12:00 AM
Apr 06, 2009
 |  BioCentury  |  Finance

Ebb & Flow

Shares of Amylin Pharmaceuticals Inc. (NASDAQ:AMLN) rode a rollercoaster last week, ultimately finishing down $2.32 (19%) to $9.68, on a mix of clinical, corporate and competitor news.

On Monday, the stock was off by as much as 9% to $10.87 intraday after Amylin announced the nomination of two new board members in its ongoing battle with activist investor Carl Icahn.

The following day the stock hit an intraday high of $13.45 - up 19% on Monday's close of $11.32. The company's exenatide once weekly met the primary endpoint in the Phase IIIb DURATION-2 trial to treat Type II diabetes (see B14).

Also on Tuesday, FDA released briefing documents for an FDA panel review of competing Type II diabetes treatment Victoza liraglutide from Novo Nordisk A/S (CSE:NVO; NYSE:NVO).

News on Wednesday that Amylin and Lilly received rights from Altea Therapeutics Corp. to use the latter's PassPort Transdermal Delivery System to develop a transdermal version of exenatide had no effect on the stock. Altea recently completed a Phase I study of the once daily patch for Type II diabetes (see B2).

But Amylin's shares fell on Thursday and Friday after the FDA panel discussed data regarding a preclinical thyroid cancer signal in Victoza and whether it could be a class effect for long-acting GLP-1 agonists, which includes exenatide once weekly (see "Victoza Rat's Nest," A5).

Amylin and partner Eli Lilly and Co. (NYSE:LLY) expect to submit an NDA for exenatide once weekly by the end of next quarter. The long-acting release formulation of synthetic exendin-4 uses Medisorb drug delivery technology from Alkermes Inc. (NASDAQ:ALKS), which was off $2.61 (22%) to $9.49 on the week.

Bulging ballot

Meanwhile, the battle for control of Amylin's board became more convoluted. The company has tentatively scheduled its 2009 annual meeting for May 27, where shareholders could face a total of 22 possible directors for the 12-member board.

The outcome could be clouded by change of control provisions in two debt agreements. If a majority of Amylin's board changes, that could trigger a wave of debt repayments totaling more than $900 million. Amylin, with a current market cap of $1.3 billion, reported $816.8 million in cash and equivalents at Dec. 31.

In February, Icahn and Eastbourne Capital Management each announced intentions to nominate a slate of five directors (see BioCentury, Feb. 16).

Last week, Amylin announced its own nominations to replace two departing board members: Paul Clark, former chairman, president and CEO of Icos Corp., which Lilly acquired in 2007; and Paulo Costa, former president and CEO of the U.S. unit of Novartis AG (NYSE:NVS; SIX:NOVN).

Then, after market close on Thursday, Amylin released a letter from its lead independent director, James Wilson, which described how the board is working with the debt holders to address the change of control provisions.

He said the company believes that an agreement for $575 million in senior convertible notes issued in June 2007 should allow the board to avoid a change of control by approving director nominees prior to the election, thus avoiding the repayment trigger. However, Wilson said the trustee of the debt has "refused to confirm our view" and that the issue "will need to be resolved in court."

Wilson also said the board has contacted the administrative agent for a December 2007 credit agreement for a $125 million term loan and a $15 million revolving credit facility. The terms say repayment is automatically triggered by a change in the majority of the board. Wilson said the board is seeking to amend or waive that provision.

A third debt agreement, for $200 million in senior convertible notes made in 2004, did not contain an immediate repayment provision on change of control.

On Friday, Eastbourne said it would be willing to reduce the number of its proposed nominees to ensure shareholder-proposed nominees would only represent a minority of the board.

It was uncertain if Icahn would be willing to make a similar concession, but in his letter, Wilson said Icahn was participating in a lawsuit filed in the Chancery Court of Delaware on May 24 by a third shareholder, San Antonio Fire & Police Pension...

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