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On Nowruz, Reviewing Drug Stock Picks

NEW YORK ( TheStreet) -- As a few of you might have guessed from the contrast between my hard-to-pronounce last name and white-guy visage, I'm half-Persian. My dad was born in Iran and came to the U.S. to attend college; my mom's family is from Germany. Last week, my family celebrated Nowruz (literally translated "new day"), which is the Persian New Year and always occurs on the first day of spring.

Every Nowruz, I reflect on the past year and evaluate my decisions, with the goal of validating successes and learning from mistakes. In that spirit, let's revisit some of my drug-stock investment columns thus far. (You can access a complete archive here.)

Amylin Pharmaceuticals (AMLN)

Upon the long-delayed FDA approval for the diabetes drug Bydureon, Richard Pops, CEO of Amylin's partner Alkermes, tweeted "Game on." So far though, Amylin's game is way off. "Bydureon's commercial launch looks to be flailing, if not quite yet failing.

Wall Street analysts, nervously bullish, have already started to make excuses. Despite only a few weeks of prescription data, sellside notes are filled with reassurances: It's still early days in the Bydureon launch. True, I agree with that. The number of Bydureon prescriptions written to date is "similar" to competing diabetes drugs. I guess, but only if you apply a broad definition to the term "similar." Amylin's sales force "wasn't yet ready." That's a weak defense, given Eli Lilly (LLY) jumped exiting the Byudreon partnership three months before the drug's FDA approval.

From my view, Bydureon, a once-weekly GLP-1, is lagging the commercial launches of Byetta, Amylin's other diabetes drug, and Novo Nordisk's (NVO) Victoza, a once-daily GLP-1. Comparing Bydureon to Victoza is particularly apt and damning: Byudreon cumulative scripts are already more than 20% behind Victoza at comparable time points. If Bydureon were the revolution that bulls had hoped for, the drug should at least be launching in-line with Victoza. The excuses feel especially weak given Bydureon's advantages: High physician awareness, wide acceptance of the GLP-1 drug class and (according to the Amylin bulls) a competitive dosing advantage.

One other issue should worry the bulls: Amylin raised $200 million earlier this month in a secondary offering. I don't begrudge a "strike while the iron is hot" mentality, particularly when shares are up and management likely sees dark clouds gathering. Yet the move comes shortly after the company highlighted its tight expense control and guided to only a slight non-GAAP operating loss for 2012. Why do they need the money now? It seems like a red flag that suggests management has low confidence in the company's internal Bydureon launch estimates.
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