Amylin Pharmaceuticals Inc. (AMLN) ® COMPANY UPDATE Michael G. King, Jr. 212-430-1794 firstname.lastname@example.org LIFE SCIENCESMay 21, 2012 Market Underperform / Speculative Risk Why does AMLN Takeover Chatter Always Come Before Slow Bydureon Rx Figures? Updated GLP-1 Rx data for the week ending May 11th.MARKET DATA 5/18/2012 Wolters-Kluwer reported that there were 3,161 new starts (NRx) onPrice $26.80 Bydureon for the week of May 5 th to May 11th (week 13 of the launch).Exchange NASDAQ On an absolute basis, new starts were down more than 5% from theTarget Price $22.00 previous week’s total of 3,332, interrupting the four week streak of gains.52 Wk Hi - Low $28.02 - $8.03 NRx for the entire GLP-1 class was down slightly more than 4% (29,169Market Cap(MM) $4,364.4EV(MM) $5,734.1 vs. 30,388), giving back most of the gains seen in the previous week’sShares Out (MM) 162.9 4% sequential rise.Public Mkt Float (MM) 1,617.8 NRx for the overall exenatide franchise fell faster than the overallAvg. Daily Vol 4,153,756 GLP-1 class. Exenatide NRx dipped more than 6% sequentially drivenShort Interest 10,496,372 by significant decreases in Bydureon (discussed above) and Byetta (NRxBALANCE SHEET METRICS was 9,783), As a result, Exenatide NRx market share dipped to 44.4%, down from last week’s total of 45.2%. Bydureon’s NRx market share wasCash (MM) $204.1 10.8% (down from last week’s total of 11.0%) and Byetta’s share totalLTD (MM) $714.8Total Debt/Capital NA was 33.5%, down from 34.3%. Table 1 details the comparison of NRxCash/Share $1.39 results for the week compared to the 4-week moving averages prior toBook Value(MM) NA the launch. Figures 1 and 2 detail the NRx figures and market share.Book Value/Share $0.05 The entire GLP-1 class gave back most of last week’s TRx gains,EARNINGS DATA ($) however, the dip in Bydureon TRx is potentially worrisome. We recommend investors focus on total Rx (TRx) as the key metric, as itFY - Dec 2010A 2011A 2012E relates directly to revenues, to judge the exenatide franchise. BydureonQ1 (Mar) (0.27) (0.26) (0.66)AQ2 (Jun) (0.31) (0.22) (0.51) posted TRx of 5,043, down 2.1% from last week’s total of 5,155. This isQ3 (Sep) (0.35) (0.09) (0.44) the first sequentially down week in TRx we have seen for Bydureon.Q4 (Dec) (0.13) (3.16) (0.40) Given that the product only launched 13 weeks ago, we are surprised toFull Year EPS (1.06) (3.73) (2.03) see growth levelling off as quickly as this weeks figures appear toRevenue (MM) 669.0 650.7 624.9 indicate. Bydureon TRx market share rose modestly to 7.1% from 6.9%. Byetta TRx figures were hit even harder, failing 8.5% from 28,314 to 25,890 for the week. These figures translate to a fall in market share forVALUATION METRICS Byetta from 38.0% to 36.6%. TRx was the entire class fell almost 5% toPrice/Earnings NM NM NM 70,810. Table 2 details the comparison of TRx results for the weekEV/Revenue 8.6x 8.8x 9.2x compared to the 4-week moving averages prior to the launch.Y/Y EPS Growth 251.9% NMEV/Sales Overall, this week’s report appears to be as disappointing as last week’s was encouraging. Last week’s report showed gains across theINDICES board for AMLN and the GLP-1 class. This week those gains were givenDJIA 12,369.4 back, and AMLN products were hit harder than Victoza. Additionally, weSP-500 1,295.2 pulled the weekly Rx statistics from Victoza two years ago (Figure 3 andNASDAQ 2,478.5 Table 5). Despite the GLP-1 market growing some 20% in the two yearsNBI 1,251.0 since the launch of Victoza, the absolute NRx generated by Bydureon is 1 Year Price History almost half that achieved by Victoza at the same point in the respective launches. 30 25 20 We maintain our Market Underperform rating and a $22 target. We 15 continue to believe our skepticism is justified given the company’s history 10 5 of poor execution and the most recent quarter’s fair-to-middling (in our Q1 Q2 Q3 Q1 Q2 2012 50 opinion) results. We continue to believe the exenatide franchise is 40 30 unwanted by those who already have a presence in the diabetes space 20 10 and a sub-optimal set of assets for those companies to gain a presence 0 Created by BlueMatrix in the diabetes/metabolic disease space. In our opinion, AMLN management would have done well to accept the BMY offer of $22 per share; justifying our price target on the shares. For definitions and the distribution of analyst ratings, and other disclosures, please refer to pages 8 - 9 of this report.
