Amylin Reports – A New Message
Before we get into our analysis of Amylin’s (NASDAQ:AMLN) second quarter results let’s get the big question out of the way. There was no meaningful new news on the possible submission of the once-weekly version of Byetta. While the company has had meetings with the FDA and the results appear encouraging the company is maintaining their position that Byetta LAR will be submitted to the FDA in the first half of 2009 with the possibility of an earlier submission. This possibility of an earlier submission centers around the manufacturing facility being built for LAR. It appears that the question isn’t over the safety or efficacy of LAR, rather can they manufacture the drug on a large scale. This bio-equivalency issue will determine when LAR is submitted to the FDA.
Between now and LAR’s submission the company is revamping their sales efforts for Byetta. From all appearances sales of Byetta has slowed somewhat from earlier levels. To help ramp sales the company is expanding their sales force with a greater emphasis on primary care providers (PCPs). As Diabetic Investor has pointed out on several occasions PCPs treat nearly 80% of the patients with diabetes. Based on the comments made by the company these PCPs are under-educated on the benefits of Byetta therapy. Diabetic Investor has also learned the company has initiated a new compensation package for their sales force.
While Diabetic Investor see this increased emphasis on PCPs as a solid move there are some questions. Now on the market for nearly three years the benefits and drawbacks of Byetta therapy are well known. What may not be well known is Byetta patients fall into three categories, non-responders, glucose control -no weight loss and glucose control plus weight loss. Given all the attention given to the weight loss benefits of Byetta therapy this second group of patients presents the biggest obstacle to Amylin’s new sales strategy.
While Byetta is a diabetes drug and NOT a weight loss drug physicians use weight loss as the primary selling point when converting patients to Byetta therapy. Based on physician interviews they reason that patients will not move to an injectable therapy just for glucose control alone. The problem with this approach is what happens to the patients who fall into the second category where there is glucose control but no weight loss. Looking for weight loss these patients go off Byetta when the weight loss fails to materialize.
Hopefully with this new sales effort Amylin reps can educate PCPs on sustained glucose control and the possibility of weight loss. There is no question that when the data is presented side by side Byetta offers a compelling treatment option. However for Byetta to reach its true potential PCP market penetration is essential. Even if the reps are not successful with the current version of Byetta they will be laying the groundwork for LAR with the PCP community. As good as LAR is the drug will not reach mega-blockbuster status if not accepted by PCPs.
So, as always, when it comes to Amylin the overriding story is LAR and on that front things appear on schedule. Diabetic Investor sees no reason to change our view that at current levels Amylin shares are under-valued.