AMLN - comments?

[jiesen]

some good advice on biotech investment

http://www.forbes.com/2006/09/26/fda-drug-approvals-stocks-biz_cx_pk_0927fda.html?partner=yahootix

Stock Tips From The FDA
Matthew Herper and Peter Kang 09.27.06, 6:00 AM ET

The colon cancer drug Vectibix is one of the most promising medicines being developed by Amgen, the world's largest biotech firm. The antibody, infused into patients veins', is similar to ImClone's Erbitux but causes fewer allergic reactions. Annual sales could top $800 million three years from now--if the U.S. Food and Drug Administration decides to approve it.

Investors don't know what the FDA will decide, but they know when the decision will come: by Thursday. Why? A 1992 law sets deadlines for such decisions, by which the FDA must approve, delay or reject outright a new drug. And according to recent research from the investment bank Sanford C. Bernstein, those dates should help determine when investors buy drug and biotech stocks--and when they decide to sell them short.
In Pictures: Upcoming Regulatory Decisions

The 1992 law, the Prescription Drug User Fee Act (PDUFA), was a bargain made by industry to speed up drug approval times. Drug companies agreed to pay fees when they submitted new medicines for review, and are now paying the FDA $250 million a year. In return, the agency would make its decisions on strict time lines: drugs that were determined to be of vital medical need would face a six-month review; other decisions are given ten months.

Companies generally issue press releases when a drug is accepted for regulatory review, and when they don't, investors clamor for them. The result: Drug firms, their rivals and their stockholders mark their calendars with the expected PDUFA date for a new drug. Shorts and longs alike converge on biotechs as the date approaches, knowing the stock could get a bump from regulatory action or drop precipitously when the FDA tells a biotech to do more homework.

But is playing PDUFA dates smart? Maybe not, if you're a bull or a long-term investor. Analysts at Sanford C. Bernstein have looked at how shareholders in big pharmaceutical and more volatile biotech stocks have done over the past couple of years when they bet ahead of regulatory decisions. "It hasn't paid to be early," writes Richard Evans, Bernstein's U.S. pharmaceuticals analyst.

Evans found 56 positive and 46 negative decisions. In all, the negative FDA decisions hurt the share price more than the positive decisions helped it. Moreover, the FDA decisions tended to influence the share price long after they were made. Getting past the FDA often led companies to months of outperformance.

The lesson: Use FDA decisions as a way to scout out new investments, not as an event to trade on. Even after a stock has popped from the approval of a new drug, there is still room for the stock to run. Amylin Pharmaceuticals (nasdaq: AMLN - news - people ) and marketing partner Eli Lilly (nyse: LLY - news - people ) got their diabetes drug, Byetta, past the FDA on April 29, 2005. Shares actually fell the next day, but then broke out in late August on strong Byetta sales and good data for a still unapproved, long-acting form of the drug.

In fact, there might be an upside in shorting ahead of a regulatory decision, when bad news is most likely to arrive. This is particularly true, Evans said in an e-mail, if the FDA is rejecting or delaying a lot of drugs, because negative events tend to hurt more than positive ones help share prices. "Most times you would lose a little money, but sometimes you would gain a lot," says Geoffrey Porges, a biotech analyst at Bernstein who didn't work on the current report but has drawn similar conclusions in the past.

Two years ago, Porges also found that betting on drug stocks ahead of PDUFA dates was risky, but doing so ahead of expected data announcements was somewhat less so. This was especially true of big biotechs like Amgen (nasdaq: AMGN - news - people ) or Genentech (nyse: DNA - news - people ), where earlier clinical trials usually allowed investors to predict how later ones would turn out.

As for the PDUFA strategy, investors will have plenty of chances to put it in place--both by shorting weaker biotechs and betting on the good ones after approval. On Friday, a decision is expected on a lucrative new indication for the cancer drug Rituxan, from Genentech. Decisions on two diabetes drugs from Merck (nyse: MRK - news - people ) and Novartis (nyse: NVS - news - people ) are expected next month. All told, we count at least 11 expected decisions through the beginning of next year.

