Seeking Alpha: Should The Amylin Example Discourage Amarin Shareholders?

One of the biggest decisions in the life of any biotech is whether to keep a promising compound in-house and market it directly, or whether to partner with a larger pharmaceutical company and collect royalties. While there have been a number of notable go-it-alone success stories (including names like Alexion Pharmaceuticals (ALXN), Gilead (GILD), and Amgen (AMGN)), there have also been multiple of examples of companies that essentially shortchanged themselves by marketing a compound on their own.

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Should The Amylin Example Discourage Amarin Shareholders?

Seeking Alpha: AstraZeneca Taking Its Lumps

If investors wonder why I'm so hard on Big Pharma stocks like Lilly (LLY) and Bristol-Myers (BMY), I would offer up AstraZeneca (AZN) as an example. Due to a mix of poor planning and poor luck in the clinic, AstraZeneca is getting walloped by generic competition to key drugs. The company has most definitely opened up its wallet to restock its pipeline, but the cavalry isn't going to arrive for a while yet.

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AstraZeneca Taking Its Lumps

Seeking Alpha: Bristol-Myers No Bargain

While some Big Pharma companies can fairly be accused of being too passive in dealing with upcoming patent expirations and relying too much on cost-cutting to boost numbers, that's not really the case for Bristol-Myers Squibb (BMY). Not only has Bristol-Myers continued to invest in the clinic, but the company has also been an active acquirer in the biotech space. Although Bristol-Myers has respectable growth prospects relative to its peer group, this earnings stream seems fairly valued today.

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Bristol-Myers No Bargain

Seekin Alpha: Novo Nordisk Finally Looks (Slightly) Mortal

To whom much valuation is given, much is expected. That's about the only sense in which Novo Nordisk (NVO) disappointed anybody this quarter. While this highly-focused pharmaceutical company has been enjoying phenomenal success in diabetes, investors may just want to check into the estimates that underpin the valuation before committing their capital to these shares.

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Novo Nordisk Finally Looks (Slightly) Mortal

Seeking Alpha: AstraZeneca Sprinting To Fix Itself

British drug giant AstraZeneca (AZN) has recently been racing to fix the holes in its pipeline created by several high-profile clinical failures. The question for investors is whether the company is at risk of pulling a Wile E. Coyote and running right off the edge of the cliff. Although AstraZeneca has more work to do to fix the near-term outlook, long-term investors may have a brighter future now than just a few months ago.

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AstraZeneca Sprinting To Fix Itself

Seeking Alpha: Lilly's Beat Doesn't Change The Long-Term Dilemma

Investors reacted positively to Lilly's (LLY) first quarter earnings report, but there was actually little in the news that impacts the long-term story here. Pressure on revenue and margins is going to accelerate as the year moves on, and the company has some make-or-break clinical data coming up. While bulls are right that favorable data will push the shares considerably higher, there is a very real chance that this stock could be yielding 6% or 7% in a year's time.

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Lilly's Beat Doesn't Change The Long-Term Dilemma

Seeking Alpha: Will Human Genome End Up Blazing A Trail For Others?

Human Genome Sciences' (HGSI) Benlysta isn't the first would-be blockbuster to disappoint investors with its initial launch, but it's one of the larger disappointments in recent memory. While there is still a good case to make for Benlysta eventually being a successful drug, it's starting to look as though Human Genome and GlaxoSmithKline (GSK) may do all of the heavy lifting and trailblazing in lupus only to ultimately get left behind.

Benlysta - Waiting For Trialing, Or Waiting For Godot?
At the time of its approval, Benlysta was hailed as a multi-billion dollar blockbuster drug in the making. What's more, reading sell-side research would lead one to think that the SEC passed a rule requiring all analysts to mention that Benlysta is the first new drug for lupus in 50 years.

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Will Human Genome End Up Blazing A Trail For Others?

Long Undervalued, Is Alkermes Still A Bargain?

