Here's what the San Diego Union said yesterday:
Shares of Amylin fall 44%-plus
BLOOMBERG NEWS
04-Mar-1998 Wednesday
NEW YORK -- Shares in Amylin Pharmaceuticals Inc. lost almost half their
value yesterday following the company's announcement that Johnson & Johnson
plans to pull out of a development agreement focused on Amylin's chief
diabetes drug.
Shares in the San Diego-based company dropped from $5.06 1/4 at the opening
bell to close at $2.81 1/4 -- a loss of more than 44 percent. More than 2.4
million shares changed hands, eight times the stock's six-month daily
average.
"It's bad news" for Amylin, which had been counting on J&J's support to
help it in the expensive development of its diabetes drug, said Carl
Gordon, an analyst with Orbimed Advisors. The drug is in final stages of
the large-scale human testing required to support an application for
approval.
Amylin said Monday it plans to cut its staff by 25 percent and to
restructure in other ways in light of J&J's withdrawal in order to "ensure
sufficient cash resources to operate its research and development programs
for least one year without additional funding."
Company officials said they were surprised by J&J's decision because the
company has had no new data on its drug, known as Pramlintide, since
August. At that time, the company's shares fell 43 percent after a study
showed the drug did not significantly improve long-term metabolic
functioning in patients with type II diabetes, the most common form.
J&J said its decision was based on financial considerations.
"We re-evaluated the cost and resource implications of the project itself
and concluded that we couldn't continue, said Bob Roach, director of public
affairs at J&J's Robert Wood Johnson drug research facility.
Roach also said J&J's recent agreement with Ergo Science Corp. of
Charlestown, Mass., to develop a diabetes drug had no bearing on its
decision to abandon the Amylin agreement.
"There is no relationship," he said. "They are totally dissimilar drugs."
Amylin officials said last night they are still confident the company will
be able to complete development of Pramlintide.
"We are not slowing the development of this important drug for diabetes; we
are in fact accelerating it," said Richard Krawiec, director of corporate
communications at Amylin. "Given our more limited resources, we are going
to concentrate on more regional" development of the drug.
Krawiec said the company expects to be ready to file for European approval
for Pramlintide by the first half of 1999. Internal restructuring and
payments from J&J -- due to continue for six months -- will leave the
company with "a year or more of cash on hand," he said.
Some analysts agree.
"They will be able to get there" and file for clearance for the drug,
predicted William Tanner, an analyst at Vector Securities Inc. However,
Tanner said, any more setbacks, such as a negative review in Europe or by
the U.S. Food and Drug Administration, would darken the picture.
"It would be a tough row to hoe for them," Tanner said.
Still, Albert Rauch, an analyst with Everen Securities, said he thinks the
company's problems won't be solved by its reorganization.
"Even with the restructuring, they're going to run into some pretty severe
cash problems this year, I would believe," said Rauch, who dropped coverage
of the company this morning. Yesterday, Rauch had a near-term
"underperform" and a long-term rating of "market-perform" on the stock.
"They either have to quickly find another partner or I have concerns about
them being able to finish their development," Rauch said.
Rauch said concentrating the company's cash on getting Pramlintide to
market so it can bring in sales revenue will likely affect the drugs that
are in earlier stages of development.
And some analysts said Amylin does have ongoing clinical studies that could
demonstrate benefits from the drug.
"It's hard to judge" the long-term significance of J&J's withdrawal from
the agreement, said Richard Stover, an analyst with Auerbach, Pollak &
Richardson. "It's kind of never over till it's over," he said. Stover does
not have a rating on the stock.
In August, the company said Pramlintide did help type I, or
insulin-dependent, diabetics control their blood-sugar levels when
measured at both six and 12 months, but only showed similar benefit at six
months for patients with type II diabetes.
Over 12 months, the drug did not show a significant benefit for type II
diabetics, the company said. Type II diabetes is the most common form, and
offers the largest potential market for the drug.
The company is in the midst of redesigned trials it says will more
accurately show the benefit of the drug. Changes in the amount of insulin
patients were taking during the earlier studies may have masked the full
benefit of the drug, Amylin officials said at the time.
Controlling the level of glucose, or blood sugar, is key to reducing the
risks of diabetic complications, such as blindness, kidney failure and
stroke. |
