Amylin Reports – All in with LAR
In the game of Texas Hold’em poker a player can bet all their chips on a single hand, this is known as going all in. Simply put the player is risking everything they have on a single hand, lose and their out the game, win and they double up. With today’s announcement that Amylin (NASDAQ:AMLN) and Lilly (NYSE:LLY) have entered into a supply agreement for the long acting once a week version of Byetta, betting nearly $300 million more that Byetta LAR will reach the market and achieve the mega-blockbuster status many see for the drug.
According to Dan Bradbury, President and Chief Executive Officer of Amylin, “This agreement strengthens our balance sheet and provides us with financial flexibility in the future, while moving us closer to our goal of bringing exenatide once weekly to patients as quickly as possible." Given the way Amylin shares have been performing lately LAR can’t get here quick enough.
The agreement also signals Lilly’s commitment to Amylin and their belief that LAR will be paradigm shifting technology. According to John Lechleiter, Ph.D., Lilly’s President and Chief Executive Officer, “Amylin and Lilly continue to strengthen our exenatide alliance, building on the success of BYETTA®, our first-in-class medicine that has been used by approximately 1 million patients worldwide. With this agreement, we acknowledge Amylin’s commitment in making this important investment to build critical manufacturing capacity."
What both Amylin and Lilly know is that the future of the Byetta franchise rests on the LAR. They are also cognizant of the mistakes that were made when the current version of Byetta was launched. Back then the company couldn’t meet demand and had to curtail sales efforts. Not being able to get product physicians became reluctant to prescribe this powerful new drug fearing patients would not be able to regularly refill their prescriptions. This mistake cost the company dearly as it allowed Januvia to gain traction in the type 2 market. Both Lilly and Amylin have learned from their earlier mistake and want to insure that when LAR gets approved there’s enough product to meet what’s anticipated to be very strong demand.
This agreement should also put to rest fears that the pancreatitis issue will adversely affect LAR’s path to the FDA. According to the company LAR remains on track to be submitted to the FDA before the end of first half of 2009. With liraglutide facing an FDA panel meeting in March of 2009, it’s unlikely that liraglutide would hit the market before LAR goes to the FDA, giving Novo less time to build sales. As Diabetic Investor has stated all along while there will be some physicians who will prescribe liraglutide, many will wait for LAR favoring it’s once weekly dosing to liraglutide which is injected once daily.
Lastly the agreement confirms something Diabetic Investor has been saying consistently, Lilly will eventually acquire Amylin outright just as they did ICOS after Cialis® became successful. Lilly sees the handwriting on the wall and understands that LAR is a game changer. They are also acutely aware that Novo Nordisk (NYSE:NVO) has liraglutide coming to market and the sooner LAR gets to market the better. To Lilly LAR offers the opportunity for a little payback as Novo has become the number one insulin player in a market Lilly once dominated. Like Diabetic Investor, Lilly and Amylin see GLP-1 therapy becoming the dominate choice for treating type 2 diabetes.
With all this focus on LAR one might have forgotten that Amylin still has two approved products on the market and that business won’t stand still until LAR gets here. Based on comments made this evening by the company they are confident that the label change for Byetta will be completed by the end of 2008. They also anticipate a decision from the FDA on approving Byetta as a monotherapy also before the end of 2008. Based on interviews with several respected researchers Diabetic Investor believes the label change will be minor in nature and not the Black Box warning some initially feared. Although Diabetic Investor does not believe the pancreatitis issue will go away completely we do believe it will become much less of an issue with each passing quarter.
Looked at collectively the story for Amylin really hasn’t changed all that much. Even with the established success of Byetta and impressive pipeline everyone knows Amylin’s future rest with LAR. All the chips are on the table and Diabetic Investor believes Amylin has the winning hand.