Shares of Amylin Pharmaceuticals have collapsed after it emerged that US regulators have rejected data for a once-weekly version of its diabetes drug Byetta.

The company has disclosed in a filing to the US Securities and Exchange Commission that Byetta LAR (exenatide), which is being developed with Alkermes and Eli Lilly, has fallen foul of the Food and Drug Administration. Specifically the agency has rejected data from studies meant to show that Byetta LAR batches made by Alkermes were comparable to batches made at Amylin's Ohio facility

The latter firm said that “we are continuing discussions with the FDA regarding these data and various alternatives” to enable a New Drug Application submission by the end of the first half of 2009. However, if required to initiate a new clinical study to demonstrate comparability, the submission could be delayed.

This could mean that a regulatory filing may be pushed back to late 2010 or early 2011, a year later than Amylin had originally hoped for. It has high hopes for exenatide LAR, which uses technology from Alkermes which releases the drug over the course of a week, whereas Byetta has to be injected twice-weekly.

BMO Capital Markets analyst Robert Hazlett was not surprised by the FDA’s opposition and wrote in an investor note that “this delay in the exenatide LAR timeline was a risk we had long recognised”. He noted that a filing and possible approval for the new version of Byetta will probably be about about two years behind Novo Nordisk's investigational once-daily treatment, liraglutide.

News of the FDA’s rejection of the exenatide LAR data comes after the Byetta franchise has taken quite a hammering. In August, the FDA said it had received six reports of haemorrhagic or necrotising pancreatitis of patients receiving Byetta, two of whom died. Amylin leapt to the defence of the drug, noting that the deaths were not directly linked to Byetta and diabetics are already at increased risk of pancreatitis compared with healthy patients but the firm’s shares slumped.

This latest piece of bad news has had an equally dramatic effect on Amylin stock which ended the day down 25.8% at $7.94. Alkermes shares were also battered, down 9.8% to $9.11 each.

Shareholders talk of Amylin sale
The collapse of Amylin’s share price comes a day after Eastbourne Capital, which owns a 12.5% stake in the firm, made its own SEC filing noting that it intends to hold discussions on ways to improve shareholder value, including the possible sale of the company. Another major shareholder is the billionaire investor Carl Icahn, who has a 7.3% stake in Amylin and has just overseen the deal that will see Lilly buy ImClone Systems for $6.5 billion.