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Amylin Pharmaceuticals, Inc. Message Board

  • germantrader71 germantrader71 Sep 24, 2010 6:06 AM Flag

    DB sees AMLN as takeout candidate; M&A value at $43-$44/share

    Thinking long-term: Bydureon
    a likely blockbuster - Buy
    Robyn Karnauskas
    Research Analyst
    (+1) 212 250-7591
    Navdeep Singh
    Research Analyst
    (+1) 212 250-3076
    Colin Bristow
    Research Analyst
    (+1) 212 250-5751
    Key controversy is how big the GLP-1 class will be - our analysis says BIG
    Amylin is awaiting approval of its long-acting diabetes drug, Bydureon, which is a
    GLP-1 agonist. This class of drugs is used after oral therapy before insulin. Street
    controversy has focused not on IF Bydureon will be approved (Oct 22 is FDA
    PDUFA date), but how BIG peak sales will be. Our analysis suggests peak sales of
    Bydureon of $1.4B in '14 and $3B by '20 in the U.S. alone. We rate the stock a
    Buy because we believe Bydureon sales will be greater than street expectations.

    Conversations with endos suggest a bolus of patients could begin GLPs
    We spoke with many endocrinologists, who noted that because so many type-2
    diabetes patients began combo-pill therapy in the last 5 years, many are beginning
    to fail therapy. They expect a bolus of patients may begin GLP-1 therapy shortly,
    which could be positive for Bydureon’s launch.
    Our proprietary 100 PCP survey suggests GLP-1 use should triple
    This survey also suggests Bydureon should gain at least 50%-60% share of the
    GLP-1 class because it is more convenient (weekly) and provides better HbA1c
    reduction. It also noted needle size and reconstitution was not a major deterrent,
    but cost of Bydureon would be. We assume Amylin will price Bydureon on par
    with the once daily GLP-1 on the market, Novo Nordisk’s Victoza.
    We model GLP-1 use growing from 2.5% to 5% of the diabetes drug market
    We believe this assumption is fair given our channel checks and survey analysis.
    Combined with our estimation that the treated diabetes population could increase
    by 3.5% annually, we believe 3x as many patients will be on GLP-1 drugs by the
    end of the decade. Assuming Bydureon takes 50%-60% of the market, we see
    Amylin’s fair valuation at $27/share (see page 53).
    Bydureon cost structure makes Amylin a potentially attractive takeout
    NY Times reported a potential sale of Amylin in ’09. We view Amylin as a possible
    acquisition candidate for a large pharma company with a diabetes sales force.
    Acquirer could extract significant SG&A and R&D synergies. Our M&A analysis
    indicates Lilly and Takeda make most sense with M&A value at $43-$44/share.
    Target price for Amylin of $27/share
    Our one year $27 TP is based on a probability-adjusted DCF analysis (please see
    pg 16). Shares may be under pressure as Street correctly factors in Bydureon
    COGS. Downside risks include failure of FDA to approve Bydureon, worse than
    expected Bydureon sales and more competition than expected (pg 17).
    DB-BIO: AMLN CC􀃆 TODAY (9/24) 10amET Dial-in: (US) 800-309-8606, (Intl)
    706-679-0645 Conf ID#13577263.

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    • another broker (Barclays) commenting on GLP Class Expansion today:

      FDA Severely Restricts Avandia Use,
      Opportunity for GLP Class Expansion
      Today, FDA announced that it will “significantly” restrict use of GSK’s Avandia, and
      EMA suspended marketing authorization. Pending a re-adjudication of RECORD
      results, FDA plans to make changes to Avandia’s label with a full REMS to follow over
      the next few months. We view today’s regulatory announcements as an opportunity
      for expansion of the GLP class of diabetes drugs and potentially benefitting
      Today, FDA announced that it is restricting use of Avandia to new patients unable to
      achieve glycemic control on other diabetes meds, imposing an onerous REMS program
      requiring both docs to document and attest patient eligibility and patients to
      acknowledge potential for cardiovascular risk, requiring GSK to submit a new REMS
      program and to commission an independent commission to re-adjudicate RECORD at
      the patient record level, and suspending the TIDE trial of Avandia vs Actos.
      Simultaneously, EMA announced it is suspending but not revoking marketing
      authorization of Avandia. Over the near term with potentially 600,000 patients affected
      by these severe restrictions, we expect a drastic reduction in the number of patients on
      Avandia and view this as an opportunity for the GLP class to expand market share.
      According to IMS data, total prescriptions for the TZD class has decreased by 23% over
      the last 2 years, with share of TZD TRx within diabetes drugs decreasing 15% to 11%,
      with Avandia currently representing 11.5% of TZD TRx. However, with today’s
      regulatory action against Avandia, we expect a further and more severe reduction in
      Avandia TRx, giving rise to opportunity for other effective diabetes drugs like


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