Amylin Pharmaceuticals, Inc. Q2 2009 Earnings Call Transcript

Jul.22.09 | About: Bristol-Myers Squibb (BMY)

Amylin Pharmaceuticals, Inc. (AMLN) Q2 2009 Earnings Call Transcript July 21, 2009 5:00 PM ET

Executives

Michael York – Senior Director of IR

Daniel Bradbury – President and CEO

Mark Foletta – SVP, Finance and CFO

Vince Mihalik – SVP, Sales and Marketing and Chief Commercial Officer

Analysts

Brent Kelly – Collins Stewart

Thomas Wei – Piper Jaffray

Steve Harr – Morgan Stanley

Mona Ashiya – JP Morgan

Jon LeCroy – Natixis

Craig Gordon – Cowen and Company

Michael York

Good afternoon and welcome to Amylin Pharmaceuticals Quarterly Update Conference Call. Today's discussion will contain forward-looking statements that involve risks and uncertainties. These risks and uncertainties are outlined in today's press release and in our recent filings with the Securities and Exchange Commission. Our actual results could differ materially from what is discussed on today’s call.

Also, we have uploaded a presentation on our website that provides additional background on the quarter.

Let me introduce the other members of the Amylin management team here today. Daniel Bradbury, President and Chief Executive Officer; Mark Foletta, Senior Vice President, Finance and Chief Financial Officer; Vince Mihalik, Senior Vice President, Sales and Marketing and Chief Commercial Officer.

I will now turn the call over to Dan Bradbury.

Daniel Bradbury

Thanks, Michael. This afternoon, our comments will build on the press release issued earlier today and provide additional detail around our progress and performance for the second quarter.

The first half of 2009 has been one of focused execution at Amylin. It has been a productive time at the company, punctuated by the much anticipated announcement that the FDA filed our New Drug Application submission for exenatide once weekly.

Mid last year, we began the process of reshaping our business. Today, we report on the implementation of initiatives we began last year to reposition Amylin to compete and win in the diabetes and obesity markets.

For example, Vince will speak in a few moments to our work to create a new sales force; we deemed it the sales force of the future, and our progress implementing a more efficient and flexible operational structure with our partner Eli Lilly and Company.

These are just two of many changes, large and small, we've undertaken and will continue to undertake. Certainly, many of these actions afford us the near-term benefit of creating cost savings that will help us meet our goal of being cash flow positive from operations by the end of 2010.

We've made significant progress on this front as you'll hear shortly in Mark's comments. Perhaps even more importantly, our decisions reflect Amylin's approach to taking the long-term view on value creation. Investments in our business model are both targeted and purposeful with the intent of developing competitive advantages while maximizing shareholder returns.

Before delving into details, I want to draw your attention to the major highlights of the quarter, as they relate to the five primary areas we are focusing on to create value for Amylin shareholders in 2009.

I outlined these five areas at the start of the year and we'll continue to provide quarterly updates against them. Overall, we have made tremendous progress against key objectives in each of these five areas.

The first area of value creation is BYETTA. Revenue is up quarter-over-quarter and in support of BYETTA, we continue to further strengthen the alliance with Eli Lilly and optimize ExenatideOne team.

In the second quarter, we restructured our sales force in order to grow prescriptions more effectively and efficiently and presented important data supporting efficacy and underscoring the favorable safety profile of BYETTA. This data was presented at the June meeting of the American Diabetes Association.

The second area of value creation is exenatide once weekly. As I mentioned earlier, in the second quarter we submitted the New Drug Application for exenatide once weekly and the Agency has filed the application. Subsequently, we have received the filing Review Issues Letter from FDA, commonly referred to as the 74-Day Letter. Based on our review of the 74-Day Letter, we remain confident in our submission. The FDA has set a PDUFA date in the first quarter of 2010.

In the last few months, we also reported exciting new efficacy and safety data as part of our DURATION series of studies. These studies continue to demonstrate the superiority of exenatide once weekly over currently available therapies.

