Eli Lilly, Alkermes, Amylin shares fall following FDA decision on Bydureon

Shares in Eli Lilly, Amylin and Alkermes fell Wednesday, the day after the FDA issued a complete response letter for type 2 diabetes drug, Bydureon (extended-release exenatide), citing the need for more data on the drug's effect on heart rate, as well as results from an ongoing clinical trial. Amylin shares plunged 50 percent, followed by a 28-percent drop for Alkermes and a nearly 5-percent decrease for Eli Lilly shares.
"The news comes as a major surprise," noted JP Morgan analyst, Cory Kasimov, adding that "investor controversy had been around Bydureon's potential to meet the seemingly aggressive sales estimates and not whether approval was at risk." Analysts had predicted that the drug could garner sales of $1 billion.
Analysts noted that even if Bydureon were to win approval when it is reconsidered by US regulators in mid-2012, the competitive landscape for the drug could be much different. Cowen & Co. analyst, Phil Nadeau, noted that by this time, competitor Novo Nordisk's diabetes drug Victoza will have gained further market share, and both GlaxoSmithKline and sanofi-aventis will be further along in the development of their own rival drugs.
Commenting on the news, JP Morgan analyst, Chris Schott, said "with Bydureon representing essentially the only meaningful product launch for [Eli Lilly] over the next several years, we believe today's setback puts further pressure on [Eli Lilly's] already challenged 2012-2014 earnings profile." Leerink Swann analyst, Seamus Fernandez, added that "the pressure on [Eli Lilly] to either do a deal and/or partner some of its pipeline products and reduce its cost structure likely will intensify."

Reference Articles
Amylin, Lilly, Alkermes tumble on Bydureon setback - (ABC News)
Amylin, Lilly, Alkermes shares fall as FDA rejects Bydureon - (Bloomberg)
Lilly, Amylin, Alkermes shares get crushed after FDA rejects diabetes drug - (Daily Finance)
FDA request on diabetes drug sends Lilly shares lower - (The Indianapolis Star)
FDA again denies approval for long-acting Byetta (free preview) - (The Wall Street Journal)

**Published in "First Word"