IBJNews

Lilly's ex-partner wins FDA approval for diabetes drug

Back to TopCommentsE-mailPrintBookmark and Share

Amylin Pharmaceuticals Inc. and Alkermes Plc succeeded in their third attempt to gain U.S. clearance for Bydureon, a once-weekly version of Amylin’s diabetes shot.

The Food and Drug Administration approved the drug for adults with Type 2 diabetes, the agency said Friday in a letter posted on their website.

Bydureon is a long-acting form of Byetta, a twice-daily injection that San Diego-based Amylin developed with Eli Lilly and Co. in a partnership that ended last year. Amylin lost almost half its market value on Oct. 20, 2010, after the FDA rejected Bydureon for a second time and sought a study on cardiac effects. The companies refiled for approval last year after the trial didn’t tie the drug to dangerous heart-rhythm changes.

Byetta, the twice-daily shot approved by the FDA in 2005, earned $559 million for Amylin and $151 million for Indianapolis-based Lilly in 2010, according to data compiled by Bloomberg. The two companies ended their decade-long partnership in November to resolve a legal dispute.

Amylin had sued in May to prevent Lilly from using the same sales force to market exenatide and linagliptin, a drug Lilly is developing with Boehringer Ingelheim GmbH.

While Lilly won’t market Bydureon or Byetta in the U.S. under the deal that dissolved the partnership, the company will receive future revenue-sharing payments of as much as $1.2 billion from Amylin for both drugs. Amylin also agreed to make a one-time payment of $250 million to Lilly.

“Bydureon is now the first and only weekly diabetes therapy approved in the United States,” Amylin CEO Daniel Bradbury said on a conference call. The drug will be available in pharmacies next month, he said.

Amylin must complete a post-marketing clinical trial by 2018 to determine whether the treatment increases diabetes patients’ cardiovascular risks, the FDA said in the letter.

Bydureon’s U.S. revenue may surpass $1 billion in 2015, said Robyn Karnauskas, an analyst with Deutsche Bank in New York. Alkermes has said it will receive 8 percent of the drug’s net sales.

“We remain positive on Bydureon but significant execution risk remains,” Karnauskas, who has a “hold” rating on Amylin shares, said Jan. 24 in a note to investors. “We view Amylin’s capital structure as poor, with $2 billion of debt and $210 million in cash. However, more attractive financing options should open up” with FDA approval of the drug.

About 25.8 million people in the U.S. have diabetes, mostly the Type 2 form tied to being overweight and sedentary, according to the Centers for Disease Control and Prevention in Atlanta. The disease costs the nation an estimated $174 billion a year in medical expenses and lost productivity.

Diabetes is caused by an inability to use insulin to break down blood sugar into energy and can increase risks of heart disease, stroke and kidney damage. Medicines are used to reduce blood sugar.

The active ingredient in Byetta and Bydureon, known as exenatide, stimulates pancreas cells to produce insulin when blood sugar is high. It is a synthetic version of a substance found in the saliva of the Gila monster. Bydureon uses technology developed by Alkermes to slowly release exenatide into the bloodstream with one dose a week. The drug won European Commission approval in June.

“Bydureon’s approval in the U.S. will not solve Amylin’s current issues,” said Michael King, an analyst at Rodman & Renshaw in New York who rates the shares “market underperform.”

Amylin took on a “tremendous financial burden” when it severed ties with Lilly and acquired the global marketing rights to exenatide for $1.45 billion, King said in a note to investors. Amylin also faces competition from “established diabetes franchise players” including Bagsvaerd, Denmark-based Novo Nordisk A/S, he said.

Novo Nordisk, the world’s biggest insulin maker, sells Victoza, a once-daily shot that’s in the same medication class as exenatide. Victoza, cleared by the FDA in 2010, earned $413 million that year for the company.

While Bydureon’s weekly dosing may be more convenient for patients, its market potential may be hampered by data from a trial known as Duration-6 that found it didn’t work as well as Victoza, according to a Bloomberg Industries report.

“With staggering debt, questionable execution skills, and the pincers of competition closing in, Amylin could soon be in a fight for its corporate life,” King said. “The only way out, in our view, is if the company quickly re-partners the exenatide franchise, a concept that is not entirely out of the question.”

Primary-care doctors may prefer Bydureon’s weekly dosing to diabetes drugs injected once or twice a day, said Ian Somaiya, an analyst with Piper Jaffray & Co. in New York.

“We believe the market continues to discount Bydureon’s approval and its billion-dollar market opportunity,” Somaiya said Jan. 25 in a note that recommended buying Amylin shares.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
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
ADVERTISEMENT

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 am also a "vet" of several Cirque shows and this one left me flat. It didn't have the amount of acrobatic stunts as the others that I have seen. I am still glad that I went to it and look forward to the next one but I put Varekai as my least favorite.

  2. Looking at the two companies - in spite of their relative size to one another -- Ricker's image is (by all accounts) pretty solid and reputable. Their locations are clean, employees are friendly and the products they offer are reasonably priced. By contrast, BP locations are all over the place and their reputation is poor, especially when you consider this is the same "company" whose disastrous oil spill and their response was nothing short of irresponsible should tell you a lot. The fact you also have people who are experienced in franchising saying their system/strategy is flawed is a good indication that another "spill" has occurred and it's the AM-PM/Ricker's customers/company that are having to deal with it.

  3. Daniel Lilly - Glad to hear about your points and miles. Enjoy Wisconsin and Illinois. You don't care one whit about financial discipline, which is why you will blast the "GOP". Classic liberalism.

  4. Isn't the real reason the terrain? The planners under-estimated the undulating terrain, sink holes, karst features, etc. This portion of the route was flawed from the beginning.

  5. You thought no Indy was bad, how's no fans working out for you? THe IRl No direct competition and still no fans. Hey George Family, spend another billion dollars, that will fix it.

ADVERTISEMENT