Now, with this powerful data in hand and progress with the NDA, the ExenatideOne team is in full prelaunch mode and is actively preparing to commercialize exenatide once weekly. Also, with our eye toward the future, we announced the initiation of efforts to develop new product presentations for exenatide once weekly.

The third area of value creation is SYMLIN. Revenue is up modestly quarter-over-quarter, despite challenging economic conditions and we believe that with the increased promotion of SYMLIN by our new specialty sales team we can grow this product in the second half of this year. SYMLIN remains an important addition to the array of treatment options for diabetes available to patients and physicians and a key contributor to our financial results.

The fourth area is our obesity program. We recently announced positive results from our Phase II study of pramlintide/metreleptin that confirmed previous clinical results and further informs our go-forward strategy to develop an obesity medicine.

Lastly, through our deliberate and aggressive actions managing the company, we decreased non-GAAP operating loss for the first half of 2009 by 50% over the same period last year. We remain on track to achieve our stated business objective of generating positive cash flow from operations by the end of 2010.

I will now turn the call over to Mark to review in detail our financial performance for the quarter.

Mark Foletta

Thanks, Dan. I'll start by reviewing selective second quarter results from our earnings release earlier today.

As I have discussed the last several quarters, the key metric to track our financial progress is non-GAAP operating loss. We believe that this metric is the important measure of the performance of our business as it approximates our use of cash for operations before working capital changes as we drive towards our stated goal of positive operating cash flow by the end of 2010.

As a reminder, non-GAAP operating loss is defined as our GAAP operating loss, adjusted for non-cash items, equity compensation, deprecation and amortization and any one-time items such as restructuring charges. Non-GAAP operating loss was $22.4 million compared to $40.3 million for the same period in 2008, a $17.9 million or 45% improvement.

Included in the non-GAAP operating loss was a unique period expense of approximately $5 million for proxy contest related expenses. Excluding these expenses, non-GAAP operating loss improved from the first quarter.

Total revenue was $209.4 million including net product sales of $197.5 million in the second quarter compared to total revenue of $222 million including net product sales of $200.3 million for the same period in 2008.

Product sales in the second quarter were $175.1 million for BYETTA and $22.4 million for SYMLIN. While total prescriptions of BYETTA were comparable to the first quarter, BYETTA product sales increased by 11% over the first quarter. This increase reflects a price action in early April and a slight increase in wholesaler inventories, offsetting a slight decrease we experienced in the first quarter. BYETTA sales in the first quarter were negatively impacted by a $4.4 million reserve associated with the Tricare Retail Pharmacy program for rebates retroactive to 2008.

Cost of goods sold was $24.3 million, reflecting a gross margin of approximately 88%. Selling, general, and administrative expenses decreased to $92.1 million compared to $111.1 million for the same period in 2008. The decrease is primarily attributable to efficiencies driven by our reduced cost structure following recent changes to our operating model. Partially offsetting these decreases were expenses associated with our recent proxy contest.

Our research and development expenses decreased to $63.6 million compared to $75.4 million for the same period in 2008. The decrease in the current quarter is primarily attributable to lower development expenses for exenatide once weekly and BYETTA. Additional expense reductions for our obesity program have been driven by a reduced cost structure following recent changes to our operating model.

Our results for the second quarter included charge of $11.4 million associated with our sales force restructuring, implemented during the quarter and consists primarily of one-time employee separation costs.

Our net loss for the second quarter was $62.4 million or $0.44 per share compared to a net loss of $66.6 million or $0.49 per share for the same period in 2008. Excluding the restructuring charge, net loss was $51 million or $0.36 per share in the second quarter. At quarter-end, we held approximately $644 million of cash, cash equivalents and short-term investments.

I'll now quickly review top and bottom line results for the first half of 2009. Total revenue for the first half of 2009 was $403 million including net product sales of $376.8 million. This includes BYETTA revenue of $332.8 million and SYMLIN revenue of $44 million. This compares to total revenue for the first half of 2008 of $419.3 million including net product sales of $379.1 million, consisting of $336 million for BYETTA and $43.1 million for SYMLIN.

