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Amylin, Alkermes Hit Hard on Surprise Bydureon Rejection

By Jennifer Boggs



Assistant Managing Editor

About the only good news for Amylin Pharmaceuticals Inc. Wednesday was that investors were unlikely to pay mind to the fact that third-quarter sales of diabetes drug Byetta (exenatide) missed analyst expectations, as shares of the San Diego-based biotech were hammered on a complete response letter and the prospect of a two-year delay for its once-weekly version of the GLP-1 agonist.

Amylin's stock (NASDAQ:AMLN) fell $9.01, or 44 percent, to close Wednesday at $11.48. The firm's partners on Bydureon also got hit, with shares of Alkermes Inc. (NASDAQ:ALKS) falling $3.75, or 26 percent, to close at $10.75 and shares of Eli Lilly and Co. (NYSE:LLY) closing at $35.86, down $1.59.

Given that most industry observers were expecting approval by the Oct. 22 PDUFA date – the company had resolved outstanding issues regarding manufacturing and risk evaluation and mitigation strategy outlined in the first complete response letter received in March – the FDA's most recent letter came as a shock, particularly with the surprise request for a thorough QTc study to evaluate the risk of higher-than-therapeutic doses of Bydureon on the cardiovascular safety profile. (See BioWorld Today, March 16, 2010.)

Even Amylin's management was at a loss to explain the FDA's seemingly newfound concern over exenatide's possible cardiovascular risks, since they said previous trials of Bydureon, as well as additional postmarketing studies of twice-daily Byetta, hadn't raised any red flags.

"However, we believe that the recent attention drawn to cardiovascular safety profiles of other therapies for Type II diabetes" might have prompted "additional emphasis on the value" of a QTc study, Daniel Bradbury, Amylin's president and CEO, told investors on a late Tuesday conference call.

Cardiovascular safety was the focus of the FDA's highly publicized debate on Avandia (rosiglitazone, GlaxoSmithKline plc). The agency recently decided to allow the drug to remain on the market under restrictions in the U.S., even though European regulators suspended Avandia's marketing altogether.

Jefferies & Co. analyst Thomas Wei agreed that the QTc study requirement for Bydureon came "as a major surprise," though, upon digging into the data, Jefferies found a 2009-presented placebo-controlled QTc study of Byetta in healthy volunteers that included one set of data suggesting that higher exenatide levels might prolong the QTc interval.

Apparently, that was enough for the FDA.

QTc studies generally only take a few months to complete, but Bradbury is expecting a lengthier time frame for Bydureon. He told investors that complete response letter requested that the firm reach an agreement on protocol with the FDA prior to starting the study.

The letter also asked for results from the DURATION-5 study to evaluate the efficacy and labeling of the commercial formulation.

Amylin's goal is to resolve the outstanding issue by the end of 2011, Bradbury said, adding that the resubmitted application likely will require a six-month review, putting potential approval of Bydureon around mid-2012. That means Amylin can forget about its anticipated 2011 revenue for Bydureon sales, which analysts had estimated at around $500 million.

The product does have a shot at gaining European approval first, since an action date is expected as early as the first half of 2011. But now there's the chance overseas regulators might decide to echo the FDA's wariness.

Either way, Amylin is in for a tough ride. Sales of Byetta, which totaled about $132.4 million for the third quarter, are expected to lose ground to once-daily GLP-1 agonist Victoza (liraglutide) from Novo Nordisk A/S. The Bydureon delay "provides Novo a much longer window to entrench Victoza [and] allows competitors such as GSK/HGSI's Syncria to gain ground," Leerink Swann analyst Joshua Schimmer noted in a research report.

Investors of Bagsvaerd, Denmark-based Novo already were celebrating, as the company's shares (NYSE:NVO) jumped $9.46, or 10 percent, to close Wednesday at $100.45.

Syncria (albiglutide) from GlaxoSmithKline and Human Genome Sciences Inc. is a once-weekly GLP-1 agonist that's in Phase III testing. Another GLP-1 agonist, lixisenatide from Zealand Pharma A/S and Sanofi-Aventis SA, reported positive Phase III data earlier this year. Lixisenatide is designed for once-daily administration. (See BioWorld Today, April 16, 2010.)

Also coming down the pipeline is Lilly's own long-acting GLP-1 drug LY2189265, which could hit the market as early as 2013. That fact alone raises additional uncertainties as to how the Indianapolis-based big pharma firm's "incentives might change if timelines for Bydureon and [its] wholly owned once-weekly GLP-1 begin to converge," analyst Thomas Russo, of Robert W. Baird & Co., wrote in a research note.

With Bydureon not expected to start generating revenue now until the end of 2012, Amylin also faces some financial challenges. The firm ended the second quarter with a cash position of about $574 million – its planned third-quarter webcast was cancelled in light of the complete response letter – but it's got some substantial debt payments due, including about $270 million due in the next six months.

Mark Foletta, senior vice president and chief financial officer, said the company can amortize that debt. He added that Amylin has access to additional funds from partner Lilly, namely a $165 million credit line, and is "confident that we can manage [its cash resources] through submission and ultimate approval" of Bydureon.

That likely will translate into spending cuts. Analyst Ian Somaiya, of Piper Jaffray, expects Amylin to "drastically cut R&D and SG&A spend."

The impact of Bydureon's delay won't be nearly as sharply felt for Alkermes. True, the Waltham, Mass.-based firm will have to scratch anticipated revenue from Bydureon for the next couple of years – the company's entitled to a 7-percent royalty rate under the three-way partnership with Amylin and Lilly – but its solid cash position and last week's approval of Vivitrol (naltrexone for extended-release injectable suspension) for opioid dependence should take the pressure off. (See BioWorld Today, Oct. 14, 2010.)

Analysts are predicting sales of up to $40 million for Vivitrol in 2011.

Overall, it's been a rough October for biotech at the FDA. While a few such as Vivitrol have managed to make it successfully through the regulatory process, the agency has issued more complete response letters than approvals for biotech drugs. Among its rejections have been hepatitis C drug Zalbin (interferon alfa-2b) from Human Genome Sciences and Novartis AG, fibromyalgia drug sodium oxybate (JZP-6) from Jazz Pharmaceuticals Inc. and AZ-004 (staccato loxapine) from Alexza Pharmaceuticals Inc. (See BioWorld Today, Oct. 6, 2010, and Oct. 12, 2010.)




Published October 21, 2010


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