For a large part of its history, Alkermes (ALKS) never quite seemed to get its due from the Street. Given its business plan of helping other pharmaceutical/biotech companies develop drugs in exchange for modest royalties, perhaps that's not so surprising. After all, other drug development names like Nektar (NKTR), PDL BioPharma (PDLI), and Flamel (FLML) really haven't worked out to early expectations.

Things are different now. Not only does the company have a mature portfolio of proven drugs and established technology, but the merger with Elan Drug Technologies has diversified that base in a meaningful way. Better still, the company has an intriguing mix of emerging drugs and a strong pipeline that includes several promising wholly-owned compounds.

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Long Undervalued, Is Alkermes Still A Bargain?

Seeking Alpha: The Rumor Behind Amylin's Spike Makes Sense

Amylin Pharmaceuticals (AMLN) has always been a feast-or-famine sort of stock, as the company has long experience in surmounting the difficulties of dealing with the FDA (Symlin and Bydureon, most notably), competition, and its own now-former partner Lilly (LLY). Although recent prescription data on Bydureon has been disappointing, Wednesday's news from Bloomberg that a Big Pharma buyer had approached Amylin earlier this year had the stock rocketing in response.

Enter The First Rumored Bidder
Bloomberg reported Wednesday morning that unnamed sources claimed that Bristol-Myers Squibb (BMY) approached Amylin's board with a $22 takeout offer, which Amylin's board rejected last week. According to the report, there has been no follow-up from Bristol-Myers and Amylin remains focused on securing a marketing partner for Bydureon in Europe.

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The Rumor Behind Amylin's Spike Makes Sense

Seeking Alpha: GlaxoSmithKline A Good Mix Of Income And Opportunity

There are relatively few drug companies that offer a truly balanced opportunity for investors. In many cases investors have to factor in the risk of significant near-term patent losses or uninspiring (or highly risky) pipelines. GlaxoSmithKline (GSK) is something of an exception in that regard. Although the near-term growth outlook is not blistering, Glaxo offers investors a good mix of capital appreciation potential, dividend income, and pipeline potential.

A Disappointing And Somewhat Confusing End To The Year
Due to a host of charges and items, Glaxo's fourth quarter results were messy and subject to a little more interpretation than usual. What was pretty clear, though, was that sales performance came up lacking. Revenue shrank about 2% in constant currency terms (below the expectation of 1% growth), with a sharp decline in vaccine sales the largest single culprit.

Sales of Advair were okay (though there was little growth), while smaller products like Avodart grew nicely. Glaxo had little to say about much-discussed Benlysta (which it sells under an agreement with Human Genome Sciences (HGSI), and HGSI had previously announced disappointing quarterly sales.

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GlaxoSmithKline: A Good Mix Of Income And Opportunity

Seeking Alpha: Lilly Has Earned Its Lousy Rep

There don't seem to be very many pharmaceutical companies less-liked than Eli Lilly (LLY). There's a long tradition here of blaming others for their problems (the government and prior management teams, especially), designing trials poorly, and generally mismanaging the pipeline to say nothing of the expense structure. Said differently, Lilly doesn't have one of the highest dividend yields in Big Pharma because its payout ratio is high.

A Little Good News In Q4
Against that dour intro, Lilly had a pretty respectable fourth quarter with a few catches. Revenue declined 2% overall as strong volume growth (8%) was buried by price erosion (11%). Pharmaceutical sales fell 4%, with sales in the U.S. down 6% (despite a 11% volume increase). Lilly's good quarter largely came down to strength in the diabetes franchise (which is definitely a positive) and less-than-expected erosion of the now off-patent Zyprexa.

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Lilly Has Earned Its Lousy Rep

Seeking Alpha: The New Amylin - More Risk More Potential

Amylin Pharmaceuticals (Nasdaq: AMLN) will forever be a reminder to biotech investors that blockbuster product approval does not guarantee anything in the market. Once a darling because of its first-in-class GLP-1 analog Byetta for diabetes, Amylin has had a rough go of it in the face of competitive offerings, regulatory setbacks, and internecine wars with a former partner.
For all of the drama, though, there may yet be potential in this battered biotech.

