It amazes me how much investors can overreact to known side effects of a drug.
A few weeks ago, Elan (NYSE: ELN) and Biogen Idec (Nasdaq: BIIB) had to deal with new cases of a brain disorder in patients using the companies' multiple sclerosis drug, Tysabri. On Monday, it was Amylin Pharmaceuticals ' (Nasdaq: AMLN) turn, as investors pummeled its stock.
This seems a bit excessive: a 13% drop after news that the number of pancreatitis cases from patients taking Amylin's diabetes drug Byetta increased to 36 from the 30 reported last October. Not being as dependent on sales of Byetta for its livelihood, marketing partner Eli Lilly (NYSE: LLY) didn't take it on the chin nearly as much.
It's not that pancreatitis isn't a serious issue -- the newly diagnosed patients had a more severe form of pancreatitis, and two of the six patients died -- it's that diabetics are already at increased risk of pancreatitis. At worst, patients with other risk factors for developing pancreatitis -- gallstones, severe hypertriglyceridemia, and alcohol use -- will stop using Byetta. But the rate of pancreatitis is so low that I doubt sales of Byetta will suffer more than they already have.
The biggest worry may be about how the new cases of pancreatitis will affect Amylin's once-weekly version of Byetta that it's developing in conjunction with Alkermes (Nasdaq: ALKS). Amylin depends on the extended-release drug for its future success, especially with Novo Nordisk (NYSE: NVO) hot on its tail. Diabetes drugs have come under increased scrutiny by the Food and Drug Administration, so new uncertainty about approval is likely a big reason the stock declined Monday.
Still, I think the market overreacted to a known issue. Just as Elan has recovered more than 30% since its jaw-breaking drop, I expect Amylin's stock will recover as well. It just might be a case of, if you've got the guts to buy, a panicking market can provide a treasure trove.
Submitted by Robert H Hilley IV (not verified) on Thu, 2008-08-21 01:57. *
Amylin Pharmaceuticals Diabetes Drug Byetta® the Focus of California Lawsuit
Moore Labriola LLP and The Schmidt Firm, LLP represent Virginia man who developed pancreatitis; FDA seeks more stringent warnings
SAN DIEGO--(BUSINESS WIRE)--A Virginia man yesterday filed what is believed to be the first personal injury lawsuit stemming from injuries associated with the use of Byetta®, an injectable medication for diabetes. Victor Deleon alleges in a lawsuit filed in San Diego Superior Court (Case No. 37-2008-00090003-CU-PL-CTL) that the manufacturer of the drug, San Diego-based Amylin Pharmaceuticals, Inc., and the drug’s co-marketer, Eli Lilly and Company, failed to adequately test and monitor the side effects of Byetta®, and didn’t warn doctors or patients of the risk of developing pancreatitis. Deleon was hospitalized in December of 2007 after developing the condition, which causes inflammation of the pancreas and can lead to bleeding and death.
Deleon’s lawsuit comes two days after the Food and Drug Administration (FDA) announced that it has received six reports of hemorrhagic or necrotizing pancreatitis in patients taking Byetta® since October of 2007. Two of the six patients died. In a press release, the FDA said it is“working with the maker of Byetta®” to add “stronger and more prominent warnings” to the product’s label.
Deleon’s lawsuit alleges that Amylin “failed to adequately warn prescribing physicians of the risk of pancreatitis, of measures needed to properly assess the appropriateness of prescribing the drug to certain categories of patients, and of measures doctors and patients could and should take to minimize the risk.”
In the fall of 2007, Amylin agreed to add information about pancreatitis to the “precautions” section of the Byetta® label after the FDA reported 30 post-marketing reports of acute pancreatitis associated with the drug.
“It is pretty obvious that the label change in 2007 was not adequate,” said Thomas M. Moore of Moore Labriola LLP in Newport Beach, who jointly represents Mr. Deleon with Michael Schmidt of The Schmidt Firm, LLP in Dallas, TX. “We believe that Amylin possessed data prior to the 2007 label revision that justified a stronger and more prominent warning than the precaution language that Amylin ultimately negotiated with FDA,” Moore added.
Contacts
Schmidt & Clark, LLP
Robert H Hilley IV (866) 588-0600 [email protected]
http://www.schmidtandclark.com/Byetta
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Amylin Pharmaceuticals
Amylin Pharmaceuticals Diabetes Drug Byetta® the Focus of California Lawsuit
Moore Labriola LLP and The Schmidt Firm, LLP represent Virginia man who developed pancreatitis; FDA seeks more stringent warnings
SAN DIEGO--(BUSINESS WIRE)--A Virginia man yesterday filed what is believed to be the first personal injury lawsuit stemming from injuries associated with the use of Byetta®, an injectable medication for diabetes. Victor Deleon alleges in a lawsuit filed in San Diego Superior Court (Case No. 37-2008-00090003-CU-PL-CTL) that the manufacturer of the drug, San Diego-based Amylin Pharmaceuticals, Inc., and the drug’s co-marketer, Eli Lilly and Company, failed to adequately test and monitor the side effects of Byetta®, and didn’t warn doctors or patients of the risk of developing pancreatitis. Deleon was hospitalized in December of 2007 after developing the condition, which causes inflammation of the pancreas and can lead to bleeding and death.
Deleon’s lawsuit comes two days after the Food and Drug Administration (FDA) announced that it has received six reports of hemorrhagic or necrotizing pancreatitis in patients taking Byetta® since October of 2007. Two of the six patients died. In a press release, the FDA said it is“working with the maker of Byetta®” to add “stronger and more prominent warnings” to the product’s label.
Deleon’s lawsuit alleges that Amylin “failed to adequately warn prescribing physicians of the risk of pancreatitis, of measures needed to properly assess the appropriateness of prescribing the drug to certain categories of patients, and of measures doctors and patients could and should take to minimize the risk.”
In the fall of 2007, Amylin agreed to add information about pancreatitis to the “precautions” section of the Byetta® label after the FDA reported 30 post-marketing reports of acute pancreatitis associated with the drug.
“It is pretty obvious that the label change in 2007 was not adequate,” said Thomas M. Moore of Moore Labriola LLP in Newport Beach, who jointly represents Mr. Deleon with Michael Schmidt of The Schmidt Firm, LLP in Dallas, TX. “We believe that Amylin possessed data prior to the 2007 label revision that justified a stronger and more prominent warning than the precaution language that Amylin ultimately negotiated with FDA,” Moore added.
Contacts
Schmidt & Clark, LLP
Robert H Hilley IV (866) 588-0600
[email protected]
http://www.schmidtandclark.com/Byetta