SAN DIEGO ( TheStreet) -- Diabetes drug maker Amylin Pharmaceuticals ( AMLN) turned down a $3.5 billion takeout offer from Bristol-Myers Squibb ( BMY), according to Bloomberg, which cited two people with knowledge of the deal. Nice scoop. Well done, guys. Amylin shares are up 47% to $22.65. Some additional thoughts: Bristol's rumored $3.5 billion (that excludes debt) offer values Amylin at $22 per share, or a 46% premium to the company's closing stock price of $15.39 on Monday. That's a nice bump in value, which begs the question: How can Amylin's board justify turning down an offer like that? Answer: Amylin's board obviously believes its diabetes drug franchise, most notably the newly launched once-weekly drug Bydureon, is worth more. Deutsche Bank biotech analyst Robyn Karnauskas (a longtime Amylin bull) says Amylin is worth $31 per share, assuming cost synergies (whack SG&A expenses by 80% and R&D costs by 40%) and Bydureon generating peak U.S. sales of around $1.5 billion. A counter argument: "If the deal is predicated on Bydureon sales of $1.5 billion, I don't think it makes sense because sales won't get there," says healthcare investor (and TheStreet contributor) Nathan Sadeghi-Nejad. The Bydureon commercial launch is still early, but scripts to date show the drug lagging behind its chief competitor, Novo Nordisk's Victoza. Bristol's interest in Amylin make sense to Diabetics Investor's David Kliff because the pharma giant wants a bigger presence in the diabetes treatment market. "Bristol came to the market with Onglyza way too late, it has no chance," he says, referring to the Type 2 diabetes drug that is essentially a me-too version of Merck's ( MRK) Januvia. Bristol was a big player in the diabetes market with its metformin drug Glucophage, but that business was lost to generics, Kliff adds. "With the way Bydureon is right now, a mid-$20s bid for Amylin seems fair to me," said Kliff, although believes Bydureon's true potential won't be realized until a more convenient pen-injector version of the drug is launched at the end of the year. Amylin rejecting a $3.5 billion offer today likely means that the company and its board believes a slow Bydureon launch understates the value of the drug which will ramp higher once the pen version is available. If not Bristol, other potential Amylin acquirers might include Takeda, Astrazeneca ( AZN) or GlaxoSmithKline ( GSK), says Kliff. Don't forget about Carl Icahn, who owns about 10% of Amylin and controls two board seats. --Written by Adam Feuerstein in Boston. >To contact the writer of this article, click here: Adam Feuerstein. >To follow the writer on Twitter, go to http://twitter.com/adamfeuerstein. >To submit a news tip, send an email to: email@example.com. Follow TheStreet on Twitter and become a fan on Facebook.