Bydureon – Is Third Time The Charm?
Bydureon, a once-weekly injected drug otherwise similar to Byetta, has long been the crown jewel in Amylin's vault but the company has struggled to bring it to market. Not only did a marketing study comparing Bydureon with Novo Nordisk's (NYSE: NVO) once-daily Victoza fail to show non-inferiority (meaning Victoza works better), but the FDA has twice rejected this drug within the past two years.

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The New Amylin - More Risk, More Potential

Seeking Alpha: Amylin Wins A Battle, But The War Goes On

Amylin (AMLN) shareholders got a much-needed bit of good news Thursday evening, as the company reported that an FDA-mandated cardiac safety study of the company's one-weekly diabetes drug Bydureon reported positive results. With this information in hand, Amylin's partner Lilly (LLY) should be in place to submit a new application with the FDA in the third quarter of 2011 with possible approval in the second half of 2012.

tQT Looks A-Ok
Among the issues cited by the FDA when it rejected Bydureon back in October of 2010 was the risk that exenatide (the active ingredient) might cause QT prolongation. In simple English, the QT interval is the time that it takes the heart to repolarize (or recharge) between beats. If that interval gets too long, a number of bad things can happen to a person – including palpitations, fainting, and sudden death brought about by ventricular fibrillation and cardiac arrest.


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Amylin Wins A Battle, But The War Goes On

Seeking Alpha: Confusing Cross-Currents With Amylin's Data

Biotech investing is known for having more than its fair share of equivocal, confusing, or hard-to-interupt data. That's just really the price for sitting down at the table. The case of Amylin Pharmaceuticals (AMLN) seems to be taking that to a new level, though, and investors can be forgiven for not knowing quite what to do with this one.

Bad News First – DURATION-6
Amylin, along with partners Lilly (LLY) and Alkermes (ALKS) dropped a bombshell on investors last week when they announced disappointing results from the companies' DURATION-6 study of Bydureon, a once-weekly version of Amylin's successful Byetta GLP-1 analog for Type 2 diabetes. The study, designed as a marketing study and not a pivotal clinical trial, was destined to show similar efficacy to Novo Nordisk's (NVO) once-daily Victoza; the idea being that similar efficacy from Bydureon along with a more convenient dosing schedule and softer side-effect profile would establish Bydureon as the market leader if and when it gets approval.

Unfortunately for the AMLN-LLY-ALKS triumverate, it didn't work out that way. This study showed the lowest-ever seen efficacy rate for Bydureon (as measured by HbA1c) at 1.3%, lower than the 1.5% seen for Victoza. While the side-effect profile did look better for Bydureon (less than half as much nausea, vomiting, and diarrhea), the drop-out rates were similar.

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Confusing Cross-Currents With Amylin's Data

Seeking Alpha: Battered But Unbroken Biotechs

Disappointment is a fact of life with biotech investment. While clearly some companies do go on to become Amgen (AMGN) or Gilead (GILD), the roughly 85% failure rate for new experimental drugs means that most companies will eventually fail … or do little more than struggle along from disappointment to disappointment while using even the slightest glimmers of hope to shake down shareholders for more capital.

Despite that somewhat morbid lead-in, the reality is that some biotechs do recover after periods of disappointment and malaise. Current successes like Alexion (ALXN) and Celgene (CELG) had their trials by fire and came back to handsomely reward those who took a chance on them during the dark days. In fact, history has shown that sometimes the best time to buy is after the initial enthusiasm has been wrung out of a stock and management has earned some credit hours from the school of hard knocks.

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http://seekingalpha.com/article/255516-battered-but-unbroken-biotechs?source=mc_all

Please note: I mistakenly listed "Glaxo" as Nektar's partner on the inhaled pneumonia drug, when it should be (is) Bayer. That correction should get made promptly...

