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UPDATE: Lilly, others see stock slide after drug rejection

October 20, 2010
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Stock in Eli Lilly and Co., Amylin Pharmaceuticals Inc. and Alkermes Inc. dropped in trading Wednesday morning after they were rebuffed a second time in a bid to gain U.S. approval of a once-weekly version of the diabetes drug Byetta.

The Food and Drug Administration “blindsided” the companies late Tuesday by calling for a study assessing the heart risks for the new drug, Bydureon, said Phil Nadeau, an analyst with Cowen & Co. in New York.

San Diego-based Amylin was the biggest loser, plunging $10.39, or 50 percent, to $10.10 per share in early-morning trading.
Shares in Indianapolis-based Lilly fell $1.90, or 5 percent, to $35.59 each.

Alkermes shares plummeted 29 percent, or $4.22, to $10.28 apiece.

Had Bydureon been approved, Nadeau estimated 2011 sales of $420 million. The drug now will be delayed by as long as 20 months based on a timetable Amylin outlined in a conference call with analysts, he said.

Amylin CEO Daniel Bradbury said the company has the cash resources to get through the longer time to bring the drug to market.

“It seems like another instance where the FDA surprised a company, and it doesn’t seem like Amylin did anything wrong,” Nadeau said Tuesday by telephone. “Seems like they got blindsided, and that’s happening more and more.”

The agency hadn’t requested new studies when it declined to approve Amylin’s Bydureon application on March 15 and asked for more information about a risk-management plan. Amylin plans to respond to the FDA with the results of the heart-risk research by end of 2011, Bradbury said Tuesday on a conference call.

While Amylin prepares the heart study, Danish competitor Novo Nordisk S/A’s diabetes drug Victoza will gain further market share, Nadeau said.

Lilly markets Byetta outside the United States and co-markets it with Amylin in the U.S. The drug was developed by Amylin, and the technology enabling it to be used in a longer-acting form was developed by Alkermes. Waltham, Mass.-based Alkermes will receive royalties of about 8 percent on Bydureon sales.

Almost 24 million Americans have diabetes, which occurs when people don’t have sufficient amounts of the hormone insulin, or are resistant to it, hampering their ability to convert blood sugar to energy. The FDA requires makers of new diabetes drugs to prove they aren’t tied to an increase in heart attacks and deaths.

The guidelines were released in December 2008 while the agency was facing criticism for failing to recognize the heart risks of GlaxoSmithKline Plc’s Avandia, which was found to increase heart attack risk in 2007 after eight years on the market. Last month, the FDA restricted use of Avandia, once the world’s best-selling diabetes drug. Glaxo is based in London.

Amylin had started producing Bydureon to build inventory in anticipation of an approval, Bradbury said. The excess inventory may be used if the drug is approved in Europe, or in the new clinical trials, he said.

Byetta, a synthetic version of a substance found in the saliva of the Gila monster, stimulates pancreas cells to produce the hormone insulin when blood sugar is high. A twice-daily injection, it had worldwide sales of $796.5 million in 2009.

Byetta is a so-called GLP-1 analogue, a newer class of diabetes medicine that boosts insulin production in patients with Type 2 diabetes. Victoza, a GLP-1 analogue from Novo, was approved Jan. 25 by the FDA with required warnings for thyroid cancer and pancreatitis.

Roche Holding AG of Basel, Switzerland, said Sept. 10 it had told doctors to stop giving its experimental GLP-1 analogue taspoglutide to patients in clinical trials after side effects such as nausea and vomiting led many to drop out of the studies.
 

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