Pin the tail on Amylin

Pin the tail on Amylin

The diabetes community was abuzz this morning when rumors surfaced that Amylin (NASDAQ:AMLN) had rejected a $3.5 Billion takeover bid from Bristol Myers Squibb (NYSE:BMY).  Almost immediately shares of Amylin shot up over 50% and are still trading nearly 40% than yesterdays close. While Diabetic Investor does not believe that Bristol made any “formal” offer for the company, we do believe the two companies may have had some informal discussions. Discussions where terms of a possible takeover bid were thrown around but never put on paper.

Frankly Bristol is just the latest company rumored to be buying Amylin. Besides Bristol Diabetic Investor has heard that Takeda, AstraZeneca (NYSE:AZN), GlaxoSmithKline (NYSE:GSK) and Sanofi (NYSE:SNY) were all interested in buying the company. In all honesty about the only company who’s not rumored to be buying Amylin is the company that should have bought Amylin years ago, Lilly (NYSE:LLY).

The real story here isn’t whether Amylin will be sold; there is no question the company is in play. The real questions are; who will buy them, how much will they pay and can they turn take advantage of Bydureon. Before today’s rumor Diabetic Investor believed that Takeda was the leading contender to acquire Amylin and given the way Amylin’s share price is moving they could well step in and make a real offer before the stock price becomes overinflated. However, it would surprise no one if BMY, GSK or any of the other players stepped in now that the stock is officially in play.

What all these companies want is the opportunity to own Bydureon, Amylin’s once-weekly GLP-1 which recently received FDA approval and is now in the hands of patients. Based on our discussions with physicians who are prescribing the drug and patients using the drug, the Bydureon launch is going pretty much as we suspected it would. The question isn’t whether Bydureon works, the question is will patients tolerate a larger needle size and the fact that Bydureon in its present form needs to be mixed prior to administration; two issues which will go away once the Bydureon pen gets here sometime later this year or early next year.

It’s important to note that it would be foolish to compare the Bydureon launch to the launch of Victoza, the once-daily GLP-1 from Novo Nordisk (NYSE:GSK). Unlike Bydureon Victoza came to market with a pen delivery system and was basically up against Byetta, also delivered via a pen but injected twice a day. Although Bydureon is injected just once a week, it does carry a larger needle than either Byetta or Victoza plus the drug does need to be mixed prior to injection. As Diabetic Investor suspected physicians are testing Bydureon with a select group of patients not necessarily to see if the drug works rather how they tolerate the administering the drug.

Perhaps over-looked in all this anticipation over who will buy Amylin and at what price, is the value of the GLP-1 market. As Diabetic Investor has been stating for some time physicians are increasingly turning to GLP-1 therapy for not just their poorly controlled Type 2 patients but also as first line therapy for their newly diagnosed Type 2 patients. These physicians see the same thing in GLP-1 therapy that Diabetic Investor does; solid glucose control, simple dosing, at minimum weight neutral and a known set of side effects. They also know that while patients may prefer oral medications over an injectable therapy, these physicians also know that patients won’t see better outcomes if they don’t take their pills as prescribed. This is the most compelling argument for Bydureon, as with one simple shot the patients’ diabetes medications are done for the week- and yes it that simple.

While it will be great to watch and see who finally ends up owning Amylin, the bigger story here is the growing impact GLP-1 therapy will have on future sales of insulin and Januvia. From the start Diabetic Investor has noted that as GLP-1 therapy gains acceptance insulin companies who rely on Type 2 patients for sales growth, better be prepared for yet another threat to their core franchises. This is one reason both Novo and Sanofi have GLP-1’s and makes Lilly’s decision to abandon Amylin so strange.

Like everyone else Diabetic Investor is anxious to see who eventually pins the tail on Amylin but not for the same reasons as everyone else. From our perspective Bydureon has the potential to be a paradigm shifting technology and in the hands of a company with a large and experienced sales force could turn the diabetes drug market upside down. Although Diabetic Investor has long been a fan of Amylin, the company without a major partner has yet to successfully launch a major new drug and quite frankly they shouldn’t try. The Amylin team has been through so many ups and downs, riding a roller coaster has become boring for them. It’s time to get off the ride, receive a nice payday and let someone else take Bydureon the rest of the way.