Piper Jaffray Reiterates Overweight Rating on Amylin Pharma (AMLN)

Piper Jaffray is out with a research report this morning, where it reiterates its Overweight rating on shares of Amylin Pharmaceuticals AMLN; it also lowered its price target from $26.00 to $25.00. The PJ analysts said, “Amylin reported a wider 2Q loss, which was largely driven by lower Byetta sales, partially offset by lower operating expenses. Byetta sales of $140.7mn were in line with our 2Q preview, but below Street's $152.3mn. We have reduced our Byetta sales forecast to reflect 2Q trends. Management provided additional details on the impact of the Bydureon launch on GMs and operating expense, which suggests slightly higher operating spend from '12-15. This combined with an addition of 16mn shares to our diluted share count offsets an increase in our Bydureon estimates following ADA data presentations that support best in class profile. We are reiterating our Overweight rating but cutting our price target to $25 from $26 to reflect slightly lower EPS.” They added, “Management reiterated their plan to achieve positive cash flow from operations by the end of 2010. The company continues to target Gross Margins for Bydureon of 75%, which includes the 8% royalty to Alkermes and the $100mn/year (shared 50/50 with Lilly) fixed costs related to the Ohio manufacturing plant (roughly half of which is non-cash depreciation and amortization expense).” “Thus, we expect gross margins to be negatively impacted the first few quarters after Bydureon launch. Management provided some clarity on SG&A and R&D costs going forward, which they expect to remain in the range of $110-120mn/quarter (non-GAAP). In 2010, we model Bydureon GM of 60% in 4Q10 (compared to 91% for Byetta) improving to 75% in 4Q11. We have assumed only a 15% price premium for Bydureon vs. Byetta, which could also prove conservative.”