Amylin: Icahn aims for sale to Lilly

We were preparing to write up Eli Lilly's better-than-expected earnings when some related news hit our desks: Apparently, Carl Icahn's (photo) proxy battle for Amylin is an attempt to engineer a sale to Lilly.

As you know, Lilly and Amylin work together on the diabetes drug Byetta--and that drug is Amylin's biggest claim to fame--so putting the two companies together makes some sense. And it wouldn't be the first time Icahn played matchmaker with Lilly; after wresting control of ImClone Systems from its previous management, Icahn ended up selling to the bigger company for $6.5 billion.

Well, in a letter disclosed to the SEC, Amylin's lead independent director James Wilson stated that a sale would "dramatically undervalue" the company. "You informed us that you intend to leverage your relationship with our partner Lilly to promptly attempt to sell Amylin to Lilly," Wilson said in his letter (as quoted by Reuters). "We believe that your desire to sell Amylin is inconsistent with what you have said previously and we continue to believe that this is not the time to consider such an action."

Lilly declined to comment on discussions between Amylin and its shareholders, saying that it's satisfied with its relationship to Amylin and with Amylin's current management team. We call that a nondenial denial. And as Mike Huckman of CNBC points out, if Lilly were to acknowledge an interest in Amylin, the smaller company's stock price would rally off its 70 percent-down price, making the price tag go up commensurately. Whether that means Lilly will end up making a deal--well, that's another story.

- read Mike Huckman's column
- read the Reuters news

ALSO: Meanwhile, Lilly's profits rose on inventory accounting and on strong growth in sales of its antidepressant Cymbalta, which leapt to $709 million. Earnings amounted to $1.31 billion or $1.20 per share on a 5 percent revenue increase to $5.05 billion. Report

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