November 15, 2008 (Vol. 28, No. 20)
Minor Label Changes and Approval of Once Weekly Version of Drug Are Anticipated
The increasing incidence of obesity has ushered in a ripe market for type 2 diabetes drugs. The commercial landscape is dominated by players with big portfolios, some particularly strong in diabetes. Amylin, on the other hand, has two commercial drugs, both for type 2 diabetes. Valued at about $1.35 billion, this company markets Symlin, an amylin analogue, and Byetta, an incretin mimetic, in the U.S.
In addition to these two new drug classes, another new class of drugs is called DDP-4 inhibitors and includes Merck’s Januvia. With Merck’s 3% market share to Amylin’s 2.6%, the latter is hoping that data predicted to suggest improved efficacy against Januvia, will lure people away from this oral drug to Byetta.
Amylin did well in the first two full years after Byetta (exenatide) reached the market, while this year’s sales are somewhat stagnating. Scares of pancreatitis and competition from the H206 release of Januvia are to blame. The firm is, nonetheless, aggressively marketing Byetta.
Most seem to expect an eventual upswing. The threat of the impending label changes to reflect pancreatitis association could be worse than the effect of the new label itself, so long as black box warning is not mandated.
The success of the Byetta franchise is closely linked to the company’s value, which has dropped about 68% since the beginning of the year; as of October 27, Amylin’s stock was about $10. No surprise then that Byetta’s sales, while still climbing, aren’t getting up there as quickly. The drug pulled in $430 million in 2006, grew 47.8% in 2007, but only reached $515.9 million after the first three quarters of this year. Total sales are probably not going to exceed $700 million for the year, representing a 10% growth.
“There are few signs that things will improve in the fourth quarter,” according to Jason Napodano, senior biotechnology analyst, Zacks Investment Research. “However, with the shares trading at multiyear lows, we are upgrading the name to Hold.”
Januvia is definitely contributing to slowing sales. “Analysis of the sales shows Januvia poses great competition for Byetta,” notes industry analyst, pharmaceuticals and biotechnology, Frost & Sullivan, Sylvia Miriyam Findlay. At YE07 Januvia raked in $668 million, according to Frost and Sullivan, compared to Byetta’s $636 million.
“When companies launch once-a-week formulations of GLP-1 agonists, the market dynamic is likely to change,” she concedes. Amylin too has the same hope. Ongoing head-to-head studies with Januvia, TZD, Lantus (sanofi-aventis), and Actos (Takeda) will help LAR grab more market share if positive. An FDA decision on LAR is expected by YE09, with launch planned for HI09.
Amylin beefed up its Byetta sales force by 40% to counter the pancreatitis warning. There were reports of two deaths and four hospitalizations due to pancreatitis in patients on Byetta. “A recent study has shown that patients with type 2 diabetes were at nearly three times the risk of developing pancreatitis than those without diabetes,” points out Mark Foletta, Amylin CFO. “Additionally, a major, national insurance carrier that has nearly 40,000 patients on Byetta said that they reviewed their database and it showed no statistical difference of incidence of pancreatitis in their Byetta patients compared to all other numbers.”
Jon V. Alsenas, managing director and senior biotech analyst at Leerink Swann, believes that the firm’s efforts will pay off. He predicts stock levels of about $33 to $35 by YE09. He also anticipates that the Byetta franchise will reach $1.5 billion in 2012.
Amylin is constructing a $500 million facility to support manufacturing. Partner, Eli Lilly, has committed to reimburse Amylin for part of the capital investment through the cost of goods sold for exenatide once weekly.
“Lilly’s obvious commitment to Byetta and LAR will probably put a floor under further price declines,” Napodano says. “We think the shares could recover to $16 by the end of the year assuming the FDA approves Byetta as a monotherapy and the label safety update is in-line with expectations.”
There are 15 DPP-4 inhibitors and 12 GLP-1 agonists in the pipeline, according to Miriyam, coming from the likes of Novo Nordisk, Roche, and Phenomics. After being the first to launch a GLP-1 agonist, Amylin’s franchise will have to stand the test of time. Much weight rests on the timely approval of LAR to beat out competition and garner more market share.