A Biotech Bet on Diabetes

06/23/2006 12:00 am EST

Focus:

John McCamant

Editor, Medical Technology Stock Letter

John McCamant, editor of  Medical Technology Stock Letter , has developed an industry leading expertise in the biotech sector. Here, he looks Amylin, a stock that he considers his favorite long-term play on improving treatments for those with diabetes.

"Amylin (AMLN NASDAQ) has made a strong commitment over the years to treating patients with diabetes and other metabolic diseases, and we believe that commitment is going to continue to result in healthy returns to AMLN's shareholders.  The company has two first-in-class diabetes product candidates, Byetta and Symlin, that are already approved to treat diabetes a disease which needs no introduction, and which has become a global epidemic. 

"Byetta, in particular, has shown the ability to not only effectively lower blood glucose levels, but also body weight in type 2 diabetes patients.  Since the product's launch in 2005, Byetta sales have continued to outperform expectations and are paving the way nicely until AMLN and their partners Eli Lilly and fellow MTSL recommendation Alkermes introduce a long-acting release (LAR) formulation of the drug (which, in its current approved form, is administered twice daily).

"To that end, data produced thus far have been highly encouraging, and have also helped fuel the dramatic appreciation in AMLN's stock price.  A slew of data on Byetta and Symlin were recently featured as part of both oral and poster presentations at this year’s ADA meeting. Overall, we believe it is very safe to say that management once again delivered the goods to their shareholders.

"By building on its experience in diabetes research, AMLN has also been able to produce a stable of compounds targeting cardiovascular disease and obesity.  Looking out into the distance, we believe that AMLN represents the most attractive pure play in the diabetes treatment arena.  As such, this is a company you are going to want to own at current levels. AMLN is a buy under $45."

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