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    Amylin Pharmaceuticals recovers on EU recommendation; poised to dip as Q1 results miss estimates

    Amylin Pharmaceuticals Inc. (Nasdaq: AMLN) shares surged 16% on April 15, after the company reported that its experimental diabetes drug Bydureon (exenatide once-weekly) has been recommended for approval by Europe’s Committee for Medicinal Products for Human Use. The drug candidate is developed in a partnership with Alkermes (Nasdaq: ALKS) and Eli Lilly (NYSE: LLY) and represents a once-weekly, injectable version of the type 2 diabetes treatment Byetta (exenatide). Recommendations from the committee on new medicines are normally authorized by the European Commission within two or three months.

    Amylin Pharmaceuticals is a biopharmaceutical company that developed and gained approval in 2005 for two first-in-class medicines for diabetes, Symlin (pramlintide acetate) injection and Byetta injection. The company’s ongoing research program focuses treatment on diabetes, obesity and other metabolic diseases.

    The positive news is called to counterbalance AMLN’s worsening operating performance, as revenue continues to shrink. For Q1 2011, AMLN reported total revenue of $152.7 million down 12.3% from $174.1 million in Q1 2010. The revenue included net sales of $128.0 million for Byetta and $22.8 million for Symlin. This compares to net product sales of $149.8 million for Byetta and $22.5 million for Symlin in Q1 2010. Adjusted net loss was $34.5 million, or $0.24 per share in Q1 2011, compared to $38.2 million, or $0.27 per share for the same period in 2010.

    Analysts polled by Thompson Reuters expected AMLN to lose 0.23 per share on revenue of $156.7 million.

    The stock lost nearly 40% over the last year on the back of several pipeline setbacks and weaker sales of Byetta. With a 52-week range of $9.51-$22.35, the April 15 trade at $13.09 is in the lower end of that range.

    AMLN lost 46% on October 20, 2010, after the U.S. Food and Drug Administration (FDA) declined to approve Bydureon and asked for more data on potential heart risks before approving the medicine. The recent news opens the European market to Bydureon and raises the chances that the company would overcome the regulatory hurdles in the United States. AMLN is planning to present the required information on the drug to the FDA in the second half of 2011 and, if successful, could get the approval during the summer of 2012.

    The company took another beating on March 3, 2011, when it reported that weekly Bydureon proved inferior to a daily version of Novo Nordisk’s (NYSE: NVO) rival drug Victoza. While Bydureon is not as efficacious as Victoza it still could receive approval. Moreover, its once-a-week dosing compared to Victoza’s daily need for injections can appeal to a significant number of patients, given the fact that a solid percentage of them are afraid of needles making multiple injections each day a very stressful task. According to an article of Dr. James Hamilton, it is estimated that at least 10% of American adults are having needle phobia, and it is likely that the actual number is larger, as the most severe cases are never documented due to the tendency of the sufferer to simply avoid all medical treatment.

    During 2011, AMLN plans to expand the indication for Byetta and research new market segments for this product. In addition to weekly version, AMLN, in a partnership with Eli Lilly, is developing a monthly version of Bydureon, and already reported positive results in a Phase II study measuring effectiveness, safety and tolerability. In addition, the company initiated the Exscel study to demonstrate Bydureon’s effect on cardiovascular endpoints with results of this study expected in 2016.

    The company’s revenue declined 13.5% to $669 million in 2010, compared to $770 million in 2009. The sales of Byetta ranged at $559 million in 2010 versus $668 million in 2009; while Symlin generated revenue of $92 million in 2010, compared to $86 million in 2009. Net loss was $152.3 million, or $1.06 per share, for 2010, compared to $186.3 million or $1.32 per share for 2009.

    Going forward, the company’s valuation would remain sensitive to the approval process of Bydureon, as well as the marketing performance of Byetta. The launch of Bydureon in Europe could help revive the growth at AMLN, which has seen weaker sales of Byetta since it was related to cases of acute pancreatitis in 2008.

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