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Cover Story March 6, 2008, 5:00PM EST

Inside Drugmakers' War on Fat

(page 2 of 6)

In the middle sit companies like Amylin, a midsize biotech that was nearly wiped out in the 1990s. Now it's trying to follow its successful diabetes treatment with another hit to diversify its revenue stream.

The initial results for all three companies seem promising. Amylin's early-stage tests showed that patients lost an average of 13% of their body weight, or 25 pounds, in six months. Vivus and Merck, meanwhile, are in the final stage of testing before they submit their drugs to the FDA for approval, and Merck will start releasing data in late March. But for these and other companies, the quest for an obesity cure might well end in tears. Their research is playing out against a backdrop of fatalities, failed clinical trials, and product recalls, most famously the Vioxx and fen-phen debacles of a few years back. Never before have drug applications confronted the kind of intense FDA scrutiny that scuttled Acomplia.

ONE-TRICK PONY?

San Diego's Amylin is already a success in diabetes, with two drugs on the market. But it knows all too well the perils of being a one-trick pony. One of its diabetes molecules, which is now a key ingredient in its obesity drug, nearly sank the biotech a decade ago. Another diabetes drug, Byetta, turned into a blockbuster, generating $636 million in sales last year. But Byetta is so tied in to Amylin's near-term prospects that investors hang on every bit of news. On Mar. 3 analysts downgraded Amylin's stock on fears that new FDA guidelines would slow the approval of a long-acting version of Byetta, sending Amylin's shares down 4%, to 25. CEO Bradbury, an affable Englishman who started his Amylin career in Britain in 1994, hopes that branching into obesity will lead to a steady flow of hit drugs and protect the company from getting swallowed up by a larger rival, the fate that has befallen so many biotechs. "How do you create sustainable growth?" asks Bradbury. "That's one of our major challenges."

For Amylin, success in obesity would mark a dramatic turn in one of biotech's most harrowing survival stories. The company was founded in 1987 on the discovery of pramlintide, which it developed as a medicine to help diabetics control their blood sugar. Everything was moving along fine until 1998, when Johnson & Johnson (JNJ) unexpectedly pulled out of a deal to co-develop the drug. Then two trials failed. Bradbury, who was head of development at the time, remembers a grim meeting with then-CEO Joseph C. Cook Jr. "We put together a number of scenarios for the company, including closing it and returning money to the shareholders," Bradbury says.

With just six weeks of cash left and the stock trading at 31 cents a share, down from more than $15 a year earlier, board members got together and pledged millions of their own cash to save the company. Ultimately Amylin scraped together $33.5 million in private investments, enough to press on with pramlintide and a second diabetes drug it was developing. Still, to stay afloat, the biotech had to lay off more than 260 employees, leaving just 37. "We were letting people go who weren't just colleagues, but friends," Bradbury says. "It was by far the hardest thing I've ever been involved in."

Throughout the ordeal, Amylin kept focused on an edge pramlintide had over other diabetes drugs: It helped patients lose weight. Amylin's scientists had always been interested in obesity, a leading cause of Type 2 diabetes. As they learned more about pramlintide, they realized that the hormone was acting on a part of the brain that controls when people get hungry for their next meal. At the same time, the drug seemed to be slowing down the emptying of food from the stomach. The result: Patients felt full sooner than they normally would.

While Amylin was struggling to develop pramlintide, a parallel story was unfolding that would provide the missing piece of the drug being tested today. In 1994, scientists at Rockefeller University in New York discovered a hormone called leptin, which manipulates the brain signals that tell the body it can stop piling on the fat.

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