Yesterday Amylin (NASDAQ:AMLN) announced they were reducing their workforce by 25%, laying off 340 employees at their San Diego headquarters. According to the company this move will save the company more than $100 million in 2009. Dan Bradbury, Chief Executive of Amylin, stated “The purpose of the reorganization is to really put us in a stronger position as a company to execute our business plan and become cash flow positive by 2010.”
Amylin shares have suffered mightily this year down nearly 80% as the company has experienced a series of setbacks with both their lead drug Byetta and its future version, Byetta LAR. As Diabetic Investor pointed out last Thursday the future outlook for the company appears cloudy given the hurdles they must overcome. However, this is not the first time the company has experienced problems that lead many to believe the company would not make it.
Back when Byetta was going through the regulatory process many believed there was no way an injectable drug would be widely adopted by type 2 patients. More than one analyst stated that patients used to taking oral medications would never switch to a drug that needed to be injected twice each day. They believed that physicians would be reluctant to prescribe Byetta when they had a host of oral medications to choose from. They reasoned that if a physician were to move their type 2 patients to an injectable therapy regimen insulin would be the logical choice.
Diabetic Investor stood as the lone voice in the wilderness stating that physicians and patients would embrace this new therapy given Byetta’s strong profile and proven ability promoting weight loss. Once again Diabetic Investor was correct as Byetta sales quickly accelerated after approval and appeared to be headed for blockbuster status.
The reality for Amylin and its partner Lilly (NYSE:LLY) is that the problems they are now experiencing have for the most part been self-inflicted. While it’s true the FDA actions over the pancreatitis issue blindsided the companies, their response to this crisis only contributed to the problem. Diabetic Investor understood that they could not directly take on the FDA yet, they did little to reassure physicians and patients that this issue was overblown.
That being said Amylin has risen from the ashes before and may do so again. Even with the recent setback Diabetic Investor sees the long-acting once-a-week version of Byetta, Byetta LAR, as game changing technology. Based on all available data no one could logically argue that LAR won’t be a blockbuster. Besides its powerful profile of strong glycemic control and weight loss capabilities the once-a-week dosing regimen is exactly what physicians and patients are looking for.
The road ahead won’t be easy as there are many obstacles to overcome. However, having covered Amylin for many years Diabetic Investor has seen the company execute the comeback rally more than once. As it has been said many times it’s always darkest before the dawn.