’s Victoza (liraglutide), Glaxo’s (GSK - Analyst Report) Syncira (albiglutide), and Roche’s Ipsen (taspoglutide), plus another DPP-IV inhibitor in Bristol’s (BMY - Analyst Report) Onglyza (saxagliptin) on the market. We note that Glaxo’s Syncira, currently in the initial stages of a phase III program, is also a once weekly injection.

However, the most concerning potential competitor is Amylin’s current partner on LAR, Eli Lilly (LLY - Analyst Report). At ADA, Lilly presented positive data from a phase II program called GBCJ demonstrating the effectiveness of its own internally developed GLP-1 molecule, LY2189265. LY2189265 is a once-weekly injection a novel-engineered fusion protein, consisting of a dipeptidyl peptidase-IV (DDP-IV) protected GLP-1 analog linked to a fragment of immunoglobulin G4.

Lilly is looking to capitalize on the two newest anti-diabetic classes by  combining them into one molecule. Although LY2189265 is still years away from the market, we question just where Lilly’s loyalty will lie once its own GLP-1 agents are approved and now competing with LAR.

In the meantime, Amylin is focusing on presenting data in support of the LAR NDA, as well as reducing costs and streamlining its organization. Earlier this year, management announced a sales force realignment that resulted in the termination of approximately 200 representatives, or 35% of the sales force. Amylin hopes the newly focused Byetta specialty approach on endocrinologists and diabetes-focused primary care physicians will help improve the efficiency and effectiveness of the alliance with partner Eli Lilly, as well as better position the company for the launch of LAR. Refocusing the efforts on the efficiency and effectiveness of Byetta is a good thing, in our opinion, given all the outside distractions relating to the proxy fight over the past few months.

At the recent shareholder meeting, two large shareholders -- Eastbourne Capital and Carl Icahn -- were successful in getting their own members elected to the Board of Directors. Also, shareholders did not re-elect Joseph C. Cook, Jr., the prior Chairman, and James N. Wilson, Amylin's Lead Independent Director. It is clear that shareholders want a change in direction at Amylin. However, until visibility on LAR improves we continue to see little movement in the stock.