Amylin Pharmaceuticals Inc. May 21, 2012 Figure 1. NRx Absolute Figures by Week Figure 2. NRx Market Share by WeekRODMAN & RENSHAW EQUITY RESEARCH 2
Amylin Pharmaceuticals Inc. May 21, 2012 Figure 3. Comparison of Victoza and Bydureon Launches (Absolute NRx) Figure 4. Absolute TRx by WeekRODMAN & RENSHAW EQUITY RESEARCH 3
Amylin Pharmaceuticals Inc. May 21, 2012 Table 1. Changes in NRx from Week Ending 5/11 Vs. Moving Averages Prior to Bydureon Approval 4-week Moving Changes in NRx 5/11/2012 Variance Averages 1/27/2012 BYDUREON 3,161 3,161 BYETTA 11,412 9,783 (1,629) Total Exenetide Franchise 11,412 12,944 1,532 VICTOZA 15,063 16,225 1,162 TOTAL GLP-1 New Rx 26,475 29,169 2,694 Market Share % of NRx BYDUREON 10.8% 10.8% BYETTA 43.1% 33.5% -9.6% Total Exenetide % 43.1% 44.4% 1.3% VICTOZA 56.9% 55.6% -1.3% Table 2. Changes in TRx from Week Ending 5/11 Vs. Moving Averages Prior to Bydureon Approval 4-week Moving Changes in TRx 5/11/2012 Variance Averages 1/27/2012 BYDUREON 5,043 5,043 BYETTA 28,429 25,890 (2,539) Total Exenetide Franchise 28,429 30,933 2,505 VICTOZA 36,009 39,877 3,869 TOTAL GLP-1 Rx 64,437 70,810 6,373 Market Share % of TRx BYDUREON 7.1% 7.1% BYETTA 43.8% 36.6% -7.2% Total Exenetide % 43.8% 43.7% -0.1% VICTOZA 56.2% 56.3% 0.1% Upcoming Milestones Product Event Timing Corporate Annual meeting and proxy fight May 24, 2012 Bydureon Secure EU partner 2012 Metreleptin Potential EU orphan designation 1H12 Exenatide suspension Once-weekly Phase III initiation 2Q12/3Q12 Bydureon Launch pen/device 4Q12/1Q13 Exenatide suspension Once-monthly Phase III initiation 2013RODMAN & RENSHAW EQUITY RESEARCH 4
Amylin Pharmaceuticals Inc. May 21, 2012 RODMAN & RENSHAW RATING SYSTEM: Rodman & Renshaw employs a three tier rating system for evaluating both the potential return and risk associated with owning common equity shares of rated firms. The expected return of any given equity is measured on a RELATIVE basis of other companies in the same sector, as defined by First Call. The price objective is calculated to estimate the potential movement in price a given equity could achieve given certain targets are met over a defined time horizon. Price objectives are subject to exogenous factors including industry events and market volatility. The risk assessment evaluates the company specific risk and accounts for the following factors, maturity of market, maturity of technology, maturity of firm, cash utilization, and valuation considerations. Potential factors contributing to risk: relatively undefined market, new technologies, immature firm, high cash burn rates, intrinsic value weighted toward future earnings or events. RETURN ASSESSMENT q Market Outperform (Buy): The common stock of the company is expected to outperform a passive index comprised of all the common stock of companies within the same sector, as defined by First Call. q Market Perform (Hold): The common stock of the company is expected to mimic the performance of a passive index comprised of all the common stock of companies within the same sector, as defined by First Call. q Market Underperform (Sell): The common stock of the company is expected to underperform a passive index comprised of all the common stock of companies within the same sector, as defined by First Call. RISK ASSESSMENT q Speculative - The common stock risk level is significantly greater than market risk. The stock price of these equities is exceptionally volatile. q Aggressive - The common stock risk level is materially higher than market level risk. The stock price is typically more volatile than the general market. q Moderate - The common stock is moderately risky, or equivalent to stock market risk. The stock price volatility is typically in-line with movements in the general market. Rating and Price Target History for: Amylin Pharmaceuticals Inc. (AMLN) as of 05-18-2012 01/05/12 04/27/12 I:MU:$8 MU:$22 30 25 20 15 10 5 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 2010 2011 2012 Created by BlueMatrix RATING SUMMARY Distribution of Ratings Table IB Serv./Past 12 Mos Rating Count Percent Count Percent Market Outperform(MO) 74 64.35% 10 13.51% Market Perform(MP) 28 24.35% 3 10.71% Market Underperform(MU) 6 5.22% 0 0.00% Under Review(UR) 7 6.09% 2 28.57% Total 115 100% 15 100% Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of itsRODMAN & RENSHAW EQUITY RESEARCH 8
Amylin Pharmaceuticals Inc. May 21, 2012 affiliates or subsidiaries within the past 12 months. ADDITIONAL DISCLOSURES Rodman & Renshaw, LLC. (the "Firm") is a member of FINRA and SIPC and a registered U.S. Broker-Dealer. ANALYST CERTIFICATION I, Michael G. King, Jr., hereby certify that the views expressed in this research report accurately reflect my personal views about the subject company(ies) and its (their) securities. None of the research analysts or the research analysts household has a financial interest in the securities of Amylin Pharmaceuticals Inc. (including, without limitation, any option, right, warrant, future, long or short position). As of Apr 30 2012 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Amylin Pharmaceuticals Inc.. Neither the research analyst nor the Firm has any material conflict of interest with Amylin Pharmaceuticals Inc., of which the research analyst knows or has reason to know at the time of publication of this research report. The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services. The Firm or its affiliates did not receive compensation from Amylin Pharmaceuticals Inc. for any investment banking services within twelve months before, but intends to seek compensation from the companies mentioned in this report for investment banking services within three months, following publication of the research report. Neither the research analyst nor any member of the research analysts household nor the Firm serves as an officer, director or advisory board member of Amylin Pharmaceuticals Inc.. The Firm does make a market in Amylin Pharmaceuticals Inc. securities as of the date of this research report. Any opinions expressed herein are statements of our judgment as of the date of publication and are subject to change without notice. Reproduction without written permission is prohibited. The closing prices of securities mentioned in this report are as of May 21 2012. Additional information is available to clients upon written request. For complete research report on Amylin Pharmaceuticals Inc., please call (212) 356-0500. Readers are advised that this analysis report is issued solely for informational purposes and is not to be construed as an offer to sell or the solicitation of an offer to buy. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Past performance is no guarantee of future results.RODMAN & RENSHAW EQUITY RESEARCH 9