Amylin board facing pressure from key investors

San Diego Business Journal, April 27, 2009 by Heather Chambers

Last week, billionaire activist investor Carl Icahn made known his intentions to push for a sale of San Diego-based Amylin Pharmaceuticals to partner Eli Lilly & Co.

Before it came to light in documents filed with the Securities and Exchange Commission, Amylin independent director James Wilson revealed Icahn's intent in a response letter. In his letter to Icahn, Wilson called a sale to Lilly "premature" because Amylin has yet to gain FDA approval for its once-weekly version of Byetta, a diabetes drug currently sold as a twice-daily injectable.

Icahn's proposal to cut costs by 30 percent is also at odds with Amylin, which said additional cuts on top of the 16 percent cuts made in November would "dramatically undervalue" future profits from a new diabetes treatment.

An ongoing proxy fight has pitted Icahn and Eastbourne Capital Management against Amylin for control of the company.

Both Icahn and Eastbourne, which together own more than 20 percent of the company, have proposed a slate of five directors to lead the 12-member board. Additionally, Icahn has called for the resignation of Amylin Chairman Joseph Cook. Amylin, on the other hand, has submitted two other nominees to the ballot.

Any major changes to the board could trigger a "poison put," which might make Amylin pay back as much as $900 million in debt.

Amylin shares have been battered by reports linking its diabetes drug Byetta to inflamed pancreas. In November, it said data on a long-acting version of Byetta didn't meet FDA requirements.

The company cut 340 employees, or 16 percent of its work force, to preserve cash. Shares of Amylin continued to slide in early April after the FDA raised concerns about thyroid tumors seen in animals taking Novo Nordisk's drug liraglutide. Although the drug is in the same class as Amylin's once-weekly Byetta, company executives said they haven't seen risks of cancerous tumors with Byetta, and only minimal risks with its once-weekly version.

Amylin and Lilly are planning to submit an application to the FDA for approval of the long-lasting version, known as exenatide LAR, by the end of the second quarter.

Send biotechnology news to Heather Chambers at hchambers@sdbj.com, or call her at 858-277-6359.