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I have been recommending Amylin (AMLN) for a long time now. Unfortunately, I recommended this stock when it was higher than current levels, and people who bought this on my recommendation have since been sitting on 10-15% losses. However, I have always believed in this company.

They have partnered with the giant Eli Lilly (NYSE:LLY) and have been working on improving their diabetes drug, including a dosage that would need to be taken only once a week. Additionally, the company has obesity drugs in their pipeline, which makes them an attractive takeover target.

A recent study conducted by Amylin and Eli Lilly showed that diabetics taking the blood-sugar drug Byetta had about one-sixth the risk of hypoglycemia, compared to those taking insulin.

The market for diabetes is huge, but Amylin, after a huge run in 2005, has been flat for 18 months. The short ratio on the stock is around 17% and with triple digit quarterly revenue growth, the stock is poised for a move. I still like the stock at current levels even if there is no buy-out.

AMLN/LLY 1-yr comparison chart

amln

Disclosure: I do not own AMLN but my position can change anytime without notice.

Source: Amylin Pharmaceuticals: Poised For A Move