Amylin's Bydureon Bombs

By Brett Chase  MAR 03, 2011 3:15 PM

Victoza worked better at controlling blood-sugar levels than Bydureon, according to the company's own research.


One of the things that excited investors and patients about Bydureon, an experimental drug for diabetes, was the belief that it works better and is more convenient than another drug that recently hit the market, Victoza.

In fact, one of the only things that concerned investors about Victoza was that the drug got a head start over Bydureon, which was rejected for US approval in October. (See FDA Rejection Sees Amylin Stock Cut in Half in Morning Trading)

Surprise! Victoza worked better than the much-ballyhooed Bydureon, according to a study sponsored by Bydureon’s developers Amylin Pharmaceuticals (AMLN), Eli Lilly (LLY), and Alkermes (ALKS).

Amylin shares plunged 23% to $11.51 in morning trading, Alkermes fell 12% to $12.40 and Lilly was little changed at $34.37. Needless to say, the drug’s success is much more important to the smaller companies, Amylin and Alkermes. Bydureon is the once-weekly version of Amylin’s approved drug Byetta and is the company’s lead product in development. Alkermes developed the technology to create a longer-lasting medicine. Byetta is a twice-daily injectable drug used to control blood-sugar levels in adults with type 2 diabetes (the most common form of the disease).

Approved last year, Novo Nordisk’s once-daily Victoza is expected to reach $1 billion in sales by 2012. Optimistic investors hoped Bydureon will also become a blockbuster even if it doesn’t get approved till next year. The thinking was that it will be a superior drug and ultimately take market share from Victoza.

Conducting a head-to-head trial with Victoza was intended to prove that Bydureon was the more effective drug. But the results showed Victoza did a better job at controlling blood sugar, or glucose, than Bydureon.

“No one really considered or discussed the possibility the whole thing could backfire and actually prove the opposite, with statistical significance,” Robert W. Baird analyst Thomas Russo says.

Russo, who has a hold rating on the stock already was skeptical that Bydureon would be able to catch up to Victoza and steal its market share. (See Amylin’s Bydureon Facing Final Stretch)

“Our prior physician checks had indicated that docs viewed Victoza as a more worthy competitor to Bydureon than most people probably thought, and that feedback was before the new data indicating Victoza actually appears to work better.”

Acknowledging that the “study did not meet its primary endpoint,” a Lilly diabetes product development specialist, Gwen Krivi, tried to put the best face on the news. In a statement, she noted that some patients may prefer the once-weekly option of Bydureon over the once-daily dosing of Victoza. Both medicines belong to a drug class known as GLP-1 receptor agonists.

“If approved, Bydureon could provide millions of patients a once-weekly treatment option,” she says.

Amylin spokeswoman Alice Izzo says there’s no change in the company’s strategy to reapply later this year for permission to sell the drug in the US.

But even if approved, the study results can damage potential sales for a competitive drug class.

Russo calls today’s news “a very big setback.”
No positions in stocks mentioned.

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