Amylin Diabetes Drug Disappoints

Includes: ALKS, BMY, LLY
by: The Burrill Report

By Michael Fitzhugh

The U.S. Food and Drug Administration has again rejected Bydureon, Amylin’s (AMLN) once-weekly diabetes treatment, citing safety concerns regarding the drug’s cardiovascular impact, an issue it had not previously raised.

“The first indication that this was an approvability issue for us was receipt of the complete response letter,” Amylin CEO Daniel Bradbury said in an investor call after the FDA’s decision. He suggested that it may have had to do with carry-over effects of recent turmoil over Avandia, and renewed concern over cardiovascular effects of diabetes drugs.

The agency also requested the results of a study that compared the drug to Byetta, a twice-daily injection that contains the same active ingredient as Bydureon.

Investors had widely expected the FDA would approve Bydureon, which would allow people with type 2 diabetes to eliminate the need for daily treatments. The rejection spurred a sell-off of Amylin shares, destroying almost half the company’s pre-announcement share value. Shares of Lilly, Amylin’s partner on the drug, also suffered as investors fretted about the failure.

Bydureon was first rejected in March, when the FDA raised questions about Amylin’s risk evaluation and mitigation strategy and sought clarification regarding its manufacturing processes.

Amylin, Lilly (NYSE:LLY), and their other partner Alkermes (NASDAQ:ALKS), have worked for years to develop Bydureon and had invested millions to prepare for its launch. Amylin capitalized $41 million of pre-approval inventories related to the medicine and Lilly had invested $195 million or more, partly to support the building of a new manufacturing plant for the drug’s production.

The companies hope to submit their reply to FDA’s request by the end of 2011, pending discussions with the agency. Amylin said it expects that the agency would then take six months to review its resubmission.

Orville Kolterman, Amylin’s chief medical officer, says the company remains confident in Bydureon and is committed to working with the FDA to resolve issues raised in the agency’s letter.

Diabetes is among the most common, preventable and costly chronic diseases in the world. Nearly eight percent of people in the United States struggle with it. Globally, some 285 million people, or four percent of the world’s population, live with the disease.