Amylin Rising After Painful Beating - TheStreet

Amylin Rising After Painful Beating

Shares were jumping more than 7% after being beaten down by concerns about diabetes drug Byetta.
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Amylin's

(AMLN)

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) - Get Report

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) - Get Report

, "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.

"Questions of course remain about any link between Byetta and pancreatitis, the impact on Byetta scripts, the wording of a revised Byetta label, potential delays for the exenatide once-weekly NDA filing, potential entry of Novo's liraglutide next year, etc., etc.," wrote Merrill Lynch's Thomas McGahren. "But, at current levels, considering all we know now, the stock looks attractive to us for investors with high tolerance for risk and volatility."