Taking A Stab At Valuing Amylin Post-FDA

So, I decided to have a go at valuing Amylin (Nasdaq: AMLN) after this FDA debacle.
I came up with the following model (and I apologize for the formatting):

2010 2011 2012 2013 2014 2015 2016 Byetta 550 385 270 230 180 120 80 Symlin 90 90 90 90 90 90 90 Bydureon 300 750 1000 1250 1500 Total Revenue     640     475     660  1,070  1,270  1,460  1,670 GM% 90% 90% 82% 75% 76% 77% 78% Gross Profit 576.0 427.5 541.2 802.5 965.2 1124.2 1302.6 RD 165 165 165 165 165 165 165 SGA 300 275 325 325 350 375 400 Partner 250 175 200 250 300 400 490 Net inc -139 -187.5 -148.8 62.5 150.2 184.2 247.6 Non-cash 100 100 100 100 100 100 100 OCF -39 -87.5 -48.8 162.5 250.2 284.2 347.6
So, a few points: - I excluded obesity revenue, but I'll get back to that later... - I excluded interest expense (because it is not that significant) - I used $100M in non-cash add-backs as a "plug" - I excluded significant CapEx in the DCF, as I don't see the company needing much... If I plug those numbers into a DCF, and discount the result at 14%, I get a value of $14.50 per share. Amylin has debt, though, and that amounts to about $4.50/share (assuming that they cannot just continue to roll it over or convert it at favorable rates). Now, obesity ... if I assign $1B in total revenue potential to the obesity program and discount it both by the likelihood of approval (25%) and the split between AMLN and Takeda, I get a value somewhere in the $4 range. So, at a bottom line, Amylin should be worth something like $14 today, based on an assumption that Bydureon gets approved in 2012, maxes out at $1.5B/yr, and that obesity contributes about $4 in share value in five years' time and beyond. I realize this is a crude model and a crude approach to the problem, but I figure it's at least an educated guess... Disclosure - I own share of Amylin

I Think I Give Up On The FDA

With tonight's news of Amylin (Nasdaq: AMLN) getting yet another complete response letter (CRL) from the FDA on Bydureon, I am just about ready to give up on the FDA. Even though Bydureon has shown no particular cardiovascular risk, the FDA has decided to ask for a QT study - a request that is going to take at least a year to fulfill (to say nothing of another six months or so for review).

I would love to know why the FDA did not request this back in the first CRL. I cannot stand conspiracy theorizing, but I am beginning to wonder if the FDA has just decided to abandon its supposed mission of evaluating the safety and efficacy of new drugs in favor of just ruling that any and all new drugs are potentially unsafe and therefore unapprovable.

Although I think Amylin has the capital to endure this delay, and I still believe Bydureon is the best drug in its class, I do not know how anybody can just assume that the drug will get approval. It seems clear to me that the FDA does NOT want to approve this drug and will come up with whatever obstacles are necessary to block it.

By the same token, then, this is bad news for any company looking to get a new compound through the FDA. Maybe Big Pharma can still push some compounds through, but it feels like the little companies do not stand a chance.Good luck, then, to Biodel (Nasdaq: BIOD) and its problematic Phase 3 data on Linjeta - if the FDA will not approve Bydureon, I cannot see how Biodel gets through.

I wonder how long this will go on before somebody decides it is time to audit and investigate the FDA and re-examine its mandate. I appreciate and respect the necessity of protecting the public from unsafe drugs, but allowing unmet medical needs to remain unmet simply because of fanciful fears of possible harm does nobody any good. At this point, I argue that the FDA is abusing its mandate and needs a Congressional slap upside the head to remind it of its obligations to facilitate the introduction of new drugs and devices.

Anyways, I do not wish to turn this into a long-winded rant about the FDA, so I will bring this to a close. This is a major disappointment to Amylin shareholders, but it is not the end of the story yet. I still have some hope that this story will work out, but it is definitely going to take longer than I had hoped.

Disclosure - I own shares of Amylin

Avandia Gets A Reprieve?

Apparently the expert panel commissioned by the FDA to evaluate GlaxoSmithKline's (NYSE: GSK) now-controversial diabetes drug Avandia has voted to recommend that the drug stay on the market. The vote, 20-12, is not binding and although the FDA usually does as its panels recommend, they do not always do so - particularly in cases of safety concerns.

