The many moving parts of the Amylin deal
Even before Amylin (NASDAQ:AMLN) released their earnings this morning the company became more valuable. First word has come that Carl Icahn has decided to play nice for the moment dropping his lawsuit against the company. Next the FDA has decided not to approve alogliptin, a DPP-4 inhibitor from Takeda, instead issuing a complete response letter. Also late yesterday AstraZeneca (NYSE:AZN) announced their CEO would retire rather than face angry shareholders upset over the company’s recent performance.
This is new world that Amylin investors will live in now that company is officially in play. Once again as everyone waited for the approval of Bydureon and focused less on company performance, the current situation is parallel expect now everyone is waiting to see who buys the company and how much they will pay. Rather than analyze Bydureon sales numbers, $6.9 million for the quarter just in case anyone cares, moves outside the company will have as much, if not more influence on the company’s share price.
While several names are being thrown around as potential suitors for the company, Diabetic Investor continues to believe that the eventually winner will be somewhat of a surprise candidate, a company that does not currently seem to be in the mix. Bristol Myers Squibb (NYSE:BMY) who reports later this morning, AstraZeneca who reported earlier this morning, Takeda and Merck (NYSE:MRK) who reports tomorrow morning are the names most frequently thrown around as the leading candidates to buy Amylin. Of that group Diabetic Investor would pick Takeda as the company most desperate to improve their diabetes portfolio, which has experience in the space (Actos) and has somewhat of a relationship with Amylin. Given the upheaval at AstraZeneca, it would be unlikely that the company could find a new CEO and do a deal at the same time. With Januvia continuing to gain share Diabetic Investor views it as unlikely that Merck would step in and own a drug that would take share away from their blockbuster. BMS has the experience in diabetes, has seen what it’s like to be second to market in a growing category (Onglyza vs. Januvia) and seems to be interested in the company given their already rumored bid; still Diabetic Investor isn’t convinced they are a good fit which is one reason Amylin said thanks but no thanks.
Although the subject did not come up yesterday Diabetic Investor continues to believe that GlaxoSmithKline (NYSE:GSK), who reported yesterday, is a viable outsider as well as Sanofi (NYSE:SNY) who reports tomorrow morning. While both companies have a GLP- 1 in their respective pipelines GSK’s is years away and Sanofi’s is a once-daily, Victoza copycat. Sanofi also has the added incentive that their lead diabetes product Lantus will lose patent protection in 2014. Diabetic Investor would also give Sanofi a leg up given their experience with Lantus as it too is a long acting drug which is delivered via injection. Considering their current portfolio of diabetes drugs and what’s in their pipeline, Bydureon would be a sound strategic addition as well. Yet even with these potential synergies one has to wonder if Sanofi has the appetite for a diabetes deal as they are in the midst of trying to execute their ambitious strategy which frankly isn’t going that well.
A true off the wall candidate would be Johnson and Johnson (NYSE:JNJ) as the company is currently deciding what to do with their existing diabetes franchises, LifeScan and Animas. Still the company cannot be dismissed given their well-known appetite for doing deals. Obviously JNJ has the requisite diabetes experience although there is a huge gap between selling diabetes devices and an injectable medication such as Bydureon. Looking at JNJ Diabetic Investor does not believe it’s a matter of money but more a matter of how deeply JNJ wants to remain in the diabetes space and do they want to move beyond diabetes devices.
The bottom line for Amylin is they are now the bell of the ball and the field is rich with possible suitors. The company also has the added incentive of pleasing Mr. Icahn who will surly complain long and loud if the sale price isn’t to his liking. (Frankly Diabetic Investor believes Mr. Icahn will complain no matter what as this is his nature and that it would be major miracle if he would keep his mouth shut.) Although it’s taken much longer than Diabetic Investor anticipated one thing is certain we are approaching the final phase of Amylin’s life as an independent company. Just one more hurdle to clear.
