Wall Street has essentially thrown in the towel lately on Amylin Pharmaceuticals. The shares have plummeted from nearly $30 just three months ago to around $7 today.
But billionaire activist investor Carl Icahn apparently sees the stock as being on sale. At the end of June he held nearly 7,000,000 shares of AMLN . As of September 30th, according to the latest Securities and Exchange Commission filing posted late last week, Icahn owned nearly 11,000,000 shares of the San Diego biotech.
AMLN has been hammered by safety concerns over the diabetes drug, Byetta, which it shares with Eli Lilly , by worries that the companies' experimental once-a-week version of Byetta might have hit some regulatory obstacles and by a competitive threat from Novo Nordisk . Amylin's market value is now less than a billion bucks. Not quite as shocking as the fact that General Motors is now worth only $2 billion, but a huge fall nonetheless.
There's anecdotal evidence that the Byetta safety scare may have subsided. In a research note to clients this morning Lazard Capital Markets analyst Matthew Osbourne reports that based on data from IMS Health , which follows drug sales, prescriptions for Byetta are bouncing back. In the week ending November 7th, total prescriptions for Byetta jumped four percent. But for the first six weeks of the fourth quarter, Byetta business is still down nearly nine percent from the same period a year ago.
David Kliff writes a newsletter called "The Diabetic Investor" and recently started another business venture www.healthyoutcomes.com, a web site for diabetics like himself. He'd been a longtime bull on AMLN, but recently turned a little sour on the company, in particular, over the way it handled the release of the news about the potential delay in the development of once-a-week Byetta. Amylin put it out in an SEC filing. Barring any unforeseen problems, Kliff still thinks that version of the drug could be a multi-billion-dollar blockbuster.
But for years Kliff had been pounding the table that it wasn't a question of if, but when LLY would buy AMLN. Now he wonders, "Who the hell's gonna buy 'em? At this point there's too much risk, too many things could go wrong right now."
But Kliff can't blame Icahn for increasing his stake. "Why not double down when it's cheap? It's a drop in the bucket to him. You're not talking about major amounts of money here," Kliff told me over the phone this morning. For the record, I've asked LLY officials so many times about buying Amylin that I don't even have to call them to bounce this kind of speculation off of a spokesperson anymore. It's become kind of a running joke between us. Every time they say they're happy with their existing relationship with Amylin. But I'll have yet another chance to ask CEO John Lechleiter about that and to probably get the same answer or some variation of it at the company's analyst/investor meeting next month.
In the meantime, Icahn's increased stake is once again encouraging others to follow his lead. The stock's up, albeit on pretty light volume.
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