Our reported net loss for the first half of 2009 was $109.3 million or $0.78 per share compared to $137.7 million or $1.01 per share for the same period in 2008. Net loss excluding the restructuring charge in the first half of 2009 was $98 million or $0.70 per share. Most importantly, our measure for operating cash flows, non-GAAP operating loss, was $42.2 million for the first half of 2009, a 50% improvement over the $84.3 million non-GAAP operating loss for the same period last year.

I’d now like to review and update previous financial guidance. We now expect our non-GAAP operating loss to be at the lower end of our previous range of $75 million to $100 million in 2009. This improvement primarily reflects expected savings from our sales force restructuring this quarter, which will also impact our expected GAAP operating loss and GAAP operating expense guidance that I'll discuss in a moment.

Non-cash expenses projected for 2009 are approximately $100 million and consists of $60 million to $65 million of stock-based compensation and approximately $35 million to $40 million of depreciation and amortization. Consistent with the reduction in our expected non-GAAP operating loss, we now anticipate our GAAP operating loss for 2009 to also be at the lower end of our previous range of $175 million to $200 million.

To assist you in understanding the rest of our income statement, I will provide some additional information. We expect collaborative revenue 2009 to be comparable to 2008 and will consist primarily of cost-sharing payments from Lilly for their share of exenatide development expenses.

We expect that our gross margins will remain strong in 2009 at approximately 87% to 89%. And consistent with our prior expense reductions and savings from our sales force restructuring, we now expect our total GAAP operating expenses in 2009 will be at the midpoint of our previous range of $600 million to $625 million.

We believe that selling, general, and administrative expenses for the second half of the year will decrease from our second quarter run rate, which included approximately $5 million of proxy contest related expenses and did not include the full impact of the savings from our sales force restructuring that was implemented in the middle of the quarter.

We also expect that research and development expenses will increase from the second quarter run rate, driven largely by costs necessary to prepare our Ohio facility for the planned launch of exenatide once weekly in 2010. We now expect that net interest expense will improve to $15 million to $20 million for 2009.

To finish up on the cash flow front, we offer the following additional guidance. We expect capital expenditures net of reimbursements from Lilly for their share of the capital investments for the exenatide once weekly pen device to be approximately $125 million in 2009. This is driven largely by activities necessary to complete and validate our Ohio manufacturing facility and spending for the exenatide once weekly pen device. This is down from approximately $300 million of capital spending in 2008.

Maturities of our long-term secured debt will result in payments of approximately $30 million, of which $15 million was paid in the first half of the year. We are continuing to pursue options to offset the research and development expense associated with our obesity and early-stage programs.

The cumulative impact of this guidance suggests that we expect to finish 2009 with a substantial cash balance of approximately $550 million with access to an additional $165 million from the Lilly credit facility. The modest reduction from our first quarter cash guidance is a result of investments that we are making in the exenatide once weekly pen device and prelaunch inventory in preparation for the planned launch of exenatide once weekly in 2010.

Most importantly, I want you to know that driving toward positive cash flow from operations and maintaining a strong cash position are our top priorities in managing the business.

I'd like to now turn the call over to Vince to review our current commercial efforts.

Vince Mihalik

Thank you, Mark. I’ll now provide an update on our commercial activities here at Amylin, starting with the operational advances before diving into progress by product.

Last quarter, I highlighted a marketing and development restructuring named ExenatideOne, which resulted in one integrated team from Amylin and Lilly to drive our plans and address competitive dynamics in the marketplace. As we transform our commercial model, we'll continue to realize the benefits of this new approach over time.

Clearly, ExenatideOne demonstrates both Lilly and Amylin's long-term commitment to the exenatide franchise while creating operating leverage in Amylin's model and contributing to the company's drive to achieve positive cash flow from operations by the end of next year.

Building on the changes from last quarter, we continue to evolve our commercial model in the second quarter. With our recent announcement of the implementation of a new sales model, we are executing a new approach to promoting BYETTA, as we prepare for the launch of exenatide once weekly.

