Amylin Finally Gets a Break

Sometimes I wonder if Amylin (Nasdaq: AMLN) management if hugged a black cat while standing on a broken mirror underneath a ladder. In other words, if it were not for bad luck, they would have no luck at all (I am waiting for Amylin Pharmaceuticals - The Country Western Album). But in a rare change of pace, they got a little bit of good news due to bad luck at another company.

Roche (RHHBY.PK) announced today that they are going to be delaying the filing of its diabetes drug taspoglutide (licensed from Ipsen) for at least 12 - 18 months to reevaluate its safety. This comes in the wake of news that a Phase 3 study of this GLP-1 analog showed that some patients developed a hypersensitive response with skin and GI problems, but sometimes cardio and respiratory problems as well. Once the drug was stopped, the symptoms went away.

I give a lot of credit to Roche for dealing with this quickly and relatively decisively. The reactions are not too common (apparently less than 1% of patients), but the company is wise to realize that the FDA itself is hypersensitive these days and it is crucial to come to the agency with clean safety data. Moreover, this is generally part of how Roche does business - they are not a group of cowboys that tries to push through questionable data.

For Amylin, this is certainly a break. Amylin just realized clinical data on its once-weekly Bydureon (taspoglutide is always once-weekly) that demonstrates it likely will not be a first-line therapy. That news hit the stock pretty hard, although I do not understand why people thought it would be a first-line option when metformin is still effective, easy to take, and very cheap. Now, though, one of the major potential competitors is on the shelf a bit longer and may carry concerns or even a warning label into the market assuming it gets approval. Better still, for Amylin that is, Roche's drug may require antibody testing and that little extra inconvenience could be enough to alter market share.

Of course, this is also good news for Novo Nordisk (NYSE: NVO) as this company actually has its Victoza long-acting GLP-1 drug on the market.

I still happen to think that Bydureon has a good chance of becoming the top extended-release GLP-1 drug on the market, even though Victoza is benefiting from being the only game in town right now. I think Bydureon gets approved, and I think its edge in clinical performance will drive strong adoption once it is released. But then, I own Amylin stock so that should be expected (if I did not think they were going to "win", I would sell the stock and buy something else).

All in all, this is no reason to sell Roche (and I am certainly thinking about buying on the dip), but maybe a reason to consider buying Amylin if you do not already own it. The third major player, Novo Nordisk, is a great pharmaceutical company in its own right, but perpetually expensive.