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Rodman & Renshaw on Amylin Pharma (AMLN) 5-21-12
1. Amylin Pharmaceuticals Inc. (AMLN)
®
COMPANY UPDATE Michael G. King, Jr.
212-430-1794
mking@rodm.com
LIFE SCIENCES
May 21, 2012 Market Underperform / Speculative
Risk
Why does AMLN Takeover Chatter Always Come Before Slow Bydureon Rx Figures?
Updated GLP-1 Rx data for the week ending May 11th.
MARKET DATA 5/18/2012
Wolters-Kluwer reported that there were 3,161 new starts (NRx) on
Price $26.80 Bydureon for the week of May 5 th to May 11th (week 13 of the launch).
Exchange NASDAQ On an absolute basis, new starts were down more than 5% from the
Target Price $22.00 previous week’s total of 3,332, interrupting the four week streak of gains.
52 Wk Hi - Low $28.02 - $8.03
NRx for the entire GLP-1 class was down slightly more than 4% (29,169
Market Cap(MM) $4,364.4
EV(MM) $5,734.1
vs. 30,388), giving back most of the gains seen in the previous week’s
Shares Out (MM) 162.9 4% sequential rise.
Public Mkt Float (MM) 1,617.8 NRx for the overall exenatide franchise fell faster than the overall
Avg. Daily Vol 4,153,756 GLP-1 class. Exenatide NRx dipped more than 6% sequentially driven
Short Interest 10,496,372 by significant decreases in Bydureon (discussed above) and Byetta (NRx
BALANCE SHEET METRICS was 9,783), As a result, Exenatide NRx market share dipped to 44.4%,
down from last week’s total of 45.2%. Bydureon’s NRx market share was
Cash (MM) $204.1
10.8% (down from last week’s total of 11.0%) and Byetta’s share total
LTD (MM) $714.8
Total Debt/Capital NA
was 33.5%, down from 34.3%. Table 1 details the comparison of NRx
Cash/Share $1.39 results for the week compared to the 4-week moving averages prior to
Book Value(MM) NA the launch. Figures 1 and 2 detail the NRx figures and market share.
Book Value/Share $0.05 The entire GLP-1 class gave back most of last week’s TRx gains,
EARNINGS DATA ($) however, the dip in Bydureon TRx is potentially worrisome. We
recommend investors focus on total Rx (TRx) as the key metric, as it
FY - Dec 2010A 2011A 2012E
relates directly to revenues, to judge the exenatide franchise. Bydureon
Q1 (Mar) (0.27) (0.26) (0.66)A
Q2 (Jun) (0.31) (0.22) (0.51)
posted TRx of 5,043, down 2.1% from last week’s total of 5,155. This is
Q3 (Sep) (0.35) (0.09) (0.44) the first sequentially down week in TRx we have seen for Bydureon.
Q4 (Dec) (0.13) (3.16) (0.40) Given that the product only launched 13 weeks ago, we are surprised to
Full Year EPS (1.06) (3.73) (2.03) see growth levelling off as quickly as this week's figures appear to
Revenue (MM) 669.0 650.7 624.9 indicate. Bydureon TRx market share rose modestly to 7.1% from 6.9%.
Byetta TRx figures were hit even harder, failing 8.5% from 28,314 to
25,890 for the week. These figures translate to a fall in market share for
VALUATION METRICS
Byetta from 38.0% to 36.6%. TRx was the entire class fell almost 5% to
Price/Earnings NM NM NM 70,810. Table 2 details the comparison of TRx results for the week
EV/Revenue 8.6x 8.8x 9.2x
compared to the 4-week moving averages prior to the launch.
