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The Curse of Amylin's Diabetes Drug Approval

Stocks in this article: AMLN LLY NVO ALKS

Amylin and Alkermes clearly had to work hard to create Bydureon, but the results are a mixed bag that diminishes the advantage of a once-weekly injection schedule.

In the interest of brevity, I'll touch briefly on other potential problems: Amylin must market Bydureon without a partner, since Eli Lilly (LLY) abandoned ship in late 2011 after a decade-long collaboration. Bydureon causes twice as many efficacy-sapping anti-drug antibodies as Byetta. Then there's the mysteriously absent "Section 15" in the Bydureon label. (Even conspiracy theorists have yet to notice that the drug's label seems to be missing a section; my guess is the FDA nixed something at the last minute.)

We could also just take a step back and consider the simplest view: Amylin submitted the Bydureon New Drug Application (NDA) under section 505(b)(2), a regulatory pathway intended to streamline FDA approval for reformulations of marketed drugs. (This explains why Bydureon's long-term safety database is very limited.) By using this route to land Bydureon's approval, Amylin tacitly acknowledges that the drug is a slightly but not drastically different version of Byetta. As such, why should we expect something vastly different from the drug's sales trajectory? It is almost always better to have more, rather than fewer, treatment options, but does that make Bydureon a blockbuster?

I doubt it.

One last word: Amylin bulls believe the company is a hot takeover target. I think not. Given the considerable investment necessary to sell Bydureon, an increasingly competitive landscape for diabetes drugs, and the uncertainty of success, I don't see what makes Bydureon such a compelling asset. It's impossible to say with certainty that Amylin won't be taken out, but at these prices there are probably better bets to make.

Disclosure: Sadeghi has no position in Amylin or any other stocks mentioned in this column.

Nathan Sadeghi-Nejad has 15 years experience as a professional health-care investor, most recently as a sector head for Highside Capital. He has worked on the sell side (with independent research boutiques Sturza's Medical Research and Avalon Research) and the buyside (at Kilkenny Capital prior to Highside). Sadeghi-Nejad is a graduate of Columbia University and lives in New York. You can follow him on Twitter @natesadeghi.
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