NDA acceptance not enough for Alkermes

On July 7, 2009, Alkermes, Inc. (ALKS), Eli Lilly (LLY) and Amylin Pharmaceuticals, Inc. (ALNY) announced the acceptance of the New Drug Application (NDA) for once-a-week diabetes drug Exenatide by the U.S. Food and Drug Administration (FDA).

Exenatide once weekly is being co-developed by the three companies for type II diabetes. The application was filed by Alkermes in May 2009.

Exenatide is an active ingredient of Byetta injection. It is presently available in the U.S. and in many countries across the globe as a treatment for type II diabetes patients who fail to achieve good glycemic control with commonly available oral therapies. Byetta is injected twice a day as against the once a week administration of the proposed drug.

If approved, Exenatide once weekly would be the first and only once-a-week therapy for the treatment of type II diabetes. However, we are cautious about its direct approval by the FDA.

Our major concern about the program is the pancreatic inflammation reported for Byetta. Few patients developed hemorrhagic or necrotizing pancreatitis while undergoing Byetta therapy. As a result, warning and precautionary language was added to the Byetta label.

Recently, the U.S. FDA while reviewing Novo Nordisk’s (NVO) application for type II diabetes drug Liraglutide revealed its concern about thyroid tumors found in mice and rats tested with the medicine. Both Liraglutide and Exenatide belong to the Glucagon-Like Peptide-1 (GLP-1) class of drugs.

In spite of preclinical and clinical studies indicating that Exenatide once weekly may have a better safety profile than liraglutide, we remain apprehensive about the potential safety concerns of Exenatide.

In view of the above facts, we feel that the FDA may delay the approval of Exenatide once weekly. It is likely that the Duration-1 data may not be sufficient and that the FDA may require data from other Duration (2, 3, 4) trials. Even with the Duration-2 data, the approval will be delayed at least by six months. Also, the FDA may ask for greater safety testing.

We downgraded Alkermes to Sell earlier this year due to the company’s bleak outlook in the next few quarters.
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