[peanuts]

you can bet that increased revenues will increase the profitability of AMLN.

It will reduce losses. I feel a little iffy on this, dude... It would be one thing if they were already profitable and then started to make even more money, but if they are just reducing their losses, then the net result is basically the same- the company is still in the red. To me, that means the share price should erode with the losses on the books. I understand that the margins seem good now, but what about when sales take off? Will the selling costs as a percentage of sale increase at a faster rate than sales? On the surface, it sounds like this will be the case, since the products are relatively new...

Keep me updated, please. I hope you do really well with it and get another one of those HUUUUUGE 120% trades!!!

[jiesen]

AMLN has lost money up until now because they've never had a product until about a year ago (now they have 2 on the market and more to come). The products which they do have, haven't attained sufficient market share to make the company profitable as a whole, but they will. It will likely take another year or two for that, but I have no doubt that Byetta will be making a billion a year or more by 2008. Right now, it's running about $500M/year but like I just posted, there was a 10% increase just in the last week in prescriptions and therefore revenues. And with an 86% gross profit margin

see my previous post: http://www.mrmarketishuge.com/showth...?t=899&page=21

you can bet that increased revenues will increase the profitability of AMLN.

[peanuts]

Prescriptions for Byetta rose this week to 48692 from 43948 last week. We are finally seeing the end of the supply bottleneck. Now is the time to load up on AMLN, as the stock price must catch up to the rising revenues again!

http://www1.investorvillage.com/smbd...msg&mid=416729

Jiesen,

Why does AMLN lose money? They have a negative EPS according to Stockcharts. Will these increased revenues make the company profitable?

Thanks. I'm looking for new LT investments. As I have to rebalance my portfolio, now.

[jiesen]

blowout scrip numbers!

Prescriptions for Byetta rose this week to 48692 from 43948 last week. We are finally seeing the end of the supply bottleneck. Now is the time to load up on AMLN, as the stock price must catch up to the rising revenues again!

http://www1.investorvillage.com/smbd.asp?mb=2885&mn=5668&pt=msg&mid=416729

[jiesen]

check this out - another possibility for AMLN's drug

from a post at IV:

http://www1.investorvillage.com/smbd.asp?mb=2885&mn=4627&pt=msg&mid=343887

In yet another ongoing clinical trial, Amylin is testing exenatide as a treatment for Polycystic ovary syndrome...a condition that evidently affects 5-10% of all women of reproductive age. What follows is a brief explanation of the condition of PCOS as background, followed by the Phase 2 Clinical trial sponsored by Amylin in conjunction with the Lousiana Research Foundation, which began recruiting in June, 2006.

Assuming succesful results of this trial, Byetta label expansion for treatment of PCOS would expand potential users into a population of up to 5-10% of all women...who otherwise would be under threat of reproductive problems, long term diabetes and heart disease.
*******

Introduction
Polycystic ovary syndrome (PCOS) is a condition most often characterized by irregular menstrual periods, excess hair growth and obesity, but it can affect women in a variety of ways. Irregular or heavy periods may signal the condition in adolescence, or polycystic ovary syndrome may become apparent later when a woman has difficulty becoming pregnant.

The signs and symptoms of polycystic ovary syndrome stem from a disruption in the reproductive cycle, which normally culminates each month with the release of an egg from an ovary (ovulation). The name polycystic ovary syndrome comes from the appearance of the ovaries in some women with the disorder — large and studded with numerous cysts (polycystic). These cysts are follicles, fluid-filled sacs that contain immature eggs.

