Lilly Drops Inhaled Insulin – What this means for Amylin

Lilly Drops Inhaled Insulin – What this means for Amylin

Today Alkermes (NASDAQ:ALKS) stated they expect Lilly (NYSE:LLY) to terminate their collaboration on inhaled insulin. This now leaves MannKind (NASDAQ:MNKD) as sole player in the inhaled insulin market.

Diabetic Investor sees this news as a positive for Lilly’s other partner, Amylin (NASDAQ:AMLN). By terminating the inhaled insulin project the companies can now concentrate squarely on getting the long-acting once a week version of Byetta to the FDA. It should be noted that Alkermes is also part of the LAR project and is currently building a manufacturing facility in Ohio for LAR.

Over the past few days there has been a great deal of speculation that Amylin was in play. Although Lilly seemed like the most logical player to acquire the company, rumors swirled that Pfizer (NYSE:PFE) was sniffing around Amylin. With $26 billion sitting around in cash many on the Street believed Pfizer would make a major acquisition to help offset the loss of Lipitor revenue. When Pfizer’s CEO stated the company did not have an appetite for a major deal but would consider smaller strategic deals, rumors began circulating they would make an all cash offer for Amylin, effectively using a bear hug strategy.

Diabetic Investor sees this move by Lilly as strong indication of just how valuable LAR is to their long term future in the diabetes market. The realize that Novo Nordisk (NYSE:NVO) and Sanofi-Aventis (NYSE:SNY) will fight to keep their share of the insulin market and both companies have GLP-1’s under development. While they have made major improvements to their insulin delivery systems Lilly knows all too well that better delivery systems alone will not be enough to regain lost share. The reality is Lilly’s future in diabetes is LAR. The company also realizes that with Amylin shares trading at these low levels now is the time to strike.

As for the future of inhaled insulin there is no future. Exubera cost Pfizer billions, Novo terminated their project and now Lilly is betting their diabetes future on LAR. Without a partner it’s difficult seeing Mannkind succeeding on their own no matter how good their insulin works. Frankly it’s difficult seeing MannKind surviving as their inhaled insulin project is all they really have.

Diabetic Investor does not delight in this news but we are amused that all of a sudden the Street is in love with therapies that are delivered via an injection. What happened to the “they won’t use this therapy because it’s injected” mantra? Aren’t these the same people who said Exubera would be a $3 billion product, while Byetta wouldn’t be adopted because patients had to inject the drug twice each day? Keep in mind many of these same people are now doubting LAR, which reminds Diabetic Investor of something John Peers wrote back in 1979:

“The worst thing about stupidity is its insistency.”

David Kliff
Diabetic Investor
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