Abbott Completes KOS Acquisition, Amylin Implications

Abbott Completes KOS Acquisition, Amylin Implications

With Abbott (NYSE:ABT) set to close their acquisition of Kos Pharmaceuticals (NASDAQ:KOSP) in the next few days attention is turning towards Pfizer (NYSE:PFE) and what they might do next. It had been speculated that Pfizer might try and trump Abbott’s bid for Kos. Since Pfizer announced they had stopped development of a key cholesterol drug the Street has been filled with rumors on which company they would acquire to bolster their weak pipeline and help offset the coming loss of Lipitor’s patent. Pfizer has a history of making major acquisitions and has the resources to complete almost any deal.

Last week Lilly (NYSE:LLY) held their investor day and appeared to have mixed feelings about their relationship with Amylin (NASDAQ:AMLN). Amylin shares have been under pressure since Januvia, a DPP-4 from Merck (NYSE:MRK) used to treat type 2 diabetes, came onto the market. Januvia is off to strong start and many see the drug as threat to Byetta. While Januvia initially appeared to have an impact on new Byetta prescriptions recent data suggests that Byetta prescriptions are back on track. Diabetic Investor does not see Januvia as a threat to Byetta and believes the drug will have a greater impact on sales of Avandia and Actos.

Based on Lilly’s lackluster support for Amylin and their pending acquisition of Icos (NASDAQ:ICOS) it appears any deal to acquire Amylin is on hold. This opens the door for Pfizer to come in and make a play for Amylin while the stock is under pressure. Although Amylin’s pipeline does not include any drugs that would compliment Pfizer’s string presence in cholesterol, the pipeline does include the long-acting once-a-week version of Byetta, Byetta LAR, which should hit the market about the same time Lipitor, would be facing generic competition. Diabetic Investor does not expect Byetta LAR to reach the mega-blockbuster status of Lipitor; the drug does have blockbuster potential and will be a paradigm shifting drug for the treatment of type 2 diabetes.

Based on recent data it also appears the Acomplia from Sanofi-Aventis (NYSE:SNY) another potential Byetta competitor will face a difficult task gaining physician attention should the drug receive approval. At the recent IDF World Diabetes Conference the company released study results where over 17% of the participants did not complete the study due to Acomplia’s adverse event profile.

Byetta is already well on its way to becoming a billion dollar drug and Byetta LAR is moving nicely through clinical trials. Amylin also has Symlin for the treatment of Type 1 diabetes which after a lackluster start is gaining momentum. Looking towards the future Amylin’s pipeline, besides Byetta LAR, contains several promising diabetes, cardiovascular and obesity drugs. Diabetic Investor has long maintained that Amylin is the most valuable property in the diabetes sector and we see no reason to move away from that stance. We look at the recent sell off in the stock as buying opportunity for long-term investors. With all that’s going on long-term may not be that far away.

David Kliff
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