Pharmas Market with Mike Huckman

Battling Bets On Byetta

I guess this is what makes a market.

This morning, BMO Capital Markets biotech analyst Jason Zhang downgraded shares of Amylin Pharmaceuticals to the equivalent of "Sell."

On or before March 12th, the FDA is scheduled to decide whether to approve the first once-a-week drug for diabetes. It's a reformulated version of twice-a-day Byetta from AMLN and Lilly . Alkermes provides the technology that makes the Byetta last longer. But Zhang thinks the FDA is going to punt. He tells clients in the research note that he believes the agency will want more data about possible side effects, which will push approval of the drug until mid or late 2011. His call moved the stock, which Zhang now targets as being headed for $12, down from his previous $14.

But on the flip side, biotech analyst Thomas Wei at Jefferies put out a note this morning saying, "We acknowledge a higher chance of approval of (once-a-week Byetta) on March 12 than we had previously factored....We see the risk-reward on AMLN as favorable." He has a $27 target on the shares. Wei's call is based on his conversation with a former senior FDA official. "We were surprised by his assessment that our previous thesis on the need for AMLN to add more thyroid data is unlikely to cause a delay in approval." The thyroid data he's referring to is a problem that was seen only in lab rodents given a similar drug from Novo Nordisk .

Last week, the FDA put off its scheduled decisiondeadline date by one week because of the recent snowstorms that shut down its offices for several days.

The two conflicting analyst calls today are emblematic of an intensifying debate on Wall Street about what the FDA is going to do here. I've covered the beat long enough to know you can't predict such things.

Jefferies makes a market in AMLN and ALKS. BMO makes a market in AMLN.

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