Dumping Amylin ups stakes for Lilly

Back to TopCommentsE-mailPrintBookmark and Share

Eli Lilly and Co. divorced one diabetes darling in favor of a new flame last week, but no analysts cheered. And a few booed.

Lilly and its San Diego-based partner Amylin Pharmaceuticals Inc. decided to go their separate ways, with Amylin agreeing to pay Lilly to gain full rights to the diabetes medicines Byetta and Bydureon.

Lilly will instead focus on its new diabetes drug Tradjenta, which was developed by Germany-based Boehringer Ingelheim GmbH, as well as three others Lilly and Boehringer are developing together.

The move puts ever more pressure on Lilly’s pipeline to deliver new drugs—something it has struggled mightily to do ever since the approval of Byetta in 2005.

“In our view, today’s news represents yet another pipeline disappointment for LLY,” wrote Jami Rubin, a pharmaceutical analyst for Goldman Sachs Group Inc. She acknowledged that the deal gives Lilly more flexibility than it appeared to have, given the legal contention with Amylin.

“However,” she added, “LLY’s outlook now rests even more on the rest of its pipeline, for which we have seen minimal data.”

The break-up comes after Amylin sued Lilly unsuccessfully this year to force it to use separate sales forces for Byetta and Tradjenta, saying the drugs would compete against each other. Amylin had vowed to keep fighting Lilly even after a federal judge ruled in Lilly’s favor.

The divorce also comes just months before Bydureon’s expected approval in the United States (it was approved earlier this year in Europe). And that spooked investors in Amylin, who traded down the company’s stock price 11 percent on Nov. 8, the day the break-up was announced.

"Did AMLN Just Take Control of a Sinking Ship?” was the title of Collins Stewart analyst Salveen Richter’s report on the deal, which referred to Amylin by its ticker symbol. With the U.S. Food and Drug Administration scheduled to render a ruling on Bydureon on Jan. 28, he wondered if Lilly’s willingness to let go of the product signals that the company has low expectations for its potential.

Byetta was the first of a new series of drugs called glucagon-like peptides, or GLP-1s. Bydureon is based on the same drug compound, exenatide, but is supposed to be more convenient, since it requires an injection only once a week instead of twice a day, as Byetta does.

But in the meantime, Denmark-based Novo Nordisk A/S has launched its own GLP-1, called Victoza, which in clinical trials has shown better results at lowering diabetics’ blood sugar levels than either Byetta or Bydureon. Those developments, as well as FDA concerns about Byetta's contributing to pancreatitis in some patients, have dampened Byetta sales as well as expectations for Bydureon.

Through the first nine months of this year, Byetta and Bydureon recorded worldwide sales of $508 million, down 5 percent from the same period a year earlier.

In its deal with Boehringer Ingelheim, signed in January, Lilly got rights to Tradjenta, an oral diabetes medication, a type that has proved popular with patients. Lilly is also developing another GLP-1, called dulaglutide, which is soon to enter Phase 3 clinical trials and could reach the market within a few years.

Lilly investors largely shrugged about the break-up with Amylin, since Lilly will get a $250 million upfront break-up fee, and royalties up to $1.2 billion over the life of Byetta, Bydureon and one other medicine the two companies were developing.

“Given the comments from LLY, we view this as an essentially neutral financial development for the company,” wrote Deutsche Bank analyst Barbara Ryan, in a Nov. 8 note to investors, referring to LLY by its ticker symbol.

Other analysts thought the deal might be a slight negative for Lilly, but emphasized that clearing up the cloud of litigation is a good thing.


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

  2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

  3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

  4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

  5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?