Polycystic ovary syndrome is the most common hormonal disorder among women of reproductive age in the United States, affecting an estimated 5 percent to 10 percent. Early diagnosis and treatment of polycystic ovary syndrome can help reduce the risk of long-term complications, which include diabetes and heart disease.
************************************************** ******************
Exenatide and Metformin Therapy in Overweight Women With PCOS

This study is currently recruiting patients.
Verified by Metabolic Center of Louisiana Research Foundation June 2006

Sponsors and Collaborators: Metabolic Center of Louisiana Research Foundation
Amylin Pharmaceuticals
Information provided by: Metabolic Center of Louisiana Research Foundation
ClinicalTrials.gov Identifier: NCT00344851


Purpose

Current research has shown that the use of diabetes management practices aimed at reducing insulin resistance and hyperinsulinemia (such as weight reduction and the administration of oral antidiabetic drugs) in women with PCOS can not only improve glucose and lipid metabolism but can also reverse testosterone abnormalities and restore menstrual cycles. A new medicine called exenatide (Byetta) has been found to reduce body weight, as well as, improve abnormal glucose metabolism in diabetics. This randomized study will compare Exenatide (Byetta) to extended release metformin (Fortamet) to combination therapy (both Byetta and Fortamet) on menstrual cyclicity, hormone profiles and metabolic profiles over a 24-week period in women with PCOS.
Condition Intervention Phase
Polycystic Ovary Syndrome
Drug: metformin, exenatide or combined (metformin & exenatide )
Phase II


MedlinePlus related topics: Ovarian Cysts


Study Type: Interventional
Study Design: Treatment, Randomized, Open Label, Active Control, Parallel Assignment, Safety/Efficacy Study

Official Title: Comparison of the Effects of Monotherapy With Exenatide or Metformin to Combined Exenatide and Metformin Therapy on Menstrual Cyclicity in Overweight Women With Polycystic Ovary Syndrome

Further study details as provided by Metabolic Center of Louisiana Research Foundation:
Primary Outcomes: - Menstrual Cyclicity ( # menses/ 24 weeks)
Secondary Outcomes: BMI, WHR, FAI (T/SHBG), DHEAS, lipids,abdominal girth,; insulin resistance-(HOMA and composite insulin sensitivity index [ SIOGTT),; and pancreatic ß-cell function (corrected insulin response [CIRgp] and; insulinogenic index [IGI] ).
Expected Total Enrollment: 60
Study start: June 2006


Objectives: The objective of the present proposal is to compare the clinical, endocrine and metabolic effects of therapy with exenatide and metformin alone, to combination therapy in women with PCOS. This study will serve as a pilot investigation to open perspectives for future investigations combining insulin-sensitizing drugs with different mechanisms of action in patients with PCOS, especially ones for whom standard treatment with metformin is less effective.

Subjects : 60 oligomenorrheic overweight/obese (BMI >27) women meeting criteria for PCOS (age 18-40)· six or fewer menses /year or amenorrheic· clinical or laboratory evidence of hyperandrogenism (hirsutism or elevated testosterone (T))· PCOS ovary on ultrasound(need to meet criteria 1 and either 2 or 3 [or both]) Inclusion/Exclusion Criteria: Major EXCLUSION CRITERIA – FEMALE1) other uncorrected endocrinopathy- hyperprolactinemia, hyper- or hypothyroidism, congenital adrenal hyperplasia2) presence of overt diabetes or impaired glucose tolerance3) alterations in hepatic or renal function4) use of hormonal medications, insulin sensitizers or medications that interfere with carbohydrate metabolism for at least 8 weeks5) Any medical condition which, in the judgment of the investigator may interfere with the absorption, distribution, metabolism or excretion of the drug6) Simultaneous participation in another clinical trial7) Known active substance abuse including tobacco and alcohol. (> 10 cigarettes/day) Refusal or inability to comply with protocol9) patient desiring pregnancy, pregnant, or breastfeeding Study Design: Balanced randomized parallel group clinical study with 3 treatment arms: metformin (1000 mg BID); exenatide (10 mcg BID) or combined (metformin 1000 mg BID; exenatide 10 mcg BID) therapy for 24 weeks.

Efficacy Measures: Primary- Menstrual Cyclicity ( # menses/ 24 weeks)Secondary-BMI, WHR, FAI (T/SHBG), DHEAS, lipids, insulin resistance-(HOMA and composite insulin sensitivity index [ SIOGTT), and pancreatic ß-cell function (corrected insulin response [CIRgp] and insulinogenic index [IGI] ).

Safety: For safety, all subjects who enter the study are evaluable. Subjects will be monitored for safety by assessment of adverse events, physical exams, vital signs and laboratory values.

