San Diego-based Amylin Pharmaceuticals, Inc.’s (AMLN) diabetes drugs Byetta and Symlin sales were both in-line with expectations in the second quarter. However, the Amylin story is tied to the success or failure of phase III potential blockbuster, exenatide LAR. Although the data on LAR presented last month at ADA looked good, we are unconvinced that it will be enough to drive the kind of profitability that justifies an expansion in valuation.

Amylin currently trades at 21x our 2012 EPS estimate of $0.91. The 2012 multiple is a 100% premium to the large-cap pharma / biotechnology peer-group average of 10x 2012 EPS. We believe this premium by Amylin is not warranted given significant questions that surround the future growth of Byetta. Additionally, we are concerned that the recent pancreatitis fears will cause a delay in the LAR filing, currently guided for the middle of 2009.

Even with $1.5 billion in LAR

This morning, shares of biopharmaceutical company Amylin (AMLN) are tanking -- down almost 20% as I am posting this blog -- on additional bad news about its diabetes drug Byetta, which has reportedly been found to be responsible for 4 more deaths, according to an AP report this morning.

In actuality, those 4 "new" deaths are actually "old" ones; nevertheless, Byetta has been associated with 6 deaths over the past 3+ years, all in some way tied to hemorrhagic or necrotizing pancreatitis.  Management contends that the risk of developing these severe forms of pancreatitis remains consistent with that found in the general type-II diabetic population. 

And so far, the data would seem to support what Amylin and Eli Lilly (LLY) management is saying.  Nevertheless, the FDA is looking into the reported cases and the potential causality association with Byetta will be enough to have a negative impact on prescriptions

Sinobiomed Inc. (SOBM.OB) is a leading Chinese developer of genetically engineered recombinant protein drugs and vaccines. Sinobiomed employs a patented low-cost, high yield production process to enhance bioactivity and guarantee the highest levels of purity.

Sinobiomed currently has 10 products approved or in development: three on the market, four in clinical trials, and three in R&D. The company’s products respond to a wide range of diseases and conditions, including: hepatitus B&C, surgical bleeding, diabetic ulcers and burns, malaria, cancer, rheumatoid arthritis, acute liver disease, stroke, blood clots and thrombosis, acute pancreatitis, and blood cell regeneration.

Sinobiomed has several competitive advantages in addition to the company’s patented recombinant protein manufacturing process. One advantage is the company’s strong strategic alliances with leading Chinese research hospitals and institutes for collaborative development of patentable techniques and treatments. Another advantage is the company’s distribution network.

Sinobiomed has also established a nationwide sales and marketing network along with international

In a note received just now from Zacks senior biotechnology analyst Jason Napodano, CFA, the Food & Drug Administration [FDA] just issued a warning on Amylin's (AMLN) diabetes drug, Byetta, on a potential risk for pancreatitis.

According to the report, there have been six reported cases, with two deaths in a recent-enough time frame that the FDA believes warnings doctors and patients is necessary.  The stock is already down 10% on the news.

From the analyst: "We have a SELL on Amylin and continue to recommend investors avoid the name."

Read the full analyst report on AMLN