AMLN Amylin Pharmaceuticals, Inc. (MM)

Amylin Pharmaceuticals (AMLN) reported a net loss of 21 cents per share in the second quarter of 2011, a penny wider than the Zacks Consensus Estimate but well below the year-ago loss of 28 cents. Despite a decline in revenues, year-over-year loss declined due to lower expenses.

Second quarter revenues declined 3.8% to $158.1 million. Revenues, however, exceeded the Zacks Consensus Estimate of $156 million.

Quarterly Details

Total revenues for the quarter declined mainly due to lower net product sales. Quarterly revenues consisted of $154.8 million in product sales (down 4.8%) and $3.3 million in collaborative revenues, which consist of the amortization of upfront fees received under the company's collaboration agreements with Eli Lilly (LLY) and Takeda.

Product revenues comprised $129 million in sales of Byetta (exenatide) and $25.8 million in sales of Symlin. While Byetta revenues declined 8.3% from the year-ago period, Symlin increased 18.3% from the year-ago period.

Byetta revenues have been under pressure over the past few quarters due to pancreatitis fears associated with the use of the drug. Amylin is looking to return Byetta to growth now that it is armed with FDA approval for the use of the drug as a first-line monotherapy for type II diabetes patients.

Amylin also intends to expand the label so that Byetta can be used in combination with basal insulin. The company submitted a supplemental New Drug Application (sNDA) with the FDA for the label expansion. A response should be out by year end. However, we believe the next few quarters will remain challenging from a growth standpoint.

Selling, general and administrative (SG&A) expenses for the quarter declined to $65.2 million from $71.0 million in the year-earlier period. The decrease was mainly due to efficiencies driven by the company's reduced cost structure and lower costs associated with pre-Bydureon launch activities.

Research and development (R&D) expenses declined to $45.1 million in the reported quarter from $49.2 million reported in the prior-year period. The decline primarily reflects the company’s cost-cutting efforts which were partially offset by higher spending on the lipodystrophy program and the Bydureon cardiovascular outcomes study (EXSCEL).

2011 Guidance Reflects Tight Cost Control

For 2011, Amylin now expects operating loss of $15 million to $25 million, down from its earlier guidance. The company was previously expecting operating loss towards the lower end of $25 - $40 million.

Amylin expects to receive tiered royalties of less than $5 million on ex-US sales of exenatide in 2011.

Bydureon Filing Next Week

Amylin provided an update on its lead pipeline candidate, Bydureon (a once-weekly version of Byetta), which received a second complete response letter (CRL) from the FDA. Amylin and its partners, Eli Lilly and Alkermes, Inc. (ALKS), are looking to get Bydureon approved for the treatment of type II diabetes.

Amylin conducted a thorough QT (tQT) study as requested by the FDA. Results from the study showed that exenatide, at and above therapeutic levels, did not prolong the corrected QT interval in healthy individuals. The FDA has also asked Amylin and its partners to submit data from the DURATION-5 study, which was conducted to compare the safety and efficacy of Bydureon versus Byetta.

Amylin expects to submit a response to the CRL next week. A response from the FDA could be out in early 2012.

We note that Bydureon recently gained approval in the EU. Bydureon was launched in the UK in July. Bydureon’s launch triggered a $15 million milestone payment from Lilly which will be recognized in the third quarter of 2011. Lilly is currently seeking approval for Bydureon in Japan.

Amylin also presented positive phase II data on its once-monthly suspension formulation of Bydureon. The company intends to meet with regulatory authorities to determine the development path for the suspension formulation. The pen device for Bydureon remains under development with a launch expected in late 2012/early 2013.

As far as other pipeline candidates are concerned, Amylin initiated the submission of a rolling Biologics License Application (BLA) for the use of metreleptin for the treatment of diabetes and/or hypertriglyceridemia in patients suffering from rare forms of lipodystrophy. The chemistry, manufacturing and controls (CMC) section of the BLA will be filed by year end.

The candidate enjoys fast track status and a successful regulatory process could lead to the product launch in late 2012.

Neutral on Amylin

We currently have a Zacks #2 Rank (short-term Buy rating) on Amylin. We are pleased to see that the company is on track to submit a response to the Bydureon CRL next week. EU approval of Bydureon was also a major positive for the stock. Longer-term, we have a Neutral recommendation on Amylin. We expect investor focus to remain on Byetta’s performance and updates on the approval process for Bydureon.

 
ALKERMES INC (ALKS): Free Stock Analysis Report
 
AMYLIN PHARMA (AMLN): Free Stock Analysis Report
 
LILLY ELI & CO (LLY): Free Stock Analysis Report
 
Zacks Investment Research