Lilly, Amylin stock rises on drug postponement

Roche Holding AG’s decision to postpone its experimental diabetes drug taspoglutide is turning out to be a boon for
Amylin Pharmaceuticals Inc. and drug partner Eli Lilly and Co., whose twice-weekly injection would compete with Roche’s
once-weekly shot.

Amylin stock rose the most in 14 months in Friday morning trading after the Byetta competitor was delayed over side effects.
Shares rose $2.57, or 16 percent, to $19.09 each as of late morning.

Lilly shares rose 34 cents, to $34.73 each, Friday morning, while Roche stock declined 2.2 percent.

Roche postponed the drug by at least 12 to 18 months after more people than expected had side effects, including skin reactions
and digestive complications. Some patients also experienced heart and respiratory problems, though everyone recovered, the
Basel, Switzerland-based company said Friday in an e-mail.
Roche had planned to ask regulators to approve the diabetes drug, which it licensed from Ipsen SA in 2006, next year.

Byetta is Amylin’s top-selling product with $668 million in sales last year, or 88 percent of total revenue.

Lilly received $449 million from Byetta sales in 2009, up 13 percent from 2008.

“This morning’s news is clearly a positive for Amylin, as it further hobbles taspoglutide, if not removes it
from the competitive landscape entirely,” said Philip Nadeau, an analyst at Cowen & Co. in New York, in a report
to clients. “There would seem to be a good chance that taspoglutide does not make it to market.”

Roche said it needs additional time to identify the people more likely to be sensitive to the medicine and to remove them
from clinical trials.

The delay is a setback for Roche’s efforts to expand outside of cancer drugs, which account for the company’s
three best-selling products and about 50 percent of pharmaceutical sales. The injection would compete with Byetta as well
as Novo Nordisk A/S’s Victoza.

“A delay of 12 to 18 months is not good,” Andrew Weiss, an analyst at Bank Vontobel AG in Zurich, said. “It’s
an important drug for Roche and they need it on the market to balance out the oncology franchise, which is starting to slow
down.”

Roche is seeking to determine which patients are most at risk through a test to identify anti-drug antibodies, which are
the body’s immune response to a medicine and can result in allergic reactions. The company said it will remove patients
whose levels of antibodies exceed a certain level. The incidence of the response, which is common in protein-based medicines,
is less than 1 percent with taspoglutide, Roche said.

“Given the fact that the hypersensitivity is a low event rate, it’s OK, but anti-drug antibodies are something
to be taken seriously,” Weiss said.

Lilly and Amylin have asked the U.S. Food and Drug Administration to approve a once-a-week version of Byetta called Bydureon.
The FDA asked March 15 for clarification of manufacturing processes, labeling and a risk-management plan. Antibodies are also
a concern for Bydureon, Weiss said.

Roche wants to expand beyond its best-selling cancer drugs and take a share of the $24 billion-a-year diabetes market. The
number of people with the condition is expected to rise to 366 million by 2030, according to the World Health Organization.

Taspoglutide is a GLP-1 analogue, a newer class of diabetes medicine that boosts insulin production after meals. The Roche
medicine helped lower blood sugar levels and promote weight loss in late-stage studies of patients with type-2 diabetes.

 

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