Lilly and Amylin Report – The waiting game continues

Lilly and Amylin Report – The waiting game continues

While both Lilly (NYSE:LLY) and Amylin (NASDAQ:AMLN) are trying to get investors focused on something other than when Bydureon™ will receive full FDA approval, the two companies are just as anxious as investors are for this much awaited for event. Although the companies received some good news last week when the EU commission recommended that Bydureon receive full approval in Europe, the real battle for GLP-1 supremacy won’t come until the product is approved here in the US.

Looking at the numbers it’s obvious that Victoza® from Novo Nordisk (NYSE:NVO) is having an adverse impact on Byetta sales. This makes perfect sense and should provide a glimpse into what Bydureon sales might look like. While there is nothing wrong with Byetta both physicians and patients prefer the once daily administration of Victoza rather than the twice daily administration of Byetta. As Diabetic Investor has noted on several occasions just as once daily administration trumps twice daily so will once weekly trump once daily.

We also believe that many in the investment community are over analyzing the results of DURATION-6. While it’s true that Bydureon did not outperform Victoza, the difference in performance was minimal and not dramatic. The reality is both drugs are very effective at achieving their primary function, lowering glucose levels. They are also both effective at their secondary function, helping patients lose weight. While not every patient will experience significant weight loss data has shown at minimum there will be no weight gain. Diabetic Investor would not go so far as to say the drugs are mirror images of each other but the difference in performance between the two are not great. Therefore the battle for GLP-1 market share will come down to three factors; price, number of injections and execution.

The price question won’t be known until Bydureon is actually approved. Bydureon wins the number of injections area which leaves execution as the key unknown. Given the stakes here Diabetic Investor suspects that Lilly and Amylin are working diligently to avoid the issues they had when Byetta first came to market. They are also well aware that Novo Nordisk is a formidable competitor who will do whatever is needed to defend their turf. It should also be noted that all three companies are aware that there will be more competition entering the market making it even more critical they gain share now. Lilly and Amylin are better positioned here as well given that while there are other long acting GLP-1’s in development they are further behind the many once daily GLP-1’s in development.

Diabetic Investor would also caution investors from placing too great an emphasis on what type of label Bydureon receives. While Lilly officials appeared to indicate that the European label for Bydureon will be favorable, we have seen that the black box warning issued for Victoza has not hurt sales. A clean label is always preferred however the majority of physicians understand that the black box issued for Victoza was more due to an overly cautious FDA rather than a fundamental issue with the drug.

The bottom line here is nothing really has changed and the fate of three companies lies in the hands of the FDA. This may not be comforting news but it is the reality of the situation.