Beginning this month, we merged Amylin's existing primary care and specialty sales forces into a single organization that will bring a more highly trained specialty approach to endocrinologists and diabetes-focused primary care physicians. Our specialty field sales organization now includes approximately 325 sales representatives focused on endocrinologists and other physicians that treat significant numbers of diabetes patients.

Building on our scientific strength, this more focused approach leverages Lilly's expertise and reach with primary care prescribers and has our alliance well positioned to address the information needs of the complex diabetes market.

Our new sales model is designed to move us to where the market is headed given our current and future product mix, especially given declining access to physicians and a demand for more scientifically trained sales team. This specialty team now calls on physicians representing more than 70% of the current BYETTA revenue and greater than 50% of the market basket of all branded diabetes prescriptions.

The concentration of prescriptions in this segment allows us to maximize the efforts of our sales team and enables us to better target the key prescribers and influencers of BYETTA and SYMLIN. Not only is this group currently prescribing BYETTA and SYMLIN, but they are more likely than other physicians to add additional prescriptions.

The changes to Amylin's field sales organization are being coordinated and aligned with the exenatide sales efforts of Lilly. Lilly will continue their efforts within their traditional specialty and larger primary care prescriber markets to support BYETTA and effectively position the companies for the anticipated launch of exenatide once weekly.

Importantly, this new approach optimizes the economics for Amylin. We now have a specialty model focused on promoting two differentiated medicines for diabetes to a concentrated set of targets, thereby leveraging our resources and our investment. In addition to the substantial efficiencies imparted by this model, our refined strategic focus will result in an annualized benefit of approximately $45 million to GAAP operating results in 2010.

Focusing on high quality targeted interactions is consistent with the strategy that Dan mentioned at the beginning of the call, to invest selectively in areas that create competitive advantages. We expect this change to add more value to key health care providers, thus creating a competitive advantage in the diabetes space.

In conjunction with our sales force optimization efforts, we have revised our cost sharing arrangement with Lilly with regard to development and commercialization expenses for the exenatide franchise. This new cost sharing arrangement, coupled with changes resulting from ExenatideOne, will improve operational effectiveness, ease of administration across the alliance, and help to create a more efficient global cost structure for the exenatide franchise.

From a clinical standpoint, we had a strong presence at the ADA, with new data supporting BYETTA and SYMLIN and exenatide once weekly. It is notable that we had more than 30 abstract presentations including five oral presentations, a busy commercial exhibit, and two-packed medical education symposia. This extensive presence speaks to our robust clinical programs in support of our breakthrough medicines. I'll detail key data presented as I provide updates on each product.

Now, let's talk about our results in the second quarter, starting with BYETTA. As a reminder, BYETTA is the first and only FDA approved GLP-1 receptor agonist available on the market. BYETTA occupies a unique place in the treatment of type 2 diabetes by addressing specific unmet needs with the dual benefits of powerful glucose control with potential weight loss, supported by a low risk of hypoglycemia.

Even with the changes within the alliance, sales were up quarter-over-quarter, while total prescriptions of BYETTA were comparable to the first quarter of 2009. We continue to educate the market on the dual challenges of poor glycemic control and obesity, prevalent in the majority of people with type 2 diabetes.

Our intent is to create an overwhelmingly compelling rationale to stop managing A1Cs without considering the impact of therapy on a patient's weight. We are in a unique position to answer this challenge. We continue to be encouraged by the increasing body of evidence supporting the favorable cardiovascular risk profile of exenatide, well described improvements in glycemic control, coupled with positive effects on body weight, blood pressure, and lipids. Lastly, we continue our programs to educate on access. We maintain 85% Tier 2 access for commercial plans, a key consideration given the current economic environment.

Now, let's move on to SYMLIN, the first and only FDA approved Amylin analog. It is our wholly-owned compound that addresses unmet needs for patients with type 1 and type 2 diabetes who use mealtime insulin. SYMLIN reduces blood glucose fluctuations, improving glucose control and causing weight loss.

