Amylin Reports – Approaching the hurdles with caution

Amylin Reports – Approaching the hurdles with caution

Late last year Diabetic Investor outlined the many hurdles facing Amylin (NASDAQ:AMLN). To review these hurdles were:

1.      Label Change for Byetta

2.      Coming competition from Novo Nordisk (NYSE:NVO)

3.      Submitting the long-acting once a week version of Byetta to the FDA

Listening to this evening’s conference call Diabetic Investor came away with the impression that Amylin is approaching these hurdles cautiously and preparing for a worst case scenario. It’s understandable in these uncertain times that any company would try and conserve cash.  No surprise here. It’s equally understandable that Amylin faces even more issues than just how the economy is doing.

Equally unclear is how the FDA will proceed under new, yet unnamed, leadership. As Diabetic Investor pointed out earlier this year the biggest issue facing drug companies isn’t just the poor economic conditions rather how the FDA will move forward with the drug approval process.

Still Diabetic Investor was surprised that company will not be issuing revenue guidance for 2009. Based on what’s known to date Diabetic Investor does not believe the FDA will issue a Black Box warning for Byetta over the pancreatitis issue. Predicting what the FDA will do is never easy and today it’s even more difficult. However, after a careful examination of all public data on the subject Diabetic Investor believes the coming label change for Byetta will be a minor change.

Yes competition is coming but the real question is when. We’ll learn a great deal after the FDA panel meeting for liraglutide in early April. Even with a favorable decision by the panel its unlikely full approval and commercial availability of liraglutide will occur before the third quarter of 2009. There’s an outside shot liraglutide could come to market earlier perhaps by mid-year but its presence shouldn’t have a major impact on Byetta sales. While it’s true Novo will hit the market with all guns blazing Diabetic Investor believes it will take time for the liraglutide to gain traction in the market.

Finally nothing was mentioned today or in the recent past that leads Diabetic Investor to believe that the company won’t be able to hit their stated submission date for Byetta LAR.

Given all this Diabetic Investor is concerned that the company was unable to account for all these factors and issue some type of revenue guidance. Yes we agree that there are multiple scenarios and yes it is possible that the FDA could effectively kill Byetta sales with a Black Box label change, but all public evidence goes against this scenario.

We further agree that Novo will be a formidable competitor, something that Amylin’s partner Lilly (NYSE:LLY) experienced firsthand when Novo overtook Lilly in the insulin market. Yet liraglutide still has a long way to go and approval is by no means a slam dunk.

Lastly, LAR remains the jewel in Amylin’s crown and the company has issued no public comments that would lead anyone to believe that an FDA submission won’t happen by the end of the second quarter.

While it may seem perfectly natural that given all this uncertainty that the company would not issue revenue guidance, however to Diabetic Investor it’s raises our anxiety level. As Sigmund Freud said, “Anxiety is the reaction to danger.”