August 26, 2008
Rock and a Hard Place
This evening at 5pm EST Amylin (NASDAQ:AMLN) and Lilly (NYSE:LLY) will conduct a joint conference call to discuss the FDA’s recent actions in regards to Byetta. The question just what can Amylin and Lilly accomplish with this call. After taking a serious beating shares of Amylin have begun to recover regaining some lost ground as investors begin to digest the situation. The feeling appears to be that the FDA over-reacted and that the upcoming submission of the long-acting once-a-week version of Byetta won’t be adversely impacted.
Diabetic Investor does not take issue with this viewpoint and continues to see Byetta LAR as paradigm shifting technology. However, the reality of the situation is that Amylin and Lilly are between the proverbial rock and hard place. Look for today’s call to be worded as delicately as a Presidential candidate response to questions on abortion. While Diabetic Investor believes strongly that the FDA acted irresponsibly, neither Amylin nor Lilly can afford to alienate the agency. With the huge potential for Byetta LAR they just can’t afford any missteps.
It should be noted that this is joint call which should speak volumes to investors concerned about Lilly’s commitment to Amylin and Byetta. Lilly correctly understands that GLP-1 therapy has the potential to become the dominate therapy option for the treatment of type 2 diabetes. They further understand that have the only GLP-1 on the market and the best in class compound with Byetta LAR. While their insulin franchise has shown signs of recovery the fact remains the company needs Byetta LAR to remain a serious player in diabetes.
Listening to this call with great interest will be the people at Novo Nordisk (NYSE:NVO) and Roche both of whom have a GLP-1 under development. Novo already has their once daily GLP-1 Liraglutide before the FDA. Novo for their part are in precarious situation as they cannot take to hard of a stance as they too risk disaffecting the FDA. The sad fact is the FDA controls the keys to the kingdom and like it or not all the companies involved here have no choice but to put up with agency no matter how screwed up it is.
Like GlaxoSmithKline (NYSE:GSK) with Avandia, Amylin and Lilly are in the uncomfortable position of disproving a negative put out in the public domain before it was fully investigated or vetted. In today’s world with instant analysis many have already written off Byetta before even bothering to investigate all the facts. As Diabetic Investor suspected the primary care physician community reaction has been decidedly negative focusing on the headlines. Contrast that to the endocrinologist community where the reaction has been more substantive and less reactionary. Understanding the value of Byetta therapy few if any endocrinologist have publicly stated they would stop prescribing Byetta or take patients off the drug.
While listening to the call this evening keep in the back of your mind something Gandhi once said; “Almost anything you do will be insignificant, but it is very important that you do it.”
