Novo Reports, More Amylin Developments
It seems these days that Novo Nordisk (NYSE:NVO) who reported first quarter results today and Amylin Pharmaceuticals (NASDAQ:AMLN) who has made several notable announcements in the past few days, are joined at the hip. It’s next to impossible to discuss one company without mentioning the other. With Novo pursuing approval of their GLP-1 liraglutide at the FDA and Amylin getting set to submit the long-acting once-a-week version of Byetta to the FDA before the end of June, the two companies at least for the near term are linked.
With all the discussion regarding the status of liraglutide at the FDA, Novo’s subpar results almost went unnoticed. Although sales increased by nearly 18% in the quarter, sales growth is slowing and there even signs of share erosion in their core insulin business. Diabetic Investor isn’t overly concerned with the slowing growth rate given Novo’s global insulin dominance. Chalk this up to the law of large numbers and not a fundamental problem with the unit.
More importantly Novo shed some additional light on the status of liraglutide and added some insight into the role GLP-1 therapy will play in the future. According to the company they will soon meet with the FDA to discuss what comes next with liraglutide. In typical Novo fashion the company noted they will bring with them a strong body of evidence to alleviate concerns the agency has over liraglutide and thyroid cancer. The company stressed that they see the delay at the FDA being solved in a matter of months and not years. However, listening closely to the questions and answers it’s rather obvious that the company does not expect liraglutide to be approved before the end of the year. This would be a serious blow to the company as the drug would most likely hit the market, if approved, about the same time as Byetta LAR.
The company also continued their assertion that the C-cell issue which appeared with liraglutide is a class effect applying to all GLP-1’s and not just liraglutide. This issue came up when asked about their once-weekly version of liraglutide, semaglutide which just completed phase 2 trials. Not surprisingly analysts want to know if the c-cell issue which has delayed liraglutide was also present with semaglutide. While doing their best to dance around the question the company indicated that c-cell formation is present with all GLP-1’s, which leads Diabetic Investor to believe the c-cell issue is present with semaglutide. Perhaps this is the reason the company could not provide more detail on when, or if, semaglutide will move on to Phase 3 trials, deferring to their next earnings call coming in early August to provide an update.
Before we move onto to developments at Amylin it’s important to note that Novo’s claim that this c-cell issue is a class effect among all GLP-1’s has been vigorously disputed not just by Amylin but Roche who also has a long acting GLP-1 under development. The rube here is whether or not c-cell formation occurs in both rats and mice or just rats or mice. Novo is correct that in some respects c-cell formation for GLP-1’s is a class effect in that it has appeared in one species with other compounds. However, to our knowledge liraglutide is the only compound that shows c-cell formation in both rats and mice, male and female.
With each statement Novo makes their strategy with liraglutide is becoming crystal clear. First, create the impression that c-cell formation is a class effect, a statement that is only partially accurate. Second, this issue really doesn’t matter as a European panel looked at the data and recommend approval of liraglutide. However, should the issue derail liraglutide at the FDA they have created the impression that there may be an issue with all GLP-1’s and have protected their insulin franchise.
Now moving onto to Amylin yesterday the company issued the following statement; “Amylin has agreed with affiliates of Carl Icahn and with Eastbourne Capital Management, L.L.C. to allow each of them to engage in discussions with the other for the sole purpose of facilitating a settlement of the proxy contest.” This statement comes after Eastbourne issued the following press release last Firiday,
“Eastbourne Capital Management, L.L.C. (“Eastbourne”) today provided the following comment on recent developments in connection with its solicitation of proxies in support of the election of its five proposed nominees to the 12 member Board of Directors of Amylin Pharmaceuticals, Inc. (“Amylin”) (NASDAQ: AMLN) at the Company’s 2009 Annual Meeting of Shareholders:
Rick Barry, Eastbourne Founder and Portfolio Manager, commented, “We believe that Amylin’s current Board and management is mischaracterizing our reasons for pursuing significant change to Amylin’s leadership and we urge shareholders not to be distracted. We believe that the massive loss of shareholder value Amylin shareholders have suffered stems from the Company’s failure to maximize the commercial value of Amylin’s assets. The Board in place during this period should, in our view, bear responsibility for what has gone on at Amylin. It is our strong belief that the upcoming product launch of Exenatide Once-Weekly is Amylin’s best chance for commercial success. We have no confidence that the current Board as a group can provide the leadership to successfully deliver on the Company’s commercial capabilities at this critical juncture. We believe that two new director nominees selected by the incumbent Board, in the absence of further change to the Board, will not adequately address our concerns about the Board functioning.”
