FDA Approval of Bydureon to Impact Pharmaceutical Companies, Investors

Strategic Insights -

The US Food and Drug Administration is expected to approve Bydureon, a once-weekly treatment for Type 2 diabetes, during the third week of October 2010. The approval will affect three companies: Amylin Pharmaceuticals Inc, Eli Lilly and Co, and Alkermes Inc. While estimates of the drug's sales exceed $1 billion annually, there is uncertainty about how fast it can reach that figure in the competitive diabetes-treatment market. Researchers project varying sales figures, ranging from $275 million in 2011 to $3 billion in 2020.

Key Takeaways:

  • The FDA's approval of Bydureon is expected to impact three companies: Amylin Pharmaceuticals Inc, Eli Lilly and Co, and Alkermes Inc.
  • Researchers project sales figures ranging from $275 million in 2011 to $3 billion in 2020.
  • Deutsche Bank projects sales of $1.4 billion by 2014 and hitting $3 billion in 2020.
  • A negative FDA decision could cause a more than $4 drop in the stock for Alkermes.
  • Shares of Amylin have increased 47% for 2010, while those of Alkermes have increased 57% in the same period.
  • Eli Lilly's shares have increased 6% for 2010, despite the company's size and less direct impact on revenue from Bydureon.
  • Under their partnership, Amylin and Eli Lilly share US operating profits and costs from Bydureon equally.
  • Alkermes will collect an 8% royalty on global sales and pay no marketing costs.
  • Byetta had sales of $797 million in 2009, but faced competition from Novo Nordisk A/S's Victoza.
  • Barclays Capital estimates that Byetta currently has about 65%-70% of total prescriptions in the GLP-1 class.

Statistics:

  • Estimated sales of Bydureon: over $1 billion annually.
  • Projected sales figures:

+ BMO Capital Markets: $275 million in 2011, $430 million in 2012, and $1 billion eventually.

+ Deutsche Bank: $1.4 billion by 2014, $3 billion in 2020.

  • Share price increase for Amylin: 47% for 2010.
  • Share price increase for Alkermes: 57% in 2010.
  • Share price increase for Eli Lilly: 6% for 2010.
  • Royalty on global sales collected by Alkermes: 8%.
  • Sales of Byetta in 2009: $797 million.
  • Market share of Byetta in the GLP-1 class: 65%-70%.

Sources:

  • "Amylin Pharmaceuticals Inc" (Source: BMO Capital Markets)
  • "Eli Lilly and Co" (Source: BMO Capital Markets)
  • "Alkermes Inc" (Source: BMO Capital Markets)
  • "US Food and Drug Administration" (Source: The Wall Street Journal)
  • "Bydureon" (Source: Reuters)
  • "Byetta" (Source: Reuters)
  • "Victoza" (Source: Novo Nordisk A/S)
  • "Barclays Capital" (Source: The Wall Street Journal)