Elizabeth Trotta
Amylin's(AMLN Quote - Cramer on AMLN - Stock Picks) shares were rising nearly 7% early Thursday, as investors eyed a potential buying opportunity after a 25% assault a day prior and a painful beating over the past two weeks.
The stock was up 7.1% to $21.93 in recent trading. It closed at $20.48 on Wednesday -- down 41% in the last two weeks -- as investors reacted to reports about pancreatitis and deaths in patients taking diabetes drug Byetta. Amylin and partner Eli Lilly(LLY Quote - Cramer on LLY - Stock Picks) held a conference call Tuesday, intended to ease confusion. Instead, news of four additional deaths of Byetta patients with pancreatitis sent the stock in another downward spiral. The company said the patients didn't die from the pancreatitis, but it's currently unknown what, if any, part Byetta may play in pancreatitis. On Wednesday the stock garnered downgrades from Robert W. Baird, Natixis Bleichroeder, and Soleil Securities Group. But the selloff may have gone too far, some say on Thursday. "We believe Amylin stock is grossly oversold, here at $20.48, and should rebound," wrote Summer Street Research. Analysts at the firm point out that with a current market cap of $2.8 billion, the stock is cheaper than Vertex(VRTX Quote - Cramer on VRTX - Stock Picks), "which does not have a product." Merrill Lynch upgraded the stock to buy Thursday morning, decreasing its price target to $27 from $34. "We have never had a buy on [Amylin], but at these levels, we are interested," writes Merrill Lynch's Thomas McGahren. Now that the stock has declined 40%, McGahren estimates that it's pricing at a 10% chance of success for Byetta LAR, the long-acting version of the drug. He's maintained that the FDA could ask for additional data before approving Byetta LAR, "especially now if there is any safety concern about pancreatitis." But, even lowering his probability of success estimate to 45% from 80%, McGahren arrives at a price objective of $27, based on a sum of the parts model, he writes.
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