Added Barry, “We also note that in the absence of a waiver of the Company’s poison pill to allow Eastbourne and Mr. Icahn to discuss a unified minority slate of non-management director nominees, Mr. Icahn has filed amended proxy materials indicating his intention to solicit proxies in support of the election of three of his nominees and to seek authority to vote for two of the Eastbourne nominees. We believe Mr. Icahn’s decision advances the goal of electing a substantial number of shareholder selected directors drawn from both non-management slates, which would nevertheless represent only a minority of the Board if elected. Eastbourne is determined to present shareholders with the best opportunity to enact change to the Amylin Board and will make a final determination whether and to what extent to seek authority to vote for Mr. Icahn’s nominees in light of future developments, including further actions by the Company or by Mr. Icahn, views expressed by stockholders or by proxy advisory services in meetings we expect to have and taking into account developments in the pending Delaware lawsuit.”
Eastbourne currently owns approximately 12.5% of Amylin’s outstanding shares.”
It should also be noted that Amylin is headed to court next week. The lawsuit, filed March 24 by the San Antonio Fire & Police Pension Fund, said Amylin’s takeover defense may lead to “financial chaos.” Under the provision, or “proxy puts,” only the current Amylin board can change a majority of directors without adverse consequences to the company. The board can choose to approve a shareholder’s director nomination without triggering the defense, according to court documents.
To help subscribers get a glimpse of what goes on in the courtroom Diabetic Investor has hooked up with Courtroom View Network, who will webcast the full trail for live and on demand viewing at http://www.courtroomview.com/proceedings/police-fund-v-bradbury-amylin-trial-2009-05-04.
The impact of the judge’s decision will likely be felt at Amylin’s Annual Meeting on May 27th, which Diabetic Investor will be attending. Realizing the importance of this meeting Amylin is allowing the meeting normally limited to shareholders, to be covered by the media. Given the rather contentious nature of the proxy fight this should be one of the more interesting annual meetings in recent memory.
With the ongoing battle over Amylin’s board one just might forget that they do have a business to run. Thankfully the company and their partner Eli Lilly (NYSE:LLY) have not lost sight of this as they announced yesterday plans to develop a pen to deliver Byetta LAR. According to a joint press release,
“Amylin and Lilly have agreed in principle to cooperate in the development, manufacturing and marketing of exenatide once weekly in a dual chamber cartridge pen configuration. This design will enable patients to mix and administer exenatide once weekly from a pre-filled pen device, instead of the syringe and vial currently used in clinical trials. The companies will share the capital and development costs of the pen, including the initial capital investment of approximately
Diabetic Investor has learned that Ypsomed will supply the pen, while Vetter Pharma will supply the cartridges for the pen. Unlike the current version of Byetta which requires no mixing, patients using the current version of LAR will need to mix the product before administration. While this has not been an overly burdensome task during clinical trials, Amylin and Lilly understand the importance of patient friendly delivery systems. A more patient friendly deliver device only enhances Byetta LAR’s huge potential.
Diabetic Investor has seen the pen device which requires the patient to perform three simple steps- mix, prime and inject. The LAR pen is much more patient friendly than the syringe and vial approach used currently. This move should also send a serious message to Novo, who currently has the best insulin delivery systems available. Many, including Diabetic Investor, felt that Novo long known for their great delivery systems might have an edge with liraglutide over Byetta based on the delivery system alone. Once-daily dosing plus a user friendly delivery system would likely trump twice daily dosing and a rather poorly designed delivery device.
This news shows Diabetic Investor that Lilly has learned a valuable lesson and doesn’t want history to repeat itself. Although Novo’s superior delivery systems were not the only factor that allowed the company to crush Lilly in the insulin market, they were a contributing factor. Using their experience in Europe and Asia where 80% of insulin patients use an insulin pen, Novo correctly pushed for greater pen usage in the US market. Lilly eventually realized the errors of their ways and completely revamped their line of insulin pens but by then it was too late.
Understanding that LAR has mega-blockbuster written all over it and seeing that Roche and Novo also have long-acting GLP-1’s in their pipelines, Lilly and Amylin aren’t taking any chances. They know they can get away with the syringe and vial method when LAR has no competition but a user friendly delivery is required if they are to blunt the coming competition. As we have seen with insulin market, delivery systems matter just asked the good folks at Pfizer (NYSE:PFE) and their wonderful experience with Exubera’s poorly designed delivery device.
Finally as a reminder to everyone the next few weeks will be packed with information as the summer show begins May 13 with the American Association of Clinical Endocrinologists (AACE), this will followed by the Amylin Annual Meeting May 27th which is turn will be followed by the American Diabetes Association Annual Scientific Sessions starting June 5th. As per has become our custom Diabetic Investor will be reporting daily from the shows and is now accepting requests for meetings. If this year is anything at all like last year, and we think it will worse, get your meeting requests in early as our schedule fills up quickly.