Revenue was up modestly quarter-over-quarter and the SYMLIN pen, which now represents nearly 70% of all new prescriptions, grew approximately 8% in Q2 2009 compared to Q1 2009.

Additionally, we believe that the improved promotional effort generated for SYMLIN by our new specialty sales model and with new data supporting its profile, we can grow this product even further. It remains an important addition to the array of the treatment options available to patients and physicians and a key contributor to our financial results.

Going forward, I expect prescriptions for SYMLIN to grow as we implement the specialty sales force and move SYMLIN up in the detailing order, following the discontinuation of the CIALIS co-promotion. In fact, our coverage of rapid acting insulin prescribers a surrogate for SYMLIN targets is now higher than ever.

Additionally, I am encouraged by our patient’s support program for SYMLIN, which results in approximately one additional month of persistency for every six months on SYMLIN.

Turning now to exenatide once weekly, Dan highlighted the news regarding the filing acceptance of our NDA. The ExenatideOne team is in full pre-launch mode and is actively preparing to commercialize exenatide once weekly. The results from the closely watched DURATION series of superiority studies are very exciting. We have five ongoing DURATION trials which were designed to make comparisons with the most recently launched and establish therapies in different background settings.

To date, DURATION-1, 2, and 3, all demonstrated superior efficacy in managing A1C compared to four of the leading medicines widely used to treat type 2 diabetes. We were honored that DURATION-1 and 2 were presented at this year’s ADA, with DURATION-2 accepted as a late breaker study further underscoring the importance of these data.

Just yesterday, we announced positive top line results from DURATION-3. The results of this study are significant, because exenatide once weekly elicited greater improvements in glucose control and body weight with fewer reports of hypoglycemia compared to Lantus insulin glargine. We look forward to presenting DURATION-3 data at an upcoming medical meeting.

The results from the DURATION series of studies are clear. Exenatide once weekly’s position to be a transformational medicine in the treatment of type 2 diabetes. As part of the pre-launch activities, the ExenatideOne team is developing programs to leverage the value of this great data towards securing a strong product launch.

I will now turn the call back over to Dan, to discuss additional development activities including our obesity program.

Daniel Bradbury

Thanks Vince. In addition to the positive data and the agency filing this quarter, and with Lilly’s continued investment, in the second quarter, we announced the initiation of efforts to further improve the delivery options of exenatide once weekly. The first initiative is the development of a pen device for exenatide once weekly. And the second program is a suspension formulation.

We have initiated a Phase I, II clinical trial designed to evaluate the pharmacokinetics, tolerability, and safety of exenatide once weekly suspension formulation and expect initial findings of this study by the end of 2009.

In parallel with the investments we are making in exenatide once weekly product presentations, we continue to leverage the potency of exenatide by developing non-injectable delivery options. Phase II development programs for nasal and transdermal delivery presentations are ongoing.

And lastly, based on the positive effect on markers of cardiovascular health reported with BYETTA and in the DURATION program, we look forward to launching a cardiovascular outcomes clinical trial for exenatide once weekly later on this year.

As I mentioned earlier, our obesity program represents the full area of focus on our plan for value creation for Amylin in 2009. Earlier this month, we announced positive results from a 28-week dose ranking study of pramlintide/metreleptin, a combination treatment comprised of pramlintide, an analog of the human hormone amylin and metreleptin an analog of the human hormone leptin in overweight and obese patients. This Phase II study successfully characterized patients who responded best to the treatment and provided important information informing optimal dose selection.

In our other clinical program focused on obesity, we remain on track to complete the davalintide Phase II trial in the fourth quarter of this year. We will finalize our obesity funding and development strategy later this year based on the outcomes of these studies.

In closing, I would like to comment on our 2009 Annual Meeting of Stockholders and election of the Board of Directors. We are pleased to welcome four new Directors to the Board, Kathy Behrens, Paul Clark, Paulo Costa and Alex Denner, and we look forward to working together.

