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Alkermes plc Message Board

  • ales_ebay ales_ebay Oct 15, 2010 5:02 AM Flag

    The great bet: Bydureon !

    Amylin, Alkermes Eagerly Await FDA Verdict (Again) For Once-Weekly Diabetes Drug

    Back in March, it was “pins and needles” time at San Diego-based Amylin Pharmaceuticals (NASDAQ: AMLN) and Waltham, MA-based Alkermes (NASDAQ: ALKS).
    Now these two companies are getting that prickly feeling again.
    Both biotech companies are eagerly awaiting word from the FDA on whether the agency will allow the first once-weekly injectable diabetes drug for sale in the U.S. This treatment, exenatide once-weekly (Bydureon), was developed by Amylin and Eli Lilly (NYSE: LLY), with enabling technology from Alkermes that helps the drug remain stable and long-lasting in the bloodstream. The FDA delayed the companies’ original application in March, saying it wanted more clarification on manufacturing processes, and more time to work on a Risk Evaluation and Mitigation Strategy (REMS) plan that will help guide prescribing physicians. By making those requests, the FDA set a second deadline of October 22 to finish up its review, and say ‘yay’ or ‘nay.’

    As I pointed out in the March preview story, Amylin has the most at stake in the FDA’s decision to approve exenatide once-weekly, since it only has two other approved products and the new drug is poised to drive its earnings for years to come. But there’s also some real upside potential for Alkermes, which stands to collect an 8 percent royalty on worldwide sales of the drug, without having to pick up any expenses for marketing or manufacturing. The drug is likely to generate peak worldwide sales of about $2 billion in 2017, according to JP Morgan analyst Cory Kasimov. An estimated 25 million people in the U.S. suffer from diabetes, and incidence is expected to climb for years to come as the obesity epidemic rages on.

    One important shift in the diabetes landscape has occurred in the last six months since the FDA delayed the exenatide once-weekly application. A primary competitor, Roche’s taspoglutide (Taspo), was delayed over safety concerns in June. That bit of bad news for Roche was interpreted by investors as good news for Amylin.

    For patients, FDA approval of this new drug could shake things up considerably. The new drug takes the active ingredient in Amylin’s best-selling drug and combines it with a biodegradable polymer technology from Alkermes that makes it last longer in the blood. It’s an important modification, because the existing drug must be injected twice a day, while the new one only requires one shot a week. Amylin’s twice-daily injectable version of exenatide generated $667 million in sales in 2009.

    While many analysts expect the once-weekly drug to be a bigger seller because of greater convenience, some concerns were circulated on Wall Street over the past weeks and months about whether exenatide once-weekly might have diminished prospects because it requires a larger needle than other drugs in its class and a “slightly more complicated reconstitution process,” according to Thomas Wei, an analyst with Jefferies & Co. in a Sept. 27 note to clients. The investment firm said feedback was “mixed” from 18 physicians it surveyed about that question at a recent medical meeting. But ultimately, Jefferies still rates Amylin a “buy” with a price target of $32, Wei wrote, even though the once-weekly drug might not be an overnight smash hit.

    “Although we believe that physicians may eventually embrace Bydureon’s superior efficacy and safety profile, we believe that Bydureon may take time to establish itself on the market,” Wei wrote to clients on Sept. 27.

    Amylin executives are getting ready for their quarterly earnings call, as well as the important FDA decision date for the new drug, so they aren’t being made available for comment in advance, a spokeswoman said.

 
ALKS
56.16+1.02(+1.85%)Dec 24 1:00 PMEST

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