Cinco de Mayo Para Byetta

Fiesta time started a little earlier than expected for investors in Eli Lilly, Amylin Pharmaceuticals and Alkermes. The companies had said they would file for Food and Drug Administration approval of the once-a-week version of the diabetes drug Byetta in the second quarter, but most analysts thought that meant June.

This morning the trio announcedthey're doing it today. An earlier-than-anticipated filing might mean the timeline for potential agency approval of the drug also gets moved up. Most seem to think a decision could come early next year. But as "Diabetic Investor" newsletter editor David Kliff told me, "God knows when with the FDA these days."

Separately, late yesterday AMLN announcedit's laying off even more Byetta salespeople. And it tweaked the financial terms of its partnership with LLY. JPMorgan biotech analyst Cory Kasimov writes in a research note to clients, "This news should squelch any hopes for a near-term acquisition of AMLN by LLY." JPM has done and wants to do more investment banking for Amylin and it makes a market in the stock.

Kasimov also raises another interesting point about the Amylin restructuring announcement. "One could argue that this latest action was done under the (Icahn) gun...." Activist, billionaire investor Carl Icahn is in a heated proxy fight with AMLN. He wants shareholders to put his people on the Board of Directors and to then sell the company to Lilly. I, too, wonder whether these back-to-back announcements (especially the earlier-than-expected Byetta filing) out of Amylin are designed to show that management is trying to grab the bull by the horns and that it's got things under control ahead of the annual meeting on May 27th. Will it be enough to beat back Icahn?

Shares of LLY, AMLN and ALKS are all higher on the Byetta filing news and NovoNordisk is lower. NVO, the world's biggest diabetes drug company is waiting for FDA approval of a similar one-a-day drug, Victoza. But an FDA advisory panel recently raised concerns about a possible thyroid tumor risk that was seen in lab rodents on Victoza. And some analysts think the FDA will want to see if that is exclusive to NVO's drug or a so-called "class effect" that could also taint Byetta. In addition, the agency is still mulling over whether to put a pancreatitis warning on the Byetta label.

Most analysts think if or when once-a-week Byetta gets to market that it will become a multi-billion dollar blockbuster, although some have been lowering their sales estimates lately. The drug's fate could be determined by what the FDA decides to do about the small, possibly even unrelated risk of pancreatitis. Will it issue a warning? And if it does, how severe will it be?


In the meantime, Lilly, Amylin and Alkermes investors are pouring a few margaritas. Salud!

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