By Debbie Strickland

Though results of an initial Phase III trial in Type II diabetes failed to achieve statistical significance in an important endpoint, Amylin Pharmaceuticals Inc. and partner Johnson & Johnson are continuing ongoing late-stage trials of pramlintide, which did hit significance in the key endpoints in a parallel Phase III trial for Type I diabetes.

Pramlintide is a synthetic analogue of the human hormone amylin, which is deficient in patients with diabetes who use insulin. Amylin replacement therapy is designed to help insulin-using patients with diabetes improve their metabolic control without increasing hypoglycemia and weight gain.

In the 477-patient Type I study, pramlintide's 12-month, iintent-to-treat effects on lowering glucose and improving weight and cholesterol profiles were statistically significant and clinically meaningful.

In the Type II diabetes study of 539 patients, the lowering of glucose on an intent-to-treat basis in two of the three pramlintide dose groups achieved statistical significance after six months, but not after 12 months.

Amylin attributed the results to relatively large changes in insulin dosing by about 70 percent of patients and the smaller number of patients completing 12 months of treatment per group in this study compared to the Type I study.

Since insulin alone lowers glucose concentrations, this variability in insulin dosing obfuscated pramlintide's effect, according to Amylin. Among the Type II patients, the drug did achieve statistical significance in the weight loss endpoint after 12 months, although conclusions on cholesterol profiles could not be drawn.

Based on observations made while these initial trials were being conducted, the company has changed its study designs for four other Phase III trials, expected to be completed in 1998, in order to reduce the variability in insulin dosing and focus on patients with poor glucose control.

The clinical news on the whole was good, according to Amylin, which described the Type I results as "positive" and the Type II data as "encouraging."

"On the basis of these results, we and our partner, Johnson & Johnson, are committed to working towards completion of the pramlintide development program for Type I and Type II diabetes," said Richard Haugen, president and CEO of the San Diego-based company.

"To my knowledge, this is the first time in 75 years that a non-insulin drug candidate has demonstrated statistically significant and clinically relevant results in Phase III for the treatment of Type I diabetes," said Orville Kolterman, Amylin Pharmaceuticals' senior vice president for medical affairs.

"Furthermore," Kolterman added, "pramlintide improved not only glucose control but also positively affected body weight and cholesterol profiles, without increasing the risk of hypoglycemia. These product attributes contrast with the demonstrated tendency of intensive insulin therapy to increase hypoglycemia and cause weight gain, and thus may provide unique positioning for pramlintide among diabetes therapies."

Released after the close of the market Friday, the Type II diabetes data sent Amylin's shares into a tailspin Monday. The stock (NASDAQ:AMLN) closed at $8.438, down $6.438, or 43.2 percent.

Analysts called investors' dumping of the shares an overreaction, noting that the company achieved positive data and has already redesigned the other four ongoing Phase III trials to target patients most likely to show a clear benefit--those with consistent insulin dosage and poorly controlled glucose levels.

"Without doubt, the magnitude of the . . . effects seen here are lower than they should be due to enrollment of well-controlled and high-insulin-using patients," wrote Tim Wilson, an analyst with UBS Securities, in New York. "[T]he important point is that the next four trials are corrected for these confounding variables."

"The subgroups that show the best results are those that are already designed into the four additional Phase III trials," said Mike King, of Vector Securities International, in Deerfield, Ill.

Both Wilson and King said the company's stock is worth buying at Monday's depressed levels.

"We continue to be impressed with Amylin's ability to execute on its business plan of bringing pramlintide to market as the first breakthrough in diabetes care since the discovery of insulin in 1921," King stated.

The two analysts said the company is financially positioned to weather the clinical tempest. Wilson estimates Johnson & Johnson already has invested $117 million in the product and would have to pay another $20 million to $30 million to opt out.

Said King, "They're fine, they've got a lot of help from [Johnson & Johnson], and they're well financed."

Amylin has approximately $50 million in cash and a $57 million loan facility from New Brunswick, N.J.-based Johnson & Johnson. Combined, that's enough to carry Amylin through the end of 1998. *