Amylin Loss Narrows

Amylin Pharmaceuticals (AMLN - Analyst Report) reported a loss of 19 cents per share in the third quarter, which was narrower than the Zacks Consensus Estimate of a loss of 30 cents. In the prior-year period, the company had incurred a loss of 47 cents. Total revenues for the quarter were $211.2 million, down 3.3% year over year.
 
Revenues consisted of $192.9 million in product sales and $18.3 million in collaborative payments from partner Eli Lilly (LLY - Analyst Report). Product sales comprised $171.1 million in sales of Byetta and $21.8 million in sales of Symlin. Byetta sales declined both on a yearly and sequential basis. The company attributed the sequential decline in Byetta sales to an increase in wholesaler stocking in the previous quarter. We believe Byetta continues to be affected by safety issues surrounding the use of the drug.
 
Selling, general and administrative expenses decreased to $80.1 million from $99.7 million in the same period a year ago. The decrease was mainly due to efficiencies driven by the company's reduced cost structure. We expect SG&A expenses to increase going forward as the company prepares for the launch of exenatide once-weekly, which is currently under U.S. Food and Drug Administration (FDA) review.
 
Research and development expenses decreased to $52.7 million in the reported quarter from $73.5 million in the prior-year period. The decrease primarily reflects lower development expenses for exenatide once-weekly and Byetta, and reduced expenses for the company's obesity programs, and efficiencies driven by the company's reduced cost structure.
 
The company updated its financial guidance for 2009 and now expects operating loss in the range of $60 - $70 million. Amylin was previously expecting operating loss to come in towards the lower end of $75-$100 million.
 
Going forward, we expect investor focus to remain on Byetta’s performance and the approvability of exenatide once-weekly. While we were pleased to hear about the acceptance of the NDA for exenatide once-weekly, we remain concerned that the FDA may ask for additional data before granting final approval.
 
In the meantime, an FDA decision on Byetta as a monotherapy could provide a boost to the shares in the near-term. Looking forward, we are optimistic on the mid-stage obesity pipeline. We currently have a Neutral rating on Amylin.