Wall Street Throws In the Towel On Amylin (AMLN) Following New Byetta Patient Deaths

August 27, 2008 1:00 PM EDT

Shares of Amylin Pharmaceuticals (NASDAQ: AMLN) are down 25% today following a disclosure that four more Byetta patients died from pancreatitis. The news comes just weeks after the FDA issued a warning to the company and partner Eli Lilly (NYSE: LLY), linking the diabetes drug to pancreatitis.

While a definite relationship between Byetta and pancreatitis has not been proved, the companies may need to add tougher warnings on the drug.

The update on Byetta pushed bullish Robert W. Baird analyst Thomas J. Russo to turn negative on the stock. This morning, Russo downgraded the stock from Buy to Neutral, saying, "we are incrementally more cautious on the commercial performance of Byetta following the latest update."

Canaccord Adams, which has had a Sell rating on the stock, cut its price target to $20 and said a black box warning from the FDA on Byetta is possible.

Soleil Securities downgraded the stock to Sell on today's news and cut its price target to $20 and said investors should avoid the shares. Natixis Bleichroeder also cut its rating to Sell today.

Taking a contrarian view, Piper Jaffray kept positive on Amylin. They said the deaths appear unrelated to Byetta and expect a new analysis to put to rest concern if it shows that pancreatitis rates and morality rates with Byetta are similar to other diabetes agents. The firm said a label warning update on Byetta that falls short of a black box warning would likely be received as a positive by the market. The firm expects a label update in September. The firm is maintaining their Buy rating and $61 price target.

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• Piper Jaffray
• Canaccord Adams
• Robert W Baird
• Soleil Securities
• Natixis Bleichroeder

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