The collapse of Amylin’s stock has certainly attracted my attention over the last weeks. First a little background on the company: Their main drug Byetta is a very effective diabetes medicine, which has the additional benefit of causing weight loss in a significant portion of patients in whom it is used. There was a recent study present at a diabetes meeting and reported in the NY Times suggesting that patients on Byetta were much less likely to die over a period of two years than patients not on the medicine. It was retrospective subgroup analysis- so not necessarily reliable, but certainly interesting. The prescriptions for Byetta have stopped growing. The drug is pulling in 700 million a year, so nothing to sneeze at, but it seems to have the potential for much greater success. At the current levels, Amylin is losing money. The problem has been that internist who seem the bulk of diabetes are reluctant to use an injectable medicine when they can use a pill- thus the success of the much less effective Januvia- which has a similar but not identical mechanism of action. The company,which is partnered with Eli Lilly,has plans to role out a much longer acting injectable which would require a single shot every week. This drug has blockbuster written all over it, and the company estimates that it could be on the market as early as next year. So what has happened over the recent weeks. The FDA issued a warning that Byetta has been associated with a very serious form of pancreatitis- inflammation of the pancreas- caused necrotizing pancreatits. This condition is very rare, but there have been two deaths from this in patients taking Byetta. Yesterday the company announced additional deaths from pancreatitis, which are not believed to be from drug. The stock has responded to these news releases by dropping from 35 to 20 in a little more than 1 week. The endocrinologists I have talked to remain very upbeat on the drug. The incidence of necrotizing pancreatitis is very low, and the drug seems to decrease death and not increase it in the recent ACCORD trial. So maybe the stock should be a scream buy here? I am not so sure, the fly in the ointment is the FDA. They have certainly been know to overreact in the recent past, and there is a real possibility that this could cause them to slow dramatically the approval of the long acting drug that Amylin needs to become profitable. This is a real risk, so I am holding off for right now on buying the stock. If it keeps falling though, we will soon reach a point where this gamble is one I cant pass up. I would love to here the opinions of other doctors on this topic.