Dear David:
I am a new member of the SI. I have read this very interesting thread, here I just want to express my opinion about the results of AMLN's latest clinical trials.
I have been a share-holder of AMLN since 1995 and have a family member who has type I diabetes (which was one of the reasons I got interested in AMLN at the first place). I am very optimistic about the future of the drug pramilintide for the following reasons.
1. The drug works for type I diabetes. Period. As well as I know how patients feel, don't tell me a reduction of 0.3% HbA1c (for example, from 7,2% to 6.9%) is no big deal. It is a huge deal especially when you don't have other ways to do it.
2. Is it possible that the on-going trials for type I diabetes will have more reductions than 0.3%? I think it is very likely according to the information the company provided in their news release. However, even if it is only a 0.3% reduction, I believe an FDA approval is pretty much guaranteed when there is no other better treatment.
3. Biotech investing is about how to manage risk. The worst risk is a hidden risk. AMLN's risk is well known now. That is pramlintide for type II diabetes may or may not work. Even the most pessimistic views don't doubt about the launching of the drug for type I diabetes.
4. Now the risk is about marketing. For at least a 0.3% reduction of HbA1c and a slight improvement of weight control and better cholesterol profiles, we will pay $2 a day (two soda less a day). It translates into $60 a month and $720 a year per prescription. There are two million patients out there. I will take a risk with J&J's marketing power. If J&J can get to one million prescriptions a year, that is $720 millions sales for pramilintide a year and would be $360 millions for AMLN's half. That is about $11 sales per corrent AMLN share. Now, what is AMGN's sales number per share? Isn't it around $7? Figure that out.
5. Don't forget that the above is the worst case scenario. If on-going trials are a little better than the last two, we may very well get an approval for type II diabetes as well. You only need less than 10% of the target patient population (half million from five million of insulin using type II diabetic patients) to add on top of the type I figure to make pramlintide a billion dollar drug.
Let's compare AMLN's situation to a softball game. Was the result from last two tials a home run? Of course not. But it was a good enough hit to put AMLN on the third base. Now, J&J is coming to bat for AMLN. It only takes a O.K. swing to send AMLN home. With a great swing from J&J, it will bring both AMLN and J&J home. Remember, for drugs like Agouron's protease inhibitor, it is a live or die situation, you don't have to get J&J to market it for you, people will come and knock on your doors to get it. But the big deal of pramlintide was meant to be made by marketing. That was why in their contract it was J&J's resposibility to market it instead of only giving AMLN money to develop the drug. It is for better control of a chronic disease. Does anybody want to bet aganist J&J's marketing power?
In my view, AMLN is one of the best investment you can get in biotech. In short term, the momentum will pusha a stock around, but in the long run, good medicine and sound business always prevail.
Good luck to all diabitic patients and AMLN share-holders.
D. Right |
