Sector Snap: Diabetes drug treatments

The multibillion-dollar diabetes drug market is teeming with competitors both current and anticipated, including Byetta and its most immediate threat to sales, Novo Nordisk's not-yet-approved liraglutide.

Late Tuesday, Indianapolis-based Eli Lilly and San Diego-based Amylin said there were four additional reported deaths in patients taking Byetta, on top of two reported earlier in August. The companies, in a conference call, pointed out that the deaths involved cases of pancreatitis could not be directly linked to Byetta, and that diabetes patients were already three times more likely to have pancreatitis, compared with the general population.

The companies also pointed out that pancreatitis likely was not the primary cause of death in the newly reported cases.

Amylin shares plunged $5.02, or 18.5 percent, to $22.21 in afternoon trading Wednesday, hitting the stock's lowest point in about three years. The drug makes up about 80 percent of Amylin's revenue. Eli Lilly shares fell 32 cents to $46.70.

Denmark-based Novo Nordisk's developing drug liraglutide would be taken once-daily, compared with Byetta's twice-daily dosing. Novo shares rose 73 cents to $57.80.

Liraglutide could also pressure Eli Lilly's and Amylin's new developing version of Byetta, called exenatide LAR, meant to be taken once-weekly. Both drugs are part of the GLP-1 class of diabetes treatments, which work to control blood-sugar levels.

Meanwhile, Whitehouse Station, N.J.-based Merck & Co. already markets the diabetes treatment Januvia, a DPP-4 inhibitor, which also works to control blood sugar.

"Although we project 2008 Byetta sales of over $700 million, sales growth has slowed since the launch of Merck's Januvia, and the approval of other GLP-1 analogues (liraglutide) is likely to further pressure Byetta over the next 24 months," Cowen and Co. analyst Phil Nadeau said in a note to investors.

Meanwhile, Thomas Weisel Partners analyst M. Ian Somaiya, said the issues surrounding Byetta could mean more Food and Drug Administration scrutiny for exenatide LAR.