AMLN Amylin Pharmaceuticals, Inc. (MM)

Eli Lilly and Company (LLY) and Boehringer Ingelheim recently gained European Union approval for their type II diabetes treatment, Trajenta (linagliptin). The European Commission approved Trajenta for use in combination with metformin and metformin plus sulfonylurea.

Trajenta can also be used as a monotherapy in patients inadequately controlled by diet and exercise alone and patients who are intolerant to metformin or for whom metformin is contraindicated due to renal impairment.

Trajenta is already available in the US under the trade name Tradjenta. Other countries where linagliptin is approved include Japan.

Eli Lilly and Boehringer’s strategic alliance, signed in Jan 2011, is focused on bringing new diabetes treatments to market. However, in May 2011, Eli Lilly’s exenatide partner, Amylin Pharmaceuticals, Inc. (AMLN) filed a lawsuit against Eli Lilly. Amylin claimed that Eli Lilly is engaging in anticompetitive activities thereby breaching its agreement for the maximization of sales of exenatide, which is currently available under the trade name, Byetta.

Amylin’s main complaint is regarding Eli Lilly’s global alliance with Boehringer Ingelheim for the development and commercialization of Tradjenta. According to Amylin, Tradjenta, which received US Food and Drug Administration (FDA) approval in early May, will compete directly with the exenatide family.

Amylin had filed a motion seeking a preliminary injunction to enjoin Eli Lilly from engaging in anticompetitive activity and breaching its diabetes collaboration agreement with Amylin.

However, in June, the United States District Court for the Southern District of California denied Amylin’s motion. Moreover, the court also vacated a temporary restraining order preventing Eli Lilly from using the same sales force for selling exenatide as well as Tradjenta.

Neutral on Eli Lilly

We currently have a Neutral recommendation on Eli Lilly, which carries a Zacks #3 Rank (short-term Hold rating). Eli Lilly will enter a tough period in late 2011 with the loss of exclusivity on Zyprexa. Barring significant cost-cutting efforts or additional revenue catalysts, 2013 will be the beginning of a very challenging period with Cymbalta losing US patent protection. On the flip side, strong performance of the diabetes business, the ramp of Effient and upside from the ImClone deal should offer some downside support. We are also pleased to see Eli Lilly pursuing small acquisitions and in-licensing deals to boost its pipeline.

 
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