Amylin – Byetta off to a strong start

Amylin – Byetta off to a strong start

This afternoon Amylin Pharmaceuticals (NASDAQ:AMLN) announced their second quarter results. Prior to release of the numbers Diabetic Investor felt that Amylin was in a no win situation as no matter what the results were they would not meet Street expectations. Earlier in the day Smith Barnet downgraded Amylin from a buy to sell rating. The main reason given for the downgrade was slower physician acceptance of Byetta. Not surprisingly Amylin shares fell $1.42 or nearly 7%, closing at $20.03.

Diabetic Investor was surprised by the Smith Barney analysis as in our discussions with physicians Byetta was not only widely known, physicians were anticipating adding more patients to the drug. Among the comments shared by physicians was a case where a patient who was previously under poor control was put on Byetta which resulted in a dramatic improvement in glucose levels combined with a 5 pound weight reduction in just two weeks. Not one physician reported any complaints from patients about injections or side effects.

Based on these discussions we came away with the impression that Byetta has a very bright future and could hurt sales of the long-acting insulin Lantus. While it is still early and physicians are not at the point of replacing Lantus, they are choosing Byetta over Lantus for patients not yet on injection therapy. Over time we anticipate patients dropping Lantus and switching to Byetta – the two key factors are simpler dosing and weight loss. Several physicians commented that patients now on Lantus should be relatively easy to convert as they are already used to daily injections of Lantus. The message that came across was that physicians are looking for more ways to use Byetta with their diabetic patient population.

Thus we were not that surprised when the company announced $7.5 million in sales for Byetta for the month of July. A pleasant surprise came with $1.2 million in sales for Amylin’s other diabetes drug Symlin. Although we don’t have high expectations for Symlin, Amylin owns 100% of the drug. Nearly every analysis of Amylin’s future value is based wholly on sales of Byetta and ignores the potential positive aspects from sales of Symlin. Byetta may be the power hitter in Amylin’s lineup but Symlin is no automatic out and will likely provide an occasional extra base hit.

Looking towards the future the company completed enrollment for a Phase 2 multiple-dose study of the once weekly LAR formulation of Byetta and expects to announce results from the study by the end of this year. Additionally the company presented data from a 16 week Phase 2 obesity study of pramlintide (AC137) at the European Congress on Obesity showing a progressive weight loss of 3.6% when compared to the placebo. The results further showed no evidence of plateau in effect at 16 weeks. A new Phase 2 dose-ranging study of the drug is now fully enrolled.

In reality nothing has changed for Amylin in Diabetic Investor eyes and we continue to believe investors should accumulate shares at prices below $25. In the coming quarters look for both Byetta and Symlin sales to accelerate as a greater percentage of physicians learn of the products. New investors should also send a thank you note to Smith Barney for providing a nice buying opportunity.

David Kliff
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224-715-3761 Mobile