As I noted at the start of the call, we are aggressively executing our business plan and remain focused on those five key areas of value creation, BYETTA, SYMLIN, exenatide once weekly, our obesity programs and achieving positive operating cash flow by the end of next year.

As we move into the second half of the year, we continue to focus on executing with urgency in order to, one, grow BYETTA and SYMLIN revenue; two, gain FDA approval for BYETTA use as monotherapy in type 2 diabetes and finalize the label update; three, advance our pre-launch activities for exenatide once weekly; four, progress the obesity program and finalize our funding strategy; and five, drive toward positive cash flow from operations.

Additionally, I want to underscore that through the changes we have made to our operating model, we’ve continued to deliver improved results reflected in the 50% improvement in our non-GAAP operating loss for the first half of 2009 compared to the first half of 2008 and are building operating leverage into our model.

As I mentioned at the outset of my remarks, we have tremendous momentum coming into the second half of the year and we are charging ahead with a continued sense of urgency to achieve our goals.

I will now ask the operator to open the lines for questions.

Question-and-Answer Session

Operator

(Operator instructions) And our first question comes from the line of Salveen Kochnover with Collins Stewart. Please proceed.

Daniel Bradbury

Hello Salveen.

Brent Kelly – Collins Stewart

Hello. Hi, this is – sorry this is Brent Kelly in for Salveen. Can you just update us on where we stand with the BYETTA monotherapy and label revision for pancreatitis and maybe your interactions in that regard with the FDA?

Daniel Bradbury

Sure, Brent. Hi, good afternoon. Yes, where we stand there is that we are continuing to have interactions with the agency on that. At this time, the agency has received from us a significant body of data with regards to pancreatitis, its prevalence in type 2 diabetes, and in particular, major epidemiology studies relating to pancreatitis and the incidence of it with respect to treatment – other treatments of type 2 diabetes as well as BYETTA. That review is ongoing and we are, I would say, cautiously optimistic that the agency will come to a conclusion in the near future.

Brent Kelly – Collins Stewart

Do you have any indication on what the hold up may be?

Daniel Bradbury

I think the agency is actually taking its time to review all data. I would say that we are very pleased that the agency has continued to be open to receiving new data. As you probably know Brent, a large amount of data was presented this year at the American Diabetes Association meeting, preclinical as well as clinical data. And I think that that data was very helpful with regards to confirming the safety of BYETTA. And I think that it’s important for the agency to continue to understand all that before coming to any conclusions.

Brent Kelly – Collins Stewart

Thank you.

Operator

And our next question comes from the line of Thomas Wei with Piper Jaffray. Please proceed.

Thomas Wei – Piper Jaffray

All right, thanks. I had a couple of questions. But first, just whether or not you could give us a sense of the feedback from the FDA on your day 74 letter and whether or not they said anything about thyroid cancer risk, and then also just wanted to get some extra details around the case of pancreatitis that you saw in DURATION-3. Thanks.

Daniel Bradbury

Hi, Thomas. Good afternoon. Well, as I commented in the script, I think I am very pleased to get the 74 day letter. It was certainly consistent with our expectations. The letter was clear and that there were no deficiencies in the – in the submission. And there were no request for additional preclinical or clinical study in the letter. They did ask for data relating to the 121 day update and consistent with the line extension strategy that we’ve employed as part of our regulatory submission.

The agency also indicated, as I mentioned in my pre – prepared remarks that there would be PDUFA date of the first quarter of 2010. And I think it’s – as I mentioned on the call, we remain confident in the submission now at this point in time. Your second question, I think was relating to the DURATION-3 study. There was a single case of mild pancreatitis in that study. It was in the exenatide once weekly arm.

The patient actually was an individual who’s been on the drug for over four months. The case result within two days of diagnosis importantly at that point there would be therapeutic doses, I should say, therapeutic levels of exenatide in the bloodstream at that time. And so with the resolution occurring within two days, I think that that’s actually very informative with regard to exenatide once weekly.

Thomas Wei – Piper Jaffray

And I am sorry, that that particular patient who’s developed pancreatitis, can you describe how it was determined that it was mild? Was this just based on elevated enzymes or were there clinical symptoms and did that patient discontinue?

