2nd UPDATE: FDA Approves Amylin's Bydureon Diabetes Drug After Delays

The U.S. Food and Drug Administration approved Amylin Pharmaceuticals Inc.'s (AMLN) diabetes drug Bydureon after a prolonged regulatory process in which the agency required extra testing to alleviate safety concerns.

Bydureon is the first once-weekly treatment for type 2 diabetes, the most common form of diabetes, Amylin and its partner Alkermes Inc. (ALKS), which developed the extended-release technology for Bydureon, said in a press release Friday. The companies said the drug will be available in U.S. pharmacies in February.

The FDA-approved prescribing label for Bydureon has a prominent warning stating that the drug caused certain kinds of thyroid tumors in rats at clinically relevant exposures in testing, according to the FDA website.

The warning notes that it's unknown whether the drug causes such tumors in humans. But it says Bydureon shouldn't be used in patients with a personal or family history of medullary thyroid carcinoma.

Bydureon is an injectable, extended-release version of Amylin's older diabetes drug, Byetta, which is injected twice daily. Byetta and Bydureon share an active ingredient, exenatide. Bydureon was approved for sale by European regulators in June.

The drug is designed to work by helping the body to make more insulin, which can reduce high blood-sugar levels.

"We are clear to begin the next steps towards bringing the first weekly dose diabetes therapy to the market in the United States," Amylin Chief Executive Daniel Bradbury said on a conference call with analysts.

Amylin shares jumped 15% to $14 in after-hours trading. Alkermes shares rose 4.7% to $20.

Some analysts have estimated Bydureon sales could reach nearly $2 billion annually by the end of this decade. But it will face a crowded market, as drug companies have responded to the rising incidence of diabetes worldwide by developing new treatments.

One competitor is Novo Nordisk A/S's (NVO) Victoza, a once-daily injectable drug approved two years ago. Although a once-weekly drug like Bydureon might seem more convenient for patients than once-daily, a study released last year showed that Victoza reduced blood-sugar levels to a greater degree than Bydureon. Victoza's label also has a warning about the potential risk of thyroid tumors.

Amylin will try to mitigate Victoza's advantage with pricing. The company said Bydureon will cost about $323 for a one-month supply, while a high-dose pack of Victoza costs about $421 per month, according to Deutsche Bank.

"Our pricing strategy is designed to rapidly make Bydureon available to as many patients as possible," Bradbury said on a conference call with analysts.

Spokesmen for Novo Nordisk couldn't immediately be reached.

Bydureon's road to FDA approval was a bumpy one, along which Amylin severed its longstanding diabetes-drug partnership with Eli Lilly & Co. (LLY). Amylin first began working on Bydureon in 1999. The original plan was for Lilly and Amylin to co-promote Bydureon in the U.S., with Lilly handling markets outside the U.S. The companies had a similar arrangement for Byetta, which was approved by the FDA in 2005.

Lilly and Amylin submitted Bydureon for FDA approval in May 2009, based on clinical-trial data showing it improved measures of blood sugar versus Byetta. Addressing heightened FDA scrutiny of heart-related effects of diabetes drugs, the companies said at the time that an analysis showed no increased risk of cardiovascular events to be associated with exenatide.

The FDA initially declined to approve it, asking in March 2010 for more information about the drug's prescribing label and the companies' risk-management plan to ensure the drug's benefits outweigh its risks. Amylin and Lilly were optimistic they would get FDA approval later in 2010 after providing the requested information.

However, in October 2010, the FDA dropped a bombshell by rejecting Bydureon again. This time the agency asked for a new study to test the effect of a high dose of the drug on heart rhythm.

The companies ran the required test and in June said results showed Bydureon wasn't associated with a clinically relevant prolonged measure of heart rhythm. The results increased optimism that the drug would finally get an FDA green light.

Amid the delay, the partnership between Lilly and Amylin deteriorated, and ultimately was terminated. In January 2010, Lilly formed a new diabetes-drug partnership with Boehringer Ingelhiem GmbH, prompting Amylin to file a lawsuit alleging breach of its own contract with Lilly.

In November, Lilly and Amylin settled the dispute by agreeing to return global development and commercialization rights for Byetta and Bydureon to Amylin. Lilly will receive royalties on sales of Byetta and Bydureon up to a cap.

The FDA approval for Bydureon requires Amylin to conduct additional testing to further assess the drug's impact on thyroid cancer and cardiovascular disease.

Shares of Amylin and Alkermes were halted Friday in advance of the agency decision.

-By Peter Loftus, Dow Jones Newswires; 215-982-5581; peter.loftus@dowjones.com

--Jennifer Corbett Dooren contributed to this article.

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