As a brief background, Avandia (also known as rosiglitazone), is a gamma PPAR diabetes drug that makes cells more responsive to insulin. Although it is quite effective (reducing HbA1C by 0.5% or more, a nearly 10% improvement in this important diabetes diagnostic marker), some studies have indicated it carries a much higher risk of heart attack and death from cardiac problems than other gamma PPARs or other anti-diabetes drugs in general. The issue has grown with time, precipitating this FDA meeting.

Although Avandia may be allowed to stay on the market, its glory days are almost certainly over. Actos, a rival PPAR drug marketed by Takeda does not seem to have the same risks. Moreover, this whole class has been a sort of pharmaceutical Bermuda Triangle - AstraZeneca, Bristol Myers Squibb, and Daiichi Sankyo have all had serious issues with PPAR drugs they tried to develop, and relatively few compounds are in clinical studies now.

Moreover, there are plenty of other fish in the sea - including GLP-1 analogs (Amylin, Lilly, Roche, Novo Nordisk,  and Glaxo) and DPP-4 inhibitors (Merck) on the market or in late development. Plus, very old drugs like metformin are still reasonably effective and have positive risk-benefit trade-offs.

I am a little surprised to see this result, but as I said, I do not think it will matter too much. Even if the FDA allows the drug to stay on the market, Glaxo is going to have a helluva time driving prescription growth. In the meantime, I have a vested interest here in hoping that Amylin's long-acting GLP-1 analog Bydureon steals the show.

Disclosure - I own shares of Amylin

Brief update: Of the 20 who voted NOT to remove Avandia, 10 want sells restricted and stronger warning labels, 7 want stronger labels but no new restrictions, and three recommended no changes. This breakdown makes me think that further restrictions (at a minimum) are a near-certainty and total withdrawal could still happen. 

Sanofi's Going Shopping?

According to a rumor posted on Bloomberg, Sanofi-aventis (NYSE: SNY) is supposedly closing in on a "major" acquisition in the U.S. Equally supposedly, the talks are in early stages, so plenty could go wrong.

It certainly has the ring of truth, though. Since coming into the top spot, Sanofi's CEO has led the company to 25 acquisitions costing $17 billion (also according to Bloomberg). That's pretty good work for two year's time. Most of those deals were small, though, and added drugs to the pipeline with a long march towards approval. Because of that, the company is still facing some pretty serious revenue hits from upcoming generic competition.

So, even though it's still an early-stage rumor, why not play around with who Sanofi might buy?

First, I'm going to put a range of $20B - $50B on the most Sanofi might be willing to pay.

At that level, Bristol-Myers Squibb (NYSE: BMY) and Lilly (NYSE: LLY) could both be doable, though with little premium. Bristol, though it has an interesting oncology portfolio, has the same problem as Sanofi as the companies are partnered on drugs about to go generic. Likewise, Lilly could see up to 40% of its sales go to generics between now and 2013.

Gilead (Nasdaq: GILD) would give the company a great franchise in HIV/AIDS and an okay pipeline outside of virology (mostly cardiopulmonary). Genzyme (Nasdaq: GENZ) would not make much sense as I don't think Sanofi wants to focus on rare disease. Biogen Idec (Nasdaq: BIIB) is definitely interesting. The company has a strong MS franchise and a good cancer drug, as well as a pretty good collection of Phase 3 candidates and an irritating activist investor (Icahn).

Below that level, you're looking at names like Human Genome Sciences (Nasdaq: HGSI), Amylin (Nasdaq: AMLN), and Incyte (Nasdaq: INCY). HGSI and Amylin would cost less than $10B, and Incyte probably less than $4B. All three have a lot going for them, with interesting drugs very close to the market, but are they big enough? Maybe ... Human Genome has great technology and a good cancer pipeline, and Amylin would definitely expand the company's diabetes business. Incyte, likewise, has a great portfolio and would give Sanofi a host of options, though minimal revenue contribution.

So... my guess(es)? I think Biogen, and Amylin are the best bets. Gilead makes a lot of sense, but a take-out of Gilead would probably cost more than Sanofi wants to spend.

Disclosure - I own shares of Amylin.

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.