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Amylin Shares Rise on Diabetes Drug Approval, Challenges Loom

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With US approval for Bydureon under its belt, the company and development partner Alkermes shares are rising Monday. But the drug has to catch up to a fast-selling rival.

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Shares of Amylin Pharmaceuticals (AMLN) and Alkermes (ALKS), are rising this morning after the biotech companies won US approval of their Bydureon diabetes drug.

Amylin rose 20% to $14.60 in early trading, while Alkermes gained 2% to $19.45.

Bydureon is a once-weekly version of Amylin's Byetta, a twice-daily injectable drug used by adults with type 2 diabetes to control blood-sugar levels. Bydureon uses Alkermes' drug-release technology.

Before today, Amylin shares lost a quarter of their value as investors grew uneasy over Bydureon's chances of both winning approval (the drug was twice rejected by the US Food and Drug Administration) and over concerns whether Bydureon can capture share in a competitive market. In November, development partner Eli Lilly (LLY) and Amylin parted ways, leaving the smaller biotech to fend for itself.

Now that the drug is approved, Amylin has its work cut out for it. Amylin plans to begin selling the treatment in February. It faces stiff competition from Novo Nordisk's (NVO) already-approved drug Victoza. In a head to head study released last year, Amylin and its partners failed to show Bydureon was more effective than Victoza. In fact, the study showed Victoza did a better job of controlling glucose. (See Amylin's Bydureon Bombs.) Company officials have said the once-weekly dosing of Bydureon still offers an advantage over the daily dosing of Victoza.

"Now we're ready to take this organization to the next level," CEO Daniel Bradbury told investors on a conference call late Friday.

But some analysts note the uphill battle facing the company. For instance, Amylin also will need to seek a partner to sell the drug outside the US (Bydureon was approved for use in Europe last June). A partner announcement will be another catalyst for the stock.

"The uncertainty until a potential partnership is announced may serve as an overhang on the stock," William Blair analyst John Sonnier says. He has a hold rating on Amylin's stock. He also notes Victoza's head start in selling a similar drug and execution risk for Bydureon's sales launch.

"As a small biotechnology company in a highly competitive marketplace, Amylin faces a variety of risks," Sonnier says.

Bydureon is priced to compete with Victoza. At $323.44 for four weeks of therapy, Bydureon's annual cost is around $4,200, a price that falls in the middle of Victoza's annualized price, says ISI Group analyst Mark Schoenebaum.

Victoza's annual cost ranges from $3,400 for low-dose treatments to $5,000 for high doses, according to the analyst.

"We have priced Bydureon in a manner which we believe will enable us to get Bydureon to as many people as possible in as rapid a fashion as possible," Bradbury said.

As part of its approval agreement, Amylin also has to study the safety of Bydureon, particularly for the risk of cancer and cardiovascular disease. Amylin and Lilly said last year that diabetics on Bydureon can actually lower cardiovascular risk. Cancer risk of so-called GLP-1 analogues (the class of drugs to which Bydureon and Victoza belong) has stirred debate in the scientific community.

Twitter: @brettchase

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