Amylin Pharmaceuticals shares rise in premarket trading on diabetes drug regulatory outlook

Ahead of the Bell: Amylin Pharmaceuticals

NEW YORK — Shares of Amylin Pharmaceuticals Inc. rose in premarket trading Tuesday as Wall Street considered the approval of a competitor’s diabetes drug a good sign for the biotechnology company.

On Monday, The Food and Drug Administration approved Novo Nordisk’s Victoza, a once-daily, injectable diabetes treatment. It belongs to the GLP-1 class of diabetes drugs, which include Amylin’s twice-daily injectable treatment, Byetta.

Amylin and partner Eli Lilly & Co. are still waiting for an FDA decision on their potential once-weekly version of Byetta, called exenatide LAR.

San Diego-based Amylin’s shares rose $2.67, or 15 percent, to $20.12 in premarket trading. The stock closed at $17.45 Monday.

Potential safety issues surrounding new versions of GLP-1 drugs prompted some concern in the market. But, The FDA’s approval of Victoza signals that the agency found an approval pathway for the drugs, several analysts said. That could help clear the way for exenatide LAR.

Victoza was approved with a warning over the risk for thyroid cancer and the requirement of a risk-mitigation strategy.

Jefferies & Co. analyst Thomas Wei reaffirmed a “Buy” rating on Amylin and boosted his price target to $26 from $22.

“Victoza approval bodes well for exenatide (LAR’s) prospects, both on approval and commercial prospects,” he said, in a note to investors.

He put “higher confidence” into Amylin’s drug, citing a seemingly safer profile for cancer risk and effectiveness.

Meanwhile, Leerink Swann analyst Dr. Joshua Schimmer said exenatide LAR will likely receive the same regulatory treatment as Victoza, and eventually receive approval with post-approval study requirements.

Elsewhere in the market, a Citi Investment Research analyst upgraded Amylin shares to “Buy” from “Hold” and boosted the price target to $27 from $14. A Barclays analyst reaffirmed a “Overweight” rating and raised the price target to $24 from $22.