Barclays is upgrading Amylin Pharmaceuticals (NASDAQ:
AMLN) to Overweight from Equal-Weight with a $22 price target (prev. $16).
According to the firm,
AMLN shares have been under pressure for several years, which they attribute to concerns regarding flattening Byetta trends, increasing competitive visibility, perceived regulatory risk for exenatide LAR, excess cash burn and limited pipeline visibility. Since reaching a peak share price of $51 on October 5, 2007 AMLN shares are off -76% as compared to the BTK that is up +3.2% over the same period of time. At current levels, with an enterprise value (EV) of $1.95B, AMLN shares are trading at 2x current year revenues and 4x AMLN share of revenues and appear to reflect limited sustainable growth for Byetta, low likelihood of exenatide LAR approval, heavily discounted earnings prospects and no value for its obesity assets.
Recently, however, AMLN has made significant progress towards addressing concerns with stabilization of Byetta trends, Byetta label expansion, operating expense reduction and global partnership for obesity assets. With focus on exenatide LAR as a primary value driver, however, uncertainty has persisted regarding approvability in the context of FDA concerns expressed regarding the long acting GLP-1 class. With FDA action on Novo Nordisks liraglutide as a potential nearer term proxy for FDA approach to the long acting GLP-1 class there has been an assumption that as goes liraglutide as will go AMLN.
- Barclays thinks exenatide LAR prospects may be better than expected irrespective of liraglutide action. In reviewing implications of Byetta label expansion, better than expected labeling for pancreatitis risk, differences in preclinical carcinogenicity profile, post-marketing experience with Byetta and efficacy data for Exenatide LAR the firm believes that a more constructive view regarding LAR approvability is appropriate.
- With over 1 million patients exposed to the exenatide molecule and with no major safety issues emerging Barclays believes that the Byetta safety database provides significant support for exenatide LAR approval in the event that FDA maintains a line extension designation for the product. With approval of the Byetta frontline monotherapy claim they believe that office of drug safety has had an opportunity to fully review the safety profile of the exenatide molecule and with better than expected Byetta labeling believe that a line extension designation would serve exenatide LAR well.