Statistical methods/analysis: The measurement of menstrual frequency involves nominal data ( patients with/without regular cycles pre vs post-treatment and will be analyzed using the McNemar test (complex chi square for paired data). For all other analyses, in which the data are interval, parameters, such as androgens, lipids, insulin sensitivity, etc. will be evaluated using a SS/Treatment x Trials (pre/post) analyses of variance (ANOVA). This repeated measures design will allow us to determine if each of the treatment drugs had an effect and if they are significantly different from each other while controlling for individual patient differences Study Drug Regimens: Exenatide5 ug bid - 4 weeks10 ug bid - 20 weeks (end of study)Metformin500 mg qd 2 weeks500 mg bid 2 weeks 500 mg am, 1000 mg pm- 2 weeks1000 mg bid –18 weeks (end study) Exenatide plus MetforminExenatide- 5 ug bid-4 weeksMetformin 500 qd for 2 weeks, 500 mg bid 2 weeksExenatide- 10 ug –20 weeks (to end of study)Metformin-500 mg am, 1000 mg pm- 2 weeks – 1000 bid for 18 weeks (end of study)** Metformin may be adjusted at the discretion of the physician to a level that is tolerable in patients who cannot tolerate the full dose of metformin in combination with exenatide (combination therapy only )
*******************

http://www.clinicaltrials.gov/ct/show/NCT00344851?order=14

Java

[jiesen]

Jiesen,
I am selling out of the money calls, and as the stock moves South, I cover those calls. Then as the stock moves up, I again sell the calls. Example: AMLN was about $46.50 the other day, and I sold the JAN $45 for $7.20. AMLN pulled back for three days, and those calls dropped down to $5.90. Covered them and I am looking to resell those calls again, though this time I am looking at the $50 strike. IF AMLN climbs to $50 and never looks back, I will still be happy with my profits. But AMLN moves around alot, and I like that, because the options are pretty hefty.

Thanks for recommending this stock back when it was $21.

NBB,
I'm glad you like the stock, and hope you make a ton of $$ on the options! You're right, AMLN is pretty volatile, which can make for some juicy profits there.

[New-born baby]

Amln

Jiesen,
I am selling out of the money calls, and as the stock moves South, I cover those calls. Then as the stock moves up, I again sell the calls. Example: AMLN was about $46.50 the other day, and I sold the JAN $45 for $7.20. AMLN pulled back for three days, and those calls dropped down to $5.90. Covered them and I am looking to resell those calls again, though this time I am looking at the $50 strike. IF AMLN climbs to $50 and never looks back, I will still be happy with my profits. But AMLN moves around alot, and I like that, because the options are pretty hefty.

Thanks for recommending this stock back when it was $21.

[jiesen]

So give us a price target, Mr. Genius
BTW, I own AMLN, so make a reasonable estimate, will ya?

Well, if AMLN jumped to $75 next week, I'd probably sell mine. But I think it's likely to track the weekly scrip numbers for Byetta pretty closely for the short term (meaning months instead of years)- that is, a 45k Byetta number = $45 stock price (+/- 10% or so). And I believe we should hit 50-55k in the next month or two. Within a year 100k/week will be written for Byetta, and -you guessed it- AMLN should trade at $100/shr. I only expect to see a falling price (long run) if the scrips stabilize below 80k, because that would probably not leave AMLN with enough money to complete all of its development plans without some significant equity financing. But I think 100k should be easily doable if not by next year, then 2008.

So, while my goal here is to hold AMLN pretty much forever, if you must pick a target, you could try making it a multiple (maybe 1.4x or 1.6x) the weekly scrip# and sell at that point, to buy back when it pulls back to 1x again (or below for further margin of safety). That's just a suggestion, and for short term trading on AMLN, I would defer to you and your charts- you have demonstrated your ability to make those calls. When I try to time my entries and exits (like my POTW blunder out of AMLN these past few weeks) I end up burned more often than not. Also, I sold half when it spiked to $27 in after hours way back thinking I could get it back on a pullback that never came. I'm not risking that happening again, not with AMLN.

