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Shai Bronshtein

AMLN AT A GLANCE

P/E ► 0   EV/EBITDA ► -3.84   ROA ► -15.7% AVG ROE ► -55.1% AVG Debt to Equity ► 2.27 AVG Current Ratio ► 3.41 AVG Interest Coverage Ratio ► -11.0 AVG

 

 

 

 

 

 

Revenue, Net Income, and Net MarginRevenue, Gross Profit, and Gross MarginOperating IncomeEbitIncome Before TaxesNet Income from Continuing OpsInterest vs Continuing IncomeInterest CoverageOperating Expenses Research & DevelopmentSG&AAmortization & Depreciation

Amylin Pharmaceuticals (NYSE: AMLN) is a pharmaceutical company that produces drugs to treat diabetes and obesity. The company currently has two type II diabetes drugs on the market: Simylin and Byetta. The latter is responsible for approximately 90% of the company's sales and is unique in that it promotes moderate weight loss; other diabetes drugs often have the opposite affect. Amylin is poised to take advantage of the rapidly growing market for diabetes and obesity drugs. There are an estimated 21 million people in the United States with diabetes^[1], and over 30% of the U.S. population is currently eligible for obesity treatment. To augment its chances of success, Amylin has teamed up with pharma giant Eli Lilly and Company (LLY) to market the Byetta domestically and internationally.

[edit] Business Financials

Amylin makes its money from the sale of biopharmaceutical products. Currently it has two products on the market: Byetta, a joint diabetes venture with Eli Lilly and Company (LLY), and Symlin, also a diabetes medication. Currently Byetta sales are 10x those of Symlin. This is probably due in part to the fact that Eli Lilly has partnered with AMLN to market the drug both domestically and internationally. That said Amylin is applying for additional patents that would expand the therapeutic uses of Symlin and hopefully increase sales. It is important to note that the company has yet to achieve a profitable year. Because of the long lead time needed to develop drugs and the huge R&D costs, Amylin will need several years of profitable sales to recoup its costs.

[edit] Key Trends and Forces

• Obesity and Diabetes: Amylin's two main products focus on diabetes treatment. A rise in obesity has led to increased cases of diabetes in the U.S.; roughly 30% of the U.S. population is currently eligible for anti-obesity treatment. Roughly 7% of the US population currently has diabetes, and this number is rapidly increasing. The aging US population will likely result in even more cases of diabetes, as the prevalence of diabetes increases among older individuals^[4]. Byetta, one of Amylin's two drugs for diabetes, also aids weight loss, an effect most other diabetes medications do not have. Amylin should benefit from the rapidly expanding market for its products.

• Research and Development: Amylin is currently developing products in its two therapeutic areas of diabetes and obesity. The first is Exenatide LAR, a medication derived from Byetta and currently in clinical trials. The second, a treatment for obesity, derives from the active ingredients in Symlin. These developmental drugs, however, are not "new" as much as derivatives of current medications. Amylin is looking at other hormonal treatments for obesity, but in general its pipeline is very limited. Unlike larger pharmaceutical companies that may be developing several hundred drugs at a time, Amylin is working on at most five.

• Patent Expiration: While Amylin's drugs have only recently hit the market, patent life for pharmaceutical products is very short. After the patent on the drugs expires generic drugs (Biogenerics and Biosimilars) are often introduced. Generic drugs can drive down the price of Amylin's drugs significantly.

• International Expansion: Amylin teamed up with Eli Lilly and Company (LLY) in producing Byetta, and the two have successfully sought approval for the medication in the EU. The US population is not the only aging population, and there is a market for diabetes medications in other countries as well.

[edit] Competition

AMLN is unique relative to its competitors in that it promotes moderate weight loss. Most other drugs either result in very limited weight loss or worse, weight gain. Amylin, also reduces insulin resistance, a major problem caused by type II diabetes. Amylin's primary disadvantage is that its products are injectable whereas many new drugs are taken orally. In general, oral drugs are more palatable for patients. Doctors are also more likely to prescribe an oral therapy like Merck's Januvia because of its greater ease of use. Amylin is also much smaller than its competitors.

• Novartis AG (NVS): markets Starlix for treatment of type 2 diabetes.
• AstraZeneca (AZN): currently developing saxagliptin for diabetes.
• GlaxoSmithKline (GSK): produces Avandia, a huge diabetes medication that recently was linked to cardiovascular risks.
• Eli Lilly and Company (LLY): sells Actos, an oral diabetes medication in addition to its collaboration with Amylin on Byetta.
• Merck (MRK): manufactures Januvia, which was launched in 2006 and is a direct competitor to Byetta. Byetta, however, has shown more benefits in weight-loss than Januvia, and it increase insulin levels more effectively than Januvia.

[edit] Notes

1. ↑ Juvenile Research Foundation International
2. ↑ 2006 10-K pg F4
3. ↑ 2006 10-K pg 33
4. ↑ http://apps.nccd.cdc.gov/ddtstrs/template/ndfs_2005.pdf