Daniel Bradbury

Sure. The patient had symptoms of abdominal pain and vomiting and their lipase level was two times normal. Their amylase level actually was normal.

Thomas Wei – Piper Jaffray

And that patient discontinued therapy.

Daniel Bradbury

They discontinued therapy. But of course, Thomas, as you know, knowing the pharmacokinetics of exenatide once weekly, since they have been on the medicine for over four months, there were full therapeutic levels which would be maintained for a number of weeks following discontinuation of therapy.

Thomas Wei – Piper Jaffray

Thank you. That’s very helpful.

Daniel Bradbury

Thanks, Thomas.

Operator

And our next question comes from the line of Mr. Steve Harr with Morgan Stanley. Please proceed, sir.

Steve Harr – Morgan Stanley

Right, a couple of questions. Number one, as you guys are thinking about your – the size of your commercial infrastructure, how does the outcome for Liraglutide modify, how you think about this? So first off, if there were to be a label change with a warning around thyroid cancer, does that change your view around the size of the GOP1 class? And number two, if the drug is launched or not launched, will you continue to modify your SG&A spend? Second of all, if you can just kind of walk us through what you – when you might expect to see some type of partnership in obesity and what do you – what are the economics and other things are you looking for here?

Daniel Bradbury

Hi, Steve. Maybe in this situation, I will ask Vince to comment with regards to commercial strategy going forward and then I will come back and talk to you about the obesity programs. Vince?

Vince Mihalik

Yes. So Steve, I think you highlighted a very key point here which is what ultimately the label will be for Lira in the US marketplace. But going forward, as we size the commercial structure, we have – we did look at a full Lira label without any black box or constraints on it and we sized appropriately for what we believe the key marketplaces and again I reiterated this in the conservation earlier.

But we are targeting the 35,000 physicians who account for 50% of them, the patient market basket for branded medicines. These are the doctors who are mostly likely to prescribe any new medicine and are the key prescribers for BYETTA and SYMLIN. So that doesn’t change our targeting or frequency on these particular doctors. Obviously a restricted label for Lira just enhances our positioning for the BYETTA molecule. Of course, we remain confident that the – confident in the GOP1 class and its ultimate size.

Daniel Bradbury

Thanks, Vince. Steve, so just a comment on obesity and I thought that – I have been saying pretty consistently for a while now that it’s our intention to look at potential partnerships for later stage development of our obesity programs. That is partnerships are going to be informed by the results of not only the Phase II study that we just reported for pramlintide/metreleptin, but also the ongoing open label study that’s associated with that, as well as the Phase II study for davalintide. We are looking to look at both potential financial partnerships as well as potential development and commercial partnerships. Thank you.

Operator

And our next question comes from the line of Mr. Cory Kasimov with JP Morgan. Please proceed.

Mona Ashiya – JP Morgan

Hi, this is actually Mona for Cory. Two questions, one on the exenatide once weekly NDA, I was wondering if you could share what you expect to include in the 120 day safety update. So for instance, the DURATION-3 data that you just have, is that something that you – it could be used to support the regulatory filing? And – and then again – and then the second question is also related to DURATION-3, this is a question for Vince. Wondering how this alters your marketing message for BYETTA today and LAR in the future particularly in terms of focusing on the injectable market? Thanks.

Daniel Bradbury

Thanks, Mona. Well, just a quick comment with regards to 120 day update. The 120 day update is a very routine part of the regulatory process here. It will consist mainly of an update with regards to safety data and will include safety data from the DURATION-3 study as well as from the DURATION-2 study, and DURATION-2 extension as well as the DURATION-1 study and the DURATION-1 extension as well. So it will be a very comprehensive update of all of our safety data that we have on exenatide once weekly to that point in time. With regards to the impact of the DURATION-3 study on our marketing strategy going forward for exenatide once weekly, I will ask Vince to comment on that.

Vince Mihalik

So Mona, a bit of clarification, I think you said as it relates to how we are doing things today for BYETTA or just for EQW.

