Amylin, Lilly gear up for big FDA ruling

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Eli Lilly, Amylin and Alkermes will be holding their collective breath this Friday when the FDA will reveal whether it will approve Byetta LAR, the long-acting form of the bestselling diabetes drug Byetta. Thanks to technology from Alkermes that helps the drug stay in the patient's bloodstream, Byetta LAR can be administered just once a week rather than requiring twice-daily injections.

What's at stake for these companies? Amylin has the most invested. An approval could provide the drugmaker with billions in revenues for years to come. According to the Wall Street Journal, one analyst projected $2.1 billion in sales for the drug by 2015, while another industry watcher predicts $3 billion in U.S. sales. For Lilly, Byetta LAR would boost a product lineup that's facing one of the steepest patent cliffs in the coming years. And Alkermes is set to reap 7.5 percent royalty on worldwide sales.

Xconomy's Luke Timmerman maps out the four possible outcomes from the FDA's decision Friday:

The FDA approves Byetta LAR with only a standard warning, though JP Morgan analyst Cory Kasimov says there's not much chance of that happening.

Byetta LAR could be approved, but with a severe black box warning about the possibility of patients developing thyroid cancer.

Third--most likely, according to Kasimov--the FDA will delay its response and ask for additional, but minor, data on the drug. In that case, the companies could still have an approval in hand by the end of 2010.

Finally, the worst-case scenario: FDA could issue a "complete response" letter asking for major new set of data that would severely delay the drug's approval. If that happens, look for Amylin stock to lose half its value and Alkermes to dive about 33 percent.

Needless to say, the stakes are high for all involved.

- here's the Wall Street Journal report
- read more from Xconomy