Usually I don't dwell much on Amylin (AMLN), because with at least 15 sell-side analysts covering it and all kinds of press, I don't see that the investing community is clamoring for another opinion. However, as of Monday a few good little obesity calls do seem to be getting lost in the hullabaloo.
Obesity Partnership For AMLN with Takeda
AMLN announced Sunday night (Monday morning, in Japan) that it has partnered with Japan's Takeda (OTCPK:TKPHF) to develop two Phase II injectable weight-loss candidates, some data regarding which AMLN presented in late October at the Obesity Society Annual Meeting. The deal includes two synthetic hormones (AMLN's modus operandi, and arguably its raison d'etre) -- a pramlintide-metreleptin combination and davalintide.
It certainly sounds like a good deal for AMLN. AMLN is to receive $75 million upfront from Takeda, and says future milestone payments (development, commercialization and sales) potentially total over $1 billion. Development costs associated with obtaining US approvals will be split 80% Takeda - 20% AMLN, and Takeda will shoulder 100% of development costs outside the US as well as all commercialization costs.
The products have promise. In Phase II results announced in July, patients in the pramlintide-metreleptin (please, Takeda, help us out and come up with a commercial name for this combo soon) high dose group lost an average of 11% of body weight. Monotherapy groups lost about 5%. (A Phase II trial for davalintide is currently underway and those results are not yet available.)
Based on all this, AMLN shares took off in early trading, and were up almost 15% by noon Monday.
AMLN Won't Eat VVUS's Lunch, Or OREX's, Or ARNA's
Certainly, there should be some first mover advantage to locking up the first major obesity marketing partnership. But let's not send the competitors with late-stage Phase III oral compounds for obesity -- VIVUS (NASDAQ:VVUS), Arena (NASDAQ:ARNA) and Orexigen (NASDAQ:OREX) -- to the back of the lunch line. They all have two big advantages on their side:
1) VVUS, ARNA and OREX have Phase III products, with less risk and less time to market than a Phase II product, even a really extra-super-wonderful Phase II product. Even the plainest vanilla Phase III obesity trial involves a full year of dosing.
2) VVUS, ARNA and OREX are asking patients to take once-daily pills, while AMLN's products are injections. AMLN has argued that since many diabetics take injections anyway, this won't be such a big hump to get over. I'm not convinced. Besides, nowhere near all overweight people are diabetic.
In fact, the AMLN news is arguably good for all the obesity stocks. It shows there is serious interest among major drug companies in marketing obesity drugs. The kind of money we have been talking about evidently is possible. Why would Takeda pay so much for rights to midstage injectable drugs if Takeda were the only game in town? Watch this space.
Disclosure: Long VVUS, ARNA and OREX. No positions in other stocks mentioned.