More good news for Amylin shareholders

More good news for Amylin shareholders

As shares of Amylin (NASDAQ:AMLN) continue to gain momentum, investors are beginning to wonder when or if Lilly (NYSE:LLY) will step up to the plate and make an offer for the company. With sales of their lead drug Byetta accelerating and positive data on the long-acting once a week version of Byetta it would seem Amylin would be a natural fit for Lilly. Lilly’s insulin franchise is facing serious competition from Novo Nordisk (NYSE:NVO) and Sanofi Avnetis (NYSE:SNY), while sales of Actos, an oral medication for type 2 diabetes, are solid, Lilly shares profits with Actos’s maker Takeda. Other than their relationship with Amylin, Lilly’s diabetes pipeline is weak.

One would think with diabetes growing at epidemic rates, Amylin’s solid pipeline and Lilly’s vast experience in the diabetes market that two companies are an excellent fit. Besides diabetes, Amylin has growing presence in the obesity market, another market with huge potential. Even with all this Lilly appears reluctant to make a move.

Perhaps it’s time to consider the possibility of another company making a play for Amylin. After reading through the agreement between Amylin and Lilly, Diabetic Investor found nothing that would prevent such a scenario. (We’ll preface this by saying we are not lawyers. It is possible we’re missing something.) With interest in diabetes growing among every major drug company, Amylin would be a great acquisition.

Lilly is known for its go slow and conservative approach to acquisitions. While other major drug companies have been combining, Lilly has stood out for it’s go it alone strategy. Preferring instead to form strategic alliances rather than buying companies outright. In the case of Amylin this strategy could well backfire if someone else comes along and makes a play for the company. As sales of Byetta prove, physicians are not reluctant to prescribe an injectable drug to their type 2 patients. Something that will only improve when the long-acting version of Byetta becomes available. It’s doubtful without Amylin that Lilly would be able to regain their once dominate position in the diabetes market. The company failed miserably when they did not respond to Novo’s aggressive move into the US and have nothing in their pipeline to compete with Lantus, the long acting insulin from Sanofi Aventis and now the world’s number one selling insulin. Come to think of it maybe Amylin would be better off if another company came along.

David Kliff
Diabetic Investor
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