Mona Ashiya – JP Morgan

Both actually.

Vince Mihalik

So for EQW, obviously, our intent here is to be able to demonstrate superiority to all the current forms of diabetes drugs that are frequently prescribed today, Januvia, Actose, Lantus, and that's what the series of DURATION trials are attempting to do. So we will continue to follow that through and use that grade data as we build programs around the EQW launch.

So our intent is to show superior efficacy as well as safety given the line extension strategy with – based on the safety and efficacy of BYETTA with the superiority trials that we are going to get with DURATION. As it effects today, I can’t use the DURATION-3 data, but once again, this just reinforces that BYETTA has had a number of head-to-head studies with Lantus and shown superiority. This just reinforces once again here now, we are using EQW when we have superiority insulin. I think it keeps building the case that BYETTA is superior to – superior for those patients who still have some insulin on board, it’s superior in compared to just using insulin.

Mona Ashiya – JP Morgan

Okay, thank you.

Operator

And our next question comes from the line of Jon LeCroy with Natixis. Please proceed.

Jon LeCroy – Natixis

Yes, I just had two quick questions. Thanks for taking my call. First, has the FDA given any indication at all that they want at all that they want to see calcitonin data, which I think you are doing in DURATION-5? And then the other thing is, in your DURATION trials, are patients self administering their weekly BYETTA or is that something that’s done in a clinic with a nurse? And if they are self administering, what percentage of patients are doing that? Thanks.

Daniel Bradbury

Hi, John. Yes. So actually, just I will take your last question first and then comment the first question. In the DURATION-5 study, patients are self administering exenatide once weekly. They are demonstrated to them how to use the product and then they go forward and they are self administering the product. Actually that’s one of the major points of the study is for us to get better understanding of patient compliance and understanding of the instruction program that we put in place for the product at launch.

With regards to your first question, the agency asked, there is a number of routine data request including all the major, I would say, analytes that we would be routinely monitoring. And as I believe, we have mentioned, in fact we mentioned in our quarterly call, we are actually monitoring calcitonin now in all of our ongoing DURATION studies. So the data that we will have available will be submitted as part of the 120 day update.

Jon LeCroy – Natixis

And then just a follow-up, so in DURATION-1 through 5, patients weren’t self administering in those?

Daniel Bradbury

Actually, they were. In DURATION-1, initially they were coming in, because that was the first of the studies they were coming in for the injection. But as they became more – I should say familiar with it, they then went on to self administration. Similarly in DURATION-2 that was the case. In DURATION-3, they went actually straight to self administration and same with DURATION-4.

Jon LeCroy – Natixis

Okay, thanks.

Daniel Bradbury

Thank you.

Operator

(Operator instructions) And our next question comes from the line of Mr. Craig Gordon with Cowen and Company. Please proceed.

Craig Gordon – Cowen and Company

Hi, good evening. Thank you for taking my question. In the DURATION trials, I know that in DURATION-1 through 4, you are now cutting cost of funding. Have you been able to go back to previous samples and measure calcitonin or due to IRB approvals and what not you have not been able to do that?

Daniel Bradbury

I am not the expert on exactly what we are doing in that area at the moment. But what I would say is my understanding is that we are only measuring calcitonin going forward. We haven’t gone back to pull previous samples to measure calcitonin.

Craig Gordon – Cowen and Company

Great. Thank you very much.

Operator

And there are no further questions in queue at this time. At this time, I would like to turn the call back over to your host for closing remarks. Mr. Dan Bradbury, please proceed.

Daniel Bradbury

Well, thanks again for your interest and for your questions today. I want to reinforce that we have a huge opportunity in the second half of this year to continue to advance our mission of discovering, developing and commercializing medicines to improve the lives of patients.

We have a great team here at Amylin and we will continue to push each other to perform at the highest levels, so we can achieve beyond our expectations going forward. If you have any additional questions regarding today’s call, please call Mr. Michael York, our Head of Investor Relations team. Thank you.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. And everyone have a great day.

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