Thinking about an exit strategy here, I could see $200-250 being a reasonable target for 10 years out or so. But I'll have to take a look at more sales data as it comes out for a while first, and also see how Byetta LAR plays out.

[New-born baby]

I did say I'd get to this eventually, and so here's a little fun with the latest income figures.

From the 6 months ended June 30 2006 income we have:
Rev= 185M ($30.8M/month)
Cost=24M
Gross Margin=87%
Counting the 147M SG&A cost that's a 21% margin.

From the 3 months ended June 30 2006 income we have:
Rev= 109M ($36.3M/month)
Cost=15M
Gross Margin=86%
Counting the 63M SG&A cost that's a 28% margin.

Already you can see the trend here, that with the increase in revenues/month, the margins increase. Gross margin will increase slightly (after that hiccup with the cartridge shorage of course) with economy of scale, and it doesn't get much better than a 90% margin!

But the margin after SG&A is more interesting, as it's heading to 30% and above. When AMLN is pulling in 30% of $1B of revenue, that's $300M to (fully!) fund R&D, which comes right back to the company in the expanding pipeline of new and better stuff.

With 2 products of enormous potential on the market already, more to come, and practically 0 debt, sky's the limit for this baby.

So give us a price target, Mr. Genius
BTW, I own AMLN, so make a reasonable estimate, will ya?

[jiesen]

and now some fun with gross margins (or HOW AMLN WORKS!)

I did say I'd get to this eventually, and so here's a little fun with the latest income figures.

From the 6 months ended June 30 2006 income we have:
Rev= 185M ($30.8M/month)
Cost=24M
Gross Margin=87%
Counting the 147M SG&A cost that's a 21% margin.

From the 3 months ended June 30 2006 income we have:
Rev= 109M ($36.3M/month)
Cost=15M
Gross Margin=86%
Counting the 63M SG&A cost that's a 28% margin.

Already you can see the trend here, that with the increase in revenues/month, the margins increase. Gross margin will increase slightly (after that hiccup with the cartridge shorage of course) with economy of scale, and it doesn't get much better than a 90% margin!

But the margin after SG&A is more interesting, as it's heading to 30% and above. When AMLN is pulling in 30% of $1B of revenue, that's $300M to (fully!) fund R&D, which comes right back to the company in the expanding pipeline of new and better stuff.

With 2 products of enormous potential on the market already, more to come, and practically 0 debt, sky's the limit for this baby.

[jiesen]

Ok so it's taken me a while, but...

Amylin Pharmaceuticals, Inc. Announces Conversion of All Outstanding 2.25% Convertible Senior Notes Due 2008
Thursday August 24, 4:05 pm ET

http://biz.yahoo.com/prnews/060824/lath061a.html?.v=1

SAN DIEGO, Aug. 24 /PRNewswire-FirstCall/ -- Amylin Pharmaceuticals, Inc. (Nasdaq: AMLN - News) today announced that in connection with the previously announced redemption of its 2.25% convertible senior notes due June 30, 2008, issued in 2003, holders of all of the outstanding notes converted their notes into shares of Amylin's common stock prior to the August 24, 2006 redemption date. The aggregate outstanding principal amount of the notes was $175 million. As a result of these conversions, 5,377,148 shares of common stock were issued to the note holders. The note holders were also entitled to a make-whole payment equal to $112.94 per $1,000 principal value of the converted notes less interest actually paid. Amylin elected to pay the make-whole payment for the converted notes in shares of Amylin's common stock, amounting to an additional approximately 180,000 shares issued. In connection with the conversions, Amylin paid approximately $550 in cash, representing cash paid in lieu of fractional shares.

and from the company's latest quarterly report:

http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0001104659-06-052015&Type=HTML

7. Convertible Senior Notes
In June and July 2003, the Company issued the 2003 Notes in a private placement, which have an aggregate principal amount of $175 million and are due June 30, 2008. The 2003 Notes have been registered under the Securities Act of 1933, as amended, or the Securities Act, to permit registered resale of the 2003 Notes and of the common stock issuable upon conversion of the 2003 Notes. The 2003 Notes bear interest at a rate of 2.25% per year, payable in cash semi-annually, and are convertible into a total of up to 5.4 million shares of common stock at a conversion price of approximately $32.55 per share, subject to customary adjustments such as stock dividends and other dilutive transactions.

