Amylin & Friends Brace for Diabetes Review (AMLN, LLY, ALKS)
Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) has a big event on deck this week. This Friday, March 12, is its Prescription Drug User Fee Act (PDUFA) action date for an FDA panel to issue a recommendation on Byetta as the the first once a week treatment for Type II diabetes. The date had been moved due to recent weather closures in February in and around Washington D.C.
Analysts are mixed on the stock with BMO cutting its rating last week, but there were two positive calls from Credit Suisse and Jesup & Lamont.
Options are elevated today, but not overly active. The open interest of stock options is also large enough that the $20 synthetic options straddle would imply that shares have to rise above $24.70 or drop below $15.30 to be profitable.
Byetta is already sold with Eli Lilly & Co. (NYSE: LLY), and Alkermes, Inc. (NASDAQ: ALKS) provides the technology that makes Byetta last longer in the delivery mechanism for a once per week use. Open interest in the Alkermes options is elevated but not astronomical.
There is a risk here for a potential delay on top of what has already been seen. Some feel the FDA will delay this recommendation with a request for more side effect data.
Amylin is currently believed to be the winner of ultimate once-weekly approval, even if a delay comes this week. But that notion also depends upon whom you ask. The most recent short interest data shows about 16.25 million shares (almost 12% of the float) are listed as being in the short interest. The stock is at $20.10 and the 52-week trading range is $7.89 to $20.46. That 52-week high was also hit today.
JON C. OGG
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