UPDATE: Lilly, Amylin, Alkermes Diabetes Drug Fails In Comparison

A diabetes drug taken weekly and being developed by Eli Lilly & Co. (LLY), Amylin Pharmaceuticals Inc. (AMLN) and Alkermes Inc. (ALKS) failed to prove as effective as a once-daily treatment, another setback for the drug.

In pre-market trading, shares of Amylin dropped 25% to $11.25, while Alkermes dropped 14% to $12.15 and Lilly fell 1.5% to $33.76.

The study compared once-weekly Bydureon to Novo Nordisk A/S's (NVO, NOVO-B.KO) Victoza, a once-daily injection that is in the same class of drugs. Amylin and Lilly already sell Byetta, a twice daily drug that has been losing market share to Victoza since that drug's approval earlier last year. Bydureon is a long-acting version of Byetta.

American depositary receipts of Novo Nordisk recently rose 4.9% to $130.67.

Bydureon has had multiple regulatory setbacks, something that has given Victoza an advantage in the market. The drugs, similar to a hormone in the digestive track known as GLP-1, boost the production of insulin in order to regulate blood-sugar levels.

Citigroup analyst Yaron Werber noted that the data likely won't effect the potential approval of Bydureon, but said the data are a "major win" for Novo Nordisk.

"From a marketing prospective, this is a setback as this study was intended to provide a knockout punch against Victoza as Bydureon is already more convenient and similar to better efficacy would have been a major advantage," he wrote in a note to clients.

In the study, which tested Bydureon and Victoza over 26 weeks in about 900 patients, Bydureon was less effective at its maximum approved dose in reducing blood sugar levels than Victoza. The drug missed the primary goal of the study to show "non-inferiority."

Victoza patients reported more frequent gastrointestinal side effects, but injection-site reactions occcured more often in Bydureon patients.

The FDA declined to approve Bydrueon earlier last year and made the same move in October, asking for more clinical data. The companies expect to submit that data by year-end and have projected a six-month review. Bydureon was originally submitted for approval in May of 2009.

Bydureon is key to the future of Amylin, which hasn't reported a profit since going public in 1992, and the approval was expected to be a positive development for Lilly, a company working to develop enough new drugs to offset looming generic competition to its top products.

Under their partnership, Amylin and Lilly share U.S. operating profits and costs from Bydureon equally. Alkermes will collect an 8% royalty on global sales and pay no marketing costs.

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

Amylin Pharmaceuticals, Inc. (MM) (NASDAQ:AMLN)
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