The 2003 Notes are redeemable at the Company’s option in whole or in part at a redemption price equal to 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest to the redemption date if the closing price of the Company’s common stock has exceeded $45.57 for at least 20 trading days in any consecutive 30-day trading period. At the time of any such redemption, the Company will also make an additional payment on the redeemed 2003 Notes, referred to as a make-whole payment, equal to $112.94 per $1,000 principal amount of the 2003 Notes, less interest actually paid or accrued but unpaid on the 2003 Notes. The Company may elect to make this payment in cash or shares of its common stock. On July 24, 2006, the Company announced that it is calling for the redemption of all its outstanding 2003 Notes (Note 9).

In April 2004, the Company issued the 2004 Notes, which have an aggregate principal amount of $200 million, and are due April 15, 2011, in a private placement. The 2004 Notes have been registered under the Securities Act to permit registered resale of the 2004 Notes and of the common stock issuable upon conversion of the 2004 Notes. The 2004 Notes bear interest at 2.5% per year, payable in cash semi-annually and are convertible into a total of up to 5.8 million shares of common stock at a conversion price of $34.35 per share, subject to customary adjustments for stock dividends and other dilutive transactions. The Company may not redeem the 2004 Notes prior to maturity.

Upon a change in control, the holders of the 2003 and 2004 Notes may elect to require the Company to re-purchase the 2003 or 2004 Notes. The Company may elect to pay the purchase price in common stock instead of cash, or a combination thereof. If paid with common stock the number of shares of common stock a holder will receive will be valued at 95% of the closing prices of our common stock for the five-day trading period ending on the third day before the purchase date.

What this means is that AMLN's long-term debt is now essentially retired. Half of it was redeemed by the company (about $200M worth) in stock yesterday, and the other half is essentially now a call on the stock at $34 good until 2011.

Yes, there is dilution with this, but getting the debt off of the balance sheet is a very good thing. AMLN is flush with cash now, and the $45 stock price gives them license to print as much cash as they need for the short term, until profit can get to where they need to be to fully support their pipeline. And get there it will. My revenue projection of $500M this year is still very much attainable:

http://members.cox.net/mystock/Amylin.htm

(why yes, I am having trouble sleeping tonight...)

[peanuts]

AMLN is looking pretty good here to me. Plus I like the group right now too. Should be a good one to trade long here. Someone post some TA and an opinion.... As for me, I think the chart looks fantastic.

Looks good to me also, Lye. Nice pick.

Looks like everything is pointing up. I might take a little nibble tommorrow if it follows through


glad you covered your short on steel
the future market for it is a big deal

[Lyehopper]

AMLN Showing Strength today....

AMLN is looking pretty good here to me. Plus I like the group right now too. Should be a good one to trade long here. Someone post some TA and an opinion.... As for me, I think the chart looks fantastic.

[jiesen]

Bull case for AMLN

I'm aware that my shares in AMLN have increased in price more than double from where I've entered, so it may be time to take another look to see if maybe it's become overvalued, right? Well, who am I kidding, I'm never selling this stock! I'm in love! (ok, ok hopefully I'm not) But anyway, someone is telling me that earnings and revenues are declining at AMLN, the future looks bleak, and that gross margins are dismal. Well, I'd like to address each point, but will start with the easiest one first. Obviously, I'm biased from a long perspective, so I'll take the job of presenting the bull case for AMLN, and I welcome anyone to provide the data that supports the bear case.

First, look at the chart from the previous post, showing the scrip numbers. Drug revenue estimates based on prescriptions are as follows:
2Q05: 1M
3Q05: 22M
4Q05: 56M
1Q06: 93M
2Q06: 120M+ (even if there's no prescription growth through the rest of the quarter)

These look like growing revenues to me, what about you? Is there anyone that believes AMLN will post lower drug revenues for 2006 than they did in 2005?

Next up will be gross margins... stay tuned!