UPDATE: Amylin 1Q Loss Narrows;To File FDA Response This Week

Amylin Pharmaceuticals Inc. (AMLN) reported a narrowed first-quarter loss as costs dropped; however, revenue was off 3.5% on lower prescriptions for the company's flagship diabetes treatment Byetta. The company also said it is making progress in the regulatory review of a longer-acting version of the drug.

The San Diego drug manufacturer, which sells Byetta with Eli Lilly & Co. (LLY), said it expects this week to file its response to the U.S. Food and Drug Administration's rejection of the long-acting version of the product. Approval of the drug, developed using technology from Alkermes Inc. (ALKS), is vital for Amylin's future growth and important as Lilly faces generic competition to key products in coming years.

The treatment--with a proposed brand name of Bydureon--will allow Amylin to report positive operating cash flow by the end of 2010, profitability on an adjusted basis during 2011 and profitability by the end of 2011, the company said during a conference call Monday.

Shares of Amylin recently were off 11 cents to $21.64.

The drug, injected once a week as opposed to the twice-daily version now on the market, faces heavy competition in the diabetes market and the timing of its launch is seen as crucial to its eventual success. Lilly has submitted an application for approval in Europe.

During the conference call, Chief Executive Daniel Bradbury said Amylin has had a "number of discussions" with the FDA in recent weeks and remains confident that it has addressed the agency's concerns.

In denying approval in mid-March, the FDA asked for more information about the drug's product label, risk-management plan and manufacturing process, according to the company. Wall Street largely saw the FDA letter as good news because the agency didn't request any additional clinical data or analysis of already submitted data.

Bradbury declined to comment on the length of the expected review of the submission, noting that the agency will have to make that determination. Lilly will pay Amylin a $40 million milestone payment upon launch, Bradbury said.

Under a Class 1 resubmission, which involves minor changes, clarifying information and updates, the cycle is generally 60 days. A Class 2 resubmission is more cumbersome, often including more clinical information and items needing a review by an advisory committee, resulting in a six-month review.

The prospects for long-acting Byetta were boosted by the FDA's approval in January of Novo Nordisk A/S's (NVO, NOVO-B.KO) once-daily Victoza after a 20-month review, but the move also introduced new competition for the already-marketed version of Byetta.

Amylin said Monday that it will begin a mid-stage study by the end of June of a once-a-month formulation of Byetta and, assuming success, will pursue a regulatory strategy similar to that taken with the weekly version.

In the first quarter, sales of Byetta fell 5% to $149.8 million. From the fourth quarter, sales dropped 8%.

Both Victoza and Byetta are similar to a human hormone in the digestive tract known as GLP-1, which boosts insulin production in order to regulate blood-sugar levels. While Byetta was the first drug in the class, others are in development programs at companies including Roche Holding AG (RHHBY, ROG.VX), GlaxoSmithKline PLC (GSK, GSK.LN) and even Eli Lilly.

In the quarter, Amylin reported a loss of $38.2 million, or 27 cents a share, compared with a year-earlier loss of $47 million, or 34 cents a share. Revenue fell 3.5% to $174.1 million. Analysts projected a loss of 29 cents a share on revenue of $188 million, according to Thomson Reuters.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

(Matt Jarzemsky contributed to this article.)

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