Amylin Misses Estimates

Amylin Pharmaceuticals (AMLN - Analyst Report) reported a net loss of 32 cents per share in the fourth quarter of 2009, five cents wider than the Zacks Consensus Estimate of 27 cents. The company had reported a net loss of 37 cents in the year-ago quarter. For the full year 2009, net loss came in at $1.20, narrower than the Zacks Consensus Estimate of $1.22 and the year-ago net loss of $1.95.
 
Total revenues for the quarter were $185.5 million, relatively unchanged from the year-ago period’s revenues. Quarterly revenues consisted of $184.3 million in product sales and $1.3 million in collaborative revenues, which consist of the amortization of upfront fees received under the company's collaboration agreements with Eli Lilly (LLY - Analyst Report) and Takeda. Full year total revenues declined 1.5% to $758.4 million. Full year revenues included net product sales of $754 million and collaborative revenues of $4.4 million.
 
From the quarter under discussion, Amylin has started presenting reimbursements received under collaborative agreements for research and development as a reduction of research and development expense. Earlier, these reimbursements used to be presented as revenue under collaborative agreements.
 
Quarterly product revenues comprised $163.7 million in sales of Byetta and $20.6 million in sales of Symlin. Both Byetta and Symlin revenues declined on a sequential basis. Full year Byetta revenues came in at $667.6 million. Amylin is looking to return Byetta to growth now that it is armed with a US Food and Drug Administration (FDA) approval for the use of the drug as a first-line monotherapy for type II diabetes patients.
 
Symlin revenues for the full year were $86.4 million. Amylin’s increased promotional effort behind Symlin should help prescription growth for the candidate to rebound. The company could also strike a partnership deal for Symlin in non-US territories in 2010.
 
Selling, general and administrative (SG&A) expenses for the quarter decreased to $84.2 million from $86.1 million in the year-ago period. The decrease was mainly due to efficiencies driven by the company's reduced cost structure. Full year SG&A spend declined 12.9% to $343.9 million. We expect the SG&A expenses to increase as the company prepares for the launch of exenatide once-weekly, which is currently under FDA review.
 
Research and development (R&D) expenses decreased slightly to $50.2 million in the reported quarter from $50.5 million reported in the prior-year period. The decrease primarily reflects savings driven by the completion of the company's obesity programs, besides efficiencies driven by the company's reduced cost structure. Full year R&D expenses declined 16.8% to $185.1 million.
 
Amylin provided financial guidance for 2010, stating that it expects operating loss to improve. Amylin intends to exit 2010 with positive operating cash flow on a sustainable basis, and expects to achieve profitability in 2011.
 
Going forward, we expect investor focus to remain on Byetta’s performance and the approvability of exenatide once-weekly. Amylin stands to receive a $40 million milestone payment from Eli Lilly on the launch of exenatide once-weekly. A response from the FDA should be out by March 5, 2010. We currently have a Neutral recommendation on Amylin.

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