Y/Y EPS Growth 251.9% NM
EV/Sales Overall, this week’s report appears to be as disappointing as last
week’s was encouraging. Last week’s report showed gains across the
INDICES board for AMLN and the GLP-1 class. This week those gains were given
DJIA 12,369.4 back, and AMLN products were hit harder than Victoza. Additionally, we
SP-500 1,295.2 pulled the weekly Rx statistics from Victoza two years ago (Figure 3 and
NASDAQ 2,478.5 Table 5). Despite the GLP-1 market growing some 20% in the two years
NBI 1,251.0 since the launch of Victoza, the absolute NRx generated by Bydureon is
1 Year Price History
almost half that achieved by Victoza at the same point in the respective
launches.
30
25
20
We maintain our Market Underperform rating and a $22 target. We
15 continue to believe our skepticism is justified given the company’s history
10
5
of poor execution and the most recent quarter’s fair-to-middling (in our
Q1 Q2 Q3 Q1 Q2
2012
50
opinion) results. We continue to believe the exenatide franchise is
40
30
unwanted by those who already have a presence in the diabetes space
20
10 and a sub-optimal set of assets for those companies to gain a presence
0
Created by BlueMatrix in the diabetes/metabolic disease space. In our opinion, AMLN
management would have done well to accept the BMY offer of $22 per
share; justifying our price target on the shares.
For definitions and the distribution of analyst ratings, and other disclosures, please refer to pages 8 - 9 of this report.
2. Amylin Pharmaceuticals Inc. May 21, 2012
Figure 1. NRx Absolute Figures by Week
Figure 2. NRx Market Share by Week
RODMAN & RENSHAW EQUITY RESEARCH 2
3. Amylin Pharmaceuticals Inc. May 21, 2012
Figure 3. Comparison of Victoza and Bydureon Launches (Absolute NRx)
Figure 4. Absolute TRx by Week
RODMAN & RENSHAW EQUITY RESEARCH 3
4. Amylin Pharmaceuticals Inc. May 21, 2012
Table 1. Changes in NRx from Week Ending 5/11 Vs. Moving Averages Prior to Bydureon Approval
4-week
Moving
Changes in NRx 5/11/2012 Variance
Averages
1/27/2012
BYDUREON 3,161 3,161
BYETTA 11,412 9,783 (1,629)
Total Exenetide Franchise 11,412 12,944 1,532
VICTOZA 15,063 16,225 1,162
TOTAL GLP-1 New Rx 26,475 29,169 2,694
Market Share % of NRx
BYDUREON 10.8% 10.8%
BYETTA 43.1% 33.5% -9.6%
Total Exenetide % 43.1% 44.4% 1.3%
VICTOZA 56.9% 55.6% -1.3%
Table 2. Changes in TRx from Week Ending 5/11 Vs. Moving Averages Prior to Bydureon Approval
4-week
Moving
Changes in TRx 5/11/2012 Variance
Averages
1/27/2012
BYDUREON 5,043 5,043
BYETTA 28,429 25,890 (2,539)
Total Exenetide Franchise 28,429 30,933 2,505
VICTOZA 36,009 39,877 3,869
TOTAL GLP-1 Rx 64,437 70,810 6,373
Market Share % of TRx
BYDUREON 7.1% 7.1%
BYETTA 43.8% 36.6% -7.2%
Total Exenetide % 43.8% 43.7% -0.1%
VICTOZA 56.2% 56.3% 0.1%
Upcoming Milestones
Product Event Timing
Corporate Annual meeting and proxy fight May 24, 2012
Bydureon Secure EU partner 2012
Metreleptin Potential EU orphan designation 1H12
Exenatide suspension Once-weekly Phase III initiation 2Q12/3Q12
Bydureon Launch pen/device 4Q12/1Q13
Exenatide suspension Once-monthly Phase III initiation 2013
RODMAN & RENSHAW EQUITY RESEARCH 4
8. Amylin Pharmaceuticals Inc. May 21, 2012
RODMAN & RENSHAW RATING SYSTEM: Rodman & Renshaw employs a three tier rating system for evaluating both the potential
return and risk associated with owning common equity shares of rated firms. The expected return of any given equity is measured on a
RELATIVE basis of other companies in the same sector, as defined by First Call. The price objective is calculated to estimate the potential
movement in price a given equity could achieve given certain targets are met over a defined time horizon. Price objectives are subject to
exogenous factors including industry events and market volatility. The risk assessment evaluates the company specific risk and accounts
for the following factors, maturity of market, maturity of technology, maturity of firm, cash utilization, and valuation considerations.
