Amylin Pharmaceuticals Inc. (AMLN)

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Ahead of the Bell: Amylin drops on Byetta deaths
Wednesday August 27, 8:29 am ET
Amylin falls after report of 4 new Byetta deaths, which analysts say could erode sales

NEW YORK (AP) -- Shares of Amylin Pharmaceuticals Inc. dropped in premarket trading Wednesday after the drug developer and its partner Eli Lilly & Co. reported four new deaths of patients who had taken their diabetes drug Byetta.

Analysts said the report is likely to hurt growth in Byetta prescriptions, and could also damage prospects for the companies' next-generation diabetes drug, which they plan to begin selling next year.

In premarket trading, Amylin shares dropped $3.54, or 13 percent, to $23.70. The stock has ranged from $23.75 to $51.10 over the past year.

Late Tuesday, Amylin and Lilly said four patients who took Byetta had died of pancreatitis. The Food and Drug Administration reported two similar deaths last week, although the new patients each had complicating medical conditions. The FDA is planning a stronger warning for Byetta's label.

Robert W. Baird analyst Thomas Russo downgraded Amylin shares to "Neutral" from "Outperform" on the news, and lowered his share price target to $27 from $37.

Citi Investment Research analyst John Boris said the label changes will hurt prescriptions in the second half of 2008. He added that safety concerns, greater competition and decreasing growth in prescriptions could cause sales to miss expectations.

The analysts noted that the link between Byetta and pancreatitis has not been proved. Meg Malloy of Goldman Sachs said most of the patients had other problems that can cause the condition, and diabetes patients already face a greater-than-average risk for the disease.