Amylin, Lilly Partnership Tested By Lilly GLP-1 Project

Byetta relationship is “the best it has ever been,” Amylin says, but impact of Lilly’s competitive research will need to be negotiated.

Amylin expects to discuss changes to its partnership agreement with Lilly if Lilly's internal GLP-1 antidiabetic compound LY2189265 continues to progress in the clinic.

"It is not clear in the contract" what the implications are of Lilly's development of a potential competitor to Amylin's GLP-1 brand Byetta (exenatide), Amylin CFO Mark Foletta said during the BioCentury Newsmakers conference in New York City Sept. 4. "It will be negotiated. We will sit down and talk."

Foletta stressed that there is no conflict among the partners. "The collaboration today with Eli Lilly is, I can tell you, the best it has ever been," he said. Any refinements will be to build on that, he added: "It is so important to them and to us that the collaboration be healthy."

Still, there should be plenty for the two partners to talk about.

Tough times for Byetta

Lilly's disclosure of its own competitive research project has put pressure on Amylin at a time when the company is struggling to respond to concerns about the commercial future of Byetta and the potential line-extension Byetta LAR (¹ (Also see "Miscommunicating Risk: The Byetta Disconnect" - Pink Sheet, 21 Aug, 2008.)).

Wall Street learned about Lilly's progress with its own GLP-1 compound via a posting on ² ClinicalTrials.gov--one that came just a day after an FDA safety "update," citing reports of severe pancreatitis associated with Byetta. With competing GLP-1 projects already under development from Novo Nordisk and Roche, the news added to the concern about Amylin's prospects (³ (Also see "Novo’s Liraglutide Gets Advisory Committee Review; Is Byetta To Blame?" - Pink Sheet, 5 Sep, 2008.)).

Lilly's trial posting describes a Phase II/III study comparing Lilly's "once-weekly, subcutaneous" drug LY2189265 to Merck's Januvia (sitagliptin) in 1,500 type 2 diabetes patients treated with metformin. The study now is recruiting patients with a targeted completion date of August 2012.

Lilly previously had posted a dose-ranging study of LY2189265 in overweight patients with type 2 diabetes, which only finished enrolling subjects in July. The seemingly rapid advancement into Phase II/III caught the eyes of investors at an awkward time for Amylin.

The Byetta partnership already was under some stress, after Byetta's torrid launch cooled off considerably in 2007 (⁴ (Also see "Amylin CEO: Firm Can Do Better With Byetta" - Pink Sheet, 21 Apr, 2008.)).

Not another Bristol/ImClone

One thing is clear: although the contract between Lilly and Amylin includes opt-in rights for either party on competitive research, those provisions do not apply to the Lilly compound.

"Based upon what we know of that program today, we do not believe we have opt-in rights," Foletta explained. "It needed to reach certain phases of clinical studies by a certain period of time for that to happen. And that has expired."

Lilly is more definitive in its reading of the terms: "Under certain conditions, Amylin would have received rights to 'opt in' to the development and commercialization of Lilly's GLP-1 program," Lilly said. "These conditions were not met (and there is no existing chance that they could be met). As a result, Amylin does not have rights to our GLP-1 program."

Opt-in rights have emerged as a central issue in the negotiations between Bristol-Myers Squibb and ImClone over Bristol's unsolicited offer to buy out its Erbitux partner (⁵ (Also see "“Unhappy” BMS To ImClone: Erbitux, Follow-on Still Ours" - Pink Sheet, 11 Sep, 2008.)).

Lilly is precluded from making a similar move toward Amylin by a comprehensive standstill provision in the Byetta contract (⁶ (Also see "The Next Bristol/ImClone? “Standstill” Provisions Complicate Other Deals" - Pink Sheet, 8 Sep, 2008.), p. 10).

Confident in Lilly's commitment to Byetta

Amylin may not have rights to opt-in on Lilly's research, but it does have assurances of Lilly's ongoing commitment to Byetta, Foletta said.

By contract, Lilly must devote its "best efforts" to Byetta, Foletta noted. There also is a provision requiring that any competitive research be walled off from Byetta. "You can't share resources" between Byetta and the other research, Foletta said. "And Lilly's certainly committed that's what they're doing within their GLP-1 program."

"So," Foletta said, "we will talk. And we will figure out a way that we can progress both of our companies forward in a manner that benefits both companies."

"We're very excited about this opportunity with exenatide once-weekly ... and Lilly is as well. We have senior contact at all levels there that says that it's something that they really need to help their business in the next few years."

[Editor's Note: Terms of the Lilly/Amylin partnership are included in FDC-Windhover's ⁷ [See Deal] deals database.]

Foletta suggested that anyone nervous about Lilly's commitment to Byetta "take note of" the fact that Lilly joined Amylin in a conference call to respond to the concerns about pancreatitis. Lilly VP-Global Patient Safety Donald Therasse indeed participated in the call, although unfortunately for Amylin the call ended up prompting another decline in its stock price (⁸ (Also see "Byetta Scripts, LAR Progress Unaffected By Safety Scare, Amylin Says" - Pink Sheet, 1 Sep, 2008.), p. 9).

Byetta is "best-in-class"

CEO Dan Bradbury offered another reassurance for investors worried about Lilly's intentions during the Morgan Stanley Global Healthcare "Unplugged" conference Sept. 9.

Speaking of the potential for competition in the GLP-1 class overall, Bradbury emphasized the challenging regulatory climate.

"Today, a bird in the hand is worth several in the bush, given what's going on with the FDA," he quipped. "Byetta is the only incretin mimetic that is approved. And I think that that's actually very important that people keep that in perspective. There are many unknowns about what could happen with other development programs going forward."

Amylin also questions the possibility of any second entrant demonstrating a meaningfully better risk/benefit profile.

"Actually improving upon what we've demonstrated with exenatide once-weekly with a product from the same class, I think, will be extremely difficult ... It will be very, very challenging for any other product to beat."

"Exenatide is not only the first-in-class molecule, but I think it's the best-in-class molecule. It's the most potent incretin mimetic. And it also has, we believe, the greatest efficacy with regards to its effects on glucose and on body weight."

So, Bradbury concluded, Amylin is focusing on driving the increased use of Byetta and pursuing the LAR formulation. "That will enable us with our partner Eli Lilly to be dominant in this market going forward."

- Michael McCaughan ([email protected])