Amylin Preliminary Results – Is the end or the beginning?

Amylin Preliminary Results – Is the end or the beginning?

According to a press release issued this afternoon by Amylin Pharmaceuticals (NASDAQ:AMLN); “ Amylin Pharmaceuticals, Inc. (Nasdaq: AMLN) today announced that IVS Associates, Inc., the independent Inspector of Elections for the Company’s Annual Meeting of Stockholders held May 27, 2009, has completed its preliminary tabulation of shareholder votes. The preliminary tabulation indicates that shareholders voted to re-elect eight of the Company’s current Directors to Amylin’s Board of Directors –  Adrian Adams,  Steven R. Altman,  Teresa Beck,  Daniel M. Bradbury,  Karin Eastham, Dr.  James R. Gavin III, Dr. Jay S. Skyler, and  Joseph P. Sullivan, as well as voted to elect its two new independent nominees,  Paul N. Clark and  Paulo F. Costa. In addition, Dr.  Kathleen Behrens and Dr.  Alexander J. Denner, Director candidates nominated by Eastbourne Capital Management, L.L.C. and Carl Icahn, respectively, were also elected to the Board.  Joseph C. Cook, Jr., Amylin’s Chairman, and  James N. Wilson, Amylin’s Lead Independent Director, were not re-elected to the Board.

The unanswered question for Amylin is; Is this the end of a truly nasty proxy fight or merely a pause in the fight?

At first glance with Eastbourne and Icahn owning nearly 22% of the company they would not want to rock the boat just as the company enters a critical juncture. Byetta LAR is awaiting approval at the FDA and the company must be laser focused to insure that LAR not only makes through the FDA but is successfully launched. Amylin and their partner Lilly (NYSE:LLY) know all too well what happens when you have a hot drug and bungle the launch. This is exactly what happened when Byetta first hit the market and the company failed to anticipate demand basically running out of Byetta pens so that they could not sample the product. A mistake as it turns out cost the company dearly as it opened the door for Merck (NYSE:MRK) who was launching Januvia at the same time.

The stakes are even higher this time as it quite possible that besides LAR, Liraglutide from Novo Nordisk (NYSE:NVO) will either be on the market already or coming to market just as LAR is being launched. Although LAR has the advantage of once-a-week dosing compared to once daily for Liraglutide Novo has made it clear they will be aggressive in their sale effort. Look for Novo to tout the fact that Liraglutide will likely come with a user-friendly pen delivery device, uses a smaller needle and does not require any mixing. While Diabetic Investor does not believe those factors will trump once weekly dosing they will have to be dealt with by the Amylin/Lilly sales force.

Looking at the results Diabetic Investor believes the major stakeholders felt that the existing management was receptive to the concerns brought up by Icahn and Eastbourne but were not comfortable giving them control of the board with LAR at the FDA. Basically the Amylin management time was given time to make LAR the success it should be with the understanding that with the dissidents on the board they will be watching closely. Simply put now is the time to execute.

Some will make a big deal out of the fact that Joe Cook, Jr. and James Wilson were not re-elected. Considering that the proxy fight went beyond nasty and degraded into personal attacks of these two fine gentlemen, they might just be thankfully for the result.

With just two seats on the board the dissidents would need to garner 5 additional votes to gain a majority, a highly unlikely scenario. More likely they will do what dissidents do, take credit when things go well and scream long and loud when things don’t.

Diabetic Investor believes the loudest statement of all comes from Carl Icahn’s silence. While it’s safe to say he’s unhappy with the results, it’s safer to say that he’s not stupid either. Owning nearly 13 million shares at a cost basis near $22 per share, Icahn will likely remain silent as long as Amylin shares move forward as LAR progresses. As uncomfortable as this will be for him, it would be even more uncomfortable if he complained publicly or dumped his shares which only further damages his investment. With Biogen Idec (NASDAQ:BIIB) now in his sights Carl will have the forum he needs and remain in the public eye.

Amylin and Lilly shouldn’t breathe easy just yet as Icahn’s silence will end with any missteps made. As Sidney Hook noted; “The consequences of a lost chance rarely closes the doors to future choice. But they narrow them to alternatives that are relatively unfavorable in comparison with earlier possibilities.”