Potential factors contributing to risk: relatively undefined market, new technologies, immature firm, high cash burn rates, intrinsic value
weighted toward future earnings or events.
RETURN ASSESSMENT
q
Market Outperform (Buy): The common stock of the company is expected to outperform a passive index comprised of all the
common stock of companies within the same sector, as defined by First Call.
q
Market Perform (Hold): The common stock of the company is expected to mimic the performance of a passive index comprised
of all the common stock of companies within the same sector, as defined by First Call.
q
Market Underperform (Sell): The common stock of the company is expected to underperform a passive index comprised of all
the common stock of companies within the same sector, as defined by First Call.
RISK ASSESSMENT
q
Speculative - The common stock risk level is significantly greater than market risk. The stock price of these equities is
exceptionally volatile.
q
Aggressive - The common stock risk level is materially higher than market level risk. The stock price is typically more volatile
than the general market.
q
Moderate - The common stock is moderately risky, or equivalent to stock market risk. The stock price volatility is typically in-line
with movements in the general market.
Rating and Price Target History for: Amylin Pharmaceuticals Inc. (AMLN) as of 05-18-2012
01/05/12 04/27/12
I:MU:$8 MU:$22
30
25
20
15
10
5
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2
2010 2011 2012
Created by BlueMatrix
RATING SUMMARY
Distribution of Ratings Table
IB Serv./Past 12 Mos
Rating Count Percent Count Percent
Market Outperform(MO) 74 64.35% 10 13.51%
Market Perform(MP) 28 24.35% 3 10.71%
Market Underperform(MU) 6 5.22% 0 0.00%
Under Review(UR) 7 6.09% 2 28.57%
Total 115 100% 15 100%
Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of
securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its
RODMAN & RENSHAW EQUITY RESEARCH 8
9. Amylin Pharmaceuticals Inc. May 21, 2012
affiliates or subsidiaries within the past 12 months.
ADDITIONAL DISCLOSURES
Rodman & Renshaw, LLC. (the "Firm") is a member of FINRA and SIPC and a registered U.S. Broker-Dealer.
ANALYST CERTIFICATION
I, Michael G. King, Jr., hereby certify that the views expressed in this research report accurately reflect my personal views about the
subject company(ies) and its (their) securities.
None of the research analysts or the research analyst's household has a financial interest in the securities of Amylin Pharmaceuticals Inc.
(including, without limitation, any option, right, warrant, future, long or short position).
As of Apr 30 2012 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Amylin
Pharmaceuticals Inc..
Neither the research analyst nor the Firm has any material conflict of interest with Amylin Pharmaceuticals Inc., of which the research
analyst knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific
investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a
substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from Amylin Pharmaceuticals Inc. for any investment banking services within twelve
months before, but intends to seek compensation from the companies mentioned in this report for investment banking services within
three months, following publication of the research report.
Neither the research analyst nor any member of the research analyst's household nor the Firm serves as an officer, director or advisory
board member of Amylin Pharmaceuticals Inc..
The Firm does make a market in Amylin Pharmaceuticals Inc. securities as of the date of this research report.
Any opinions expressed herein are statements of our judgment as of the date of publication and are subject to change without notice.
Reproduction without written permission is prohibited. The closing prices of securities mentioned in this report are as of May 21 2012.
Additional information is available to clients upon written request. For complete research report on Amylin Pharmaceuticals Inc., please
call (212) 356-0500.
Readers are advised that this analysis report is issued solely for informational purposes and is not to be construed as an offer to sell or
the solicitation of an offer to buy. The information contained herein is based on sources which we believe to be reliable but is not
guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Past performance
is no guarantee of future results.
RODMAN & RENSHAW EQUITY RESEARCH 9