Amylin’s bid to reassure the public about the safety of its type II diabetes drug Byetta seems to have fallen on deaf ears as the firm’s stock continues to slide.

As we reported yesterday, Amylin and partner Eli Lilly reported four new deaths among patients with pancreatitis who took Byetta (exenatide), in addition to the two cases reported last week by the US Food and Drug Administration. The two firms are in talks with the agency regarding a label change but investors are still jumpy as Amylin shares ended down 24.8% to $20.48.

Also the mood among analysts appears to have switched. Previously they had gone along with the view that patients with type II diabetes have a greater risk of pancreatitis than healthy people anyway and there have been reports of similar problems with other treatments, not just Byetta, a glucagon-like peptide-1 analogue. However some brokers are now more cautious of the drug’s long-term growth potential.

Analysts at Soleil Securities Group have downgraded Amylin to ‘sell’ from ‘hold’ following the disclosure of the four additional cases of mortality associated with pancreatitis. In a research note, Matt Renna wrote that “we believe that a heightened vigilance for patient safety among primary care physicians will blunt the rate of GLP-1 adoption”, affecting the value that will be created by Byetta and a long-acting release formulation of the drug which is under regulatory review.

Thomas Russo at Robert W Baird is also concerned. He issued a note saying that "we are reducing our rating to neutral, as we are incrementally more cautious on the commercial performance of Byetta following the latest update". He added that "we cannot conclude whether pancreatitis is any more an issue with Byetta than other diabetes drugs” but “we think meaningful gains in the stock will require proof Amylin/Lilly can jump start its growth in the second half 2008 against these latest headwinds and no negative new news from the ongoing healthcare database analysis".