Déjà vu all over again

Déjà vu all over again

Yesterday shares of Amylin (NASDAQ:AMLN) closed at $10.35, back on April 2nd, 2009 shares closed at $10.32.  In between the stock has hit nearly $24 and also dipped below $10. Needless to say shares of Amylin and a rollercoaster ride have lots in common. If Diabetic Investor didn’t know better we just might think that every time the company appears to be on the right track they intentionally shot themselves in the foot.

The most recent example of this came when they announced the results of their DURATION-6 clinical study which was a head to head comparison of their once weekly GLP-1 Bydureon™ and Novo Nordisk (NYSE:NVO) once daily GLP-1 Victoza®. According to a company issued press release issued back on March 3rd;

“Results showed that patients receiving BYDUREON experienced a reduction in A1C of 1.3 percentage points from baseline, compared to a reduction of 1.5 percentage points for Victoza. BYDUREON did not meet the pre-specified primary endpoint of non-inferiority to Victoza.”

Although Diabetic Investor does not see this small difference in results significant and we maintain that patients will prefer once weekly dosing rather than daily dosing, shares of Amylin sank on the news. Perhaps it was just over-confidence but Amylin itself contributed to this decline as the company prior to the release of this data implied Bydureon would beat Victoza. Put another way the company was anticipating a win, when in reality they basically came out with a tie. Unlike previous declines in Amylin which were inflicted by the FDA, this decline is largely due to Amylin.

Not surprisingly Novo has taken full advantage of this and is aggressively touting these results as further proof that Victoza, while administered once daily, is just fine for patients. Their sales reps are also quick to point out that while Bydureon is administered just once weekly it must be mixed and horror of horrors comes with the needle the size of a Titan nuclear missile. Novo is many things but stupid is not one of them. They know everyone believes the needle for Bydureon is huge and they are taking full advantage of this common misconception. They also know that when Bydureon is approved, Amylin with the help of their partner Lilly (NYSE:LLY) will tout once weekly over once daily.

Basically what’s happening here is Novo is trying to dampen the enthusiasm physicians have for Bydureon. Understanding that if they can get enough patients on Victoza, which is a good drug, its unlikely physicians would switch them Bydureon when it arrives.

This could be a case of history repeating itself. Some may recall that when Byetta first came to market the company stumbled when they didn’t have an adequate supply of Byetta and could not sample enough physicians. This stumble allowed Merck (NYSE:MRK), who back then was desperate for a winner, to aggressively promote Januvia. Since Amylin and Lilly could not adequately supply physicians with Byetta they had little choice to put their patients on Januvia. One can only wonder how things would have been different had there been an ample supply of Byetta around when Januvia hit the market.

Diabetic Investor does not believe Januvia would have failed, however something tells us that had the company executed well Byetta would have achieved blockbuster status; giving the company the additional benefit of a larger installed user base who they could easily convert to Bydureon. The reality is we will never know if this would have happened but it does make one wonder what could have been. It also makes one wonder if history will repeat itself.

There is no question here at Diabetic Investor that Bydureon should trump Victoza. Results of DURATION-6 aside, physicians remain anxious to have an effective drug which only needs to be administered once a week. These physicians understand all too well that a major reason why patients are not achieving better control is therapy non-compliance. While once daily administration is a solid step in improving therapy compliance, once weekly leap frogs once daily. The simple fact is Bydureon does not need to outperform Victoza when it comes to lowering HbA1c; it just has to be as good as Victoza at lowering HbA1c. Yes it would have been nice if Bydureon had outperformed Victoza in DURATION-6 but this just would have been icing on an already very tasty cake.

As we have noted previously the GLP-1 market is growing and becoming the next battleground to be fought over. Byetta and now Victoza have proved that physicians are not opposed to prescribing injectable therapy options for their Type 2 patients. Something Diabetic Investor accurately predicted would happen as they were already prescribing Lantus, another injectable, for their Type 2 patients. These same physicians also know from firsthand experience that while they are not opposed to injections the fewer the injections the better. This is the reason Novo and Sanofi-Aventis (NYSE:SNY) are trying to develop insulin’s with longer duration of action so patients don’t need to inject them every day.

Diabetic Investor does not wish to sound like a broken record but the key for Amylin, Lilly and Alkermes (NASDAQ:ALKS) is not whether or not Bydureon works or not, it does, the key is the ability to execute when Bydureon gets here. The simple fact is the trio of companies involved with Bydureon cannot afford another Byetta type blunder. The drug has lots going for it but it won’t sell itself and the competition will use every means possible to protect their turf.

As William Graham Sumner wrote; “A wise rule would be to make up your mind soberly what you want, peace or war, and then to get ready for what you want; for what you prepare for is what you shall get.” Based on the actions taken already by Novo they are preparing for war and thanks to how Amylin handled DURATION-6 they have been given an unexpected gift. This does not mean Amylin cannot recover from this or that Bydureon won’t be successful. What it does mean however, is that Amylin should be preparing for battle or they will let a golden opportunity slip away.