GLP-1 Scripts continue to grow. Bodes well for eventual Bydureon conversion of Victoza scripts

Competitor Insulin drug Victoza, by Novo, continues to grow the GLP-1 market up 37% since launch in January . According to Barclays, a part of this growth will be converted to Bydureon use when launched. At one large practice they surveyed with 250 eligible GLP-1 users, only 11 started Victoza with the rest waiting for once weekly Bydureon. As expected, Byetta scripts continue to decline as the market awaits Bydureon. Nevertheless, Victoza launch is still lagging Byetta's launch trajectory. Market share is 70% Byetta 30% Victoza. NRx share is 62% to 38%.   The clock is ticking on Bydureon Approval, though the PDUFA date is Oct 22nd, the options market has priced in an earlier approval.

Technically, AMLN, with a relative strength of 93 is pushing out of $18-$20 range its been locked in for 50 trading days. Accumulation/Distribution is surging upward during this sideways price period.

Implied Volatility on Oct vs Jan Calls imply chance of earlier Approval

The implied volatility (vols) on the October At-the-Money (ATM) Call options are 58% vs 48% for the Septembers.  With the PDUFA date of Oct 22nd, a week AFTER the Oct expiry, one would expect a big bump up in the available Jan Vols as seen between the Seps and Octs.  Instead, the Jan vols at 60% - about the same at the Octs.  This would suggest the market is pricing in the possibility of approval before the Octs expire but not before the Seps expire.  Also, because the vols are around 60 and not north of 100 as one might expect for such a binary event, the market clearly expects approval.  The elevated Vol, 60% vs 30% historic, is for the impact of a black box label for pancreatitis which Byetta does not have and trial data does not show as being necessary.  But the FDA being a regulator gets to protect itself from future liability by needlessly slapping on a warning label - even if trial data doesn't back it up.

As an update, the 10-day Call/Put ratio continues to sink, now to the lowest level in a year at 0.64.  Ordinarily investors are giddy piling into Calls of a biotech that is about to get approval for a huge drug - especially in a market where there is a scarcity of big new drugs to be approved for unmet medical needs.  Maybe AMLN should buy a Goldmine in angola, dig for oil under the Eiffel Tower, or manufacture lead paint in china, in order generate some bullish investor interest.

AMLN continues to evoke doubt

Two days ago AMLN pushed to the upside, closing above the 2 month consolidation in the $18-$20 range. So screens lit up, bells range, and investors turned more bullish to buy the breakout, right?  Uh Uh.  It was greeted with 936 Calls to 7,279 Puts or a daily 0.13 Call/Put ratio, taking the 10 day average down to 0.87 - the lowest reading in over 6 months. A contrarian's dream. This is reminiscent of when LCC was beginning its big rally from $3 last December and short interest and the Put/Call ratio rose with the stock through $4, then $5 and so on.  There were occasional sharp pullbacks, but LCC quickly snapped back.

Evidently, with AMLN this move above $20 is greeted as the selling opportunity of a lifetime.  My premise remains that with a bedrock of skepticism from both analysts and traders despite a relative strength (RS) of 86,  in the face of reasonable fundamentals, with the bonus of AMLN being an increasingly scarce and desirable asset to large foreign pharma, particularly those armed with a strong Yen that want access to the US market with a big drug  in an unmet medical need and a sales force, sets up a favorable risk-reward position.

http://stockcharts.com/c-sc/sc?s=AMLN&p=D&yr=0&mn=3&dy=0&i=t23263972693&r=2692