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Amylin's Other Drug to Watch

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There's more to this story than Byetta. A new weight-loss drug looks promising.

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Anyone interested in the diabetes sector is eagerly awaiting an FDA opinion next week on Amylin Pharmaceuticals' (AMLN) long-acting version of its popular diabetes drug Byetta. But investors have paid little attention to what else Amylin has coming through the pipeline.

The biopharma announced on Tuesday that it, along with its partner, Japan's Takeda Pharmaceutical, has decided to advance one of its weight-loss drug compounds into phase 3 trials after successful mid-stage study.

The compound, a combination called pramlintide/metreleptin, performed better than a placebo to produce weight loss, while other compounds the two companies were testing did not generate positive results during the mid-stage study and won't proceed for further testing. More than three-quarters of the patients in the original 28-week study continued on for a total of 52 weeks and showed maintained weight loss. The high-dose combination of the drugs yielded 11% weight loss while a placebo group only had 1.8%.

"We are pleased with the results of the Phase 2 extension study for the pramlintide/metreleptin combination therapy," said Nancy Joseph-Ridge, M.D., general manager of Takeda's Pharmaceutical Development Division. "This potential new therapy continues to build on our commitment to the management of obesity."

The company has been battling obesity for years, although not in a direct way. Its diabetes drug Byetta promotes weight loss in patients while helping to control their glucose levels. Byetta, also marketed by Eli Lilly (LLY), was the first drug of its class to hit the market and now faces competition from the recently approved Victoza from Novo Nordisk (NVO). Victoza, a once-daily injectible, and Byetta, a twice-daily injectible, work like the naturally occurring GLP-1 compound in the body to slow glucose absorption in the gut and thus allow a type 2 diabetic's slow insulin response to catch up.

Unlike the naturally occurring compound, the agonists aren't easily broken down by the body's enzymes. The GLP-1 agonist class also attaches to an appetite receptor in the brain and decreases hunger, leading to weight loss in patients. "While we expect US Byetta sales to peak well below $1 billion, we think [Byetta] once-weekly, if approved, could easily reach sales of $3 billion or more," wrote Morningstar analyst Matthew Coffina about the company.

(See Amylin Overshadowing Novo Nordisk's Victory)

"We view any ultimate success in obesity as upside to the stock, but the impending March 5 FDA action date for LAR overshadows obesity at this time," wrote R.W. Baird analyst Thomas Russo in a note to investors. "Amylin inked a strategic partnership for its entire obesity portfolio with Takeda, an established metabolic company. The deal retains upside exposure for Amylin, while mitigating its downside risk and shifting most development costs to Takeda."

Amylin stands to benefit greatly from the country's growing waistlines as health costs directly and indirectly attributed to obesity exceed $140 billion in the US annually. The Obesity Society says that the problem is the second-leading cause of preventable disease in the country. There are more than 72 million obese or overweight people in the US, about 20 million of those people are also diabetic -- a disease commonly associated with being overweight -- and another 1.6 million are expected to be diagnosed each year, according to the American Diabetes Association.

Yet, the company has no shortage of competition in this area. Three smaller biotech firms -- Vivus (VVUS), Arena Pharmaceuticals (ARNA), and Orexigen Therapeutics (OREX) -- have all submitted new drug applications to the FDA for approval of their obesity drugs. The agency is expected to make decisions on all three of these drugs in the fourth quarter.

(See Biotech's Race to Battle the Bulge)

Amylin does have one major advantage over these three biotech drugs. The pramlintide/metreleptin combination therapy seems to work better in patients with a body mass index under 35 -- making it an ideal treatment for overweight or slightly obese patients -- while the other drugs are meant for people with a BMI over 35.
No positions in stocks mentioned.

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