Bristol Myers Squibb (BMY) Nabs Diabetes Player Amylin Pharmaceuticals (AMLN). Who's Next? LXRX, MNKD, GILD, RHHBY, INHX, ILMN

If the pattern follows anything like the last several big biotech acquisitions have, then the purchase of Amylin Pharmaceuticals, Inc. (NASDAQ:AMLN) by Bristol Myers Squibb Co. (NYSE:BMY) is just the first of a handful of diabetes-related M&A activity in the near-term cards. The question is, who's next.

In retrospect, the recent streak of major biotech buyouts wasn't haphazard. After Gilead Sciences, Inc. (NASDAQ:GILD) bought out Pharmasset (NASDAQ:VRUS) late last year for its hepatitis-C R&D, Bristol Myers Squibb felt pressured to purchase Inhibitex, Inc. (NASDAQ:INHX) before all the top hep-C drug prospects were gone.

We saw the same phenomenon again on the genome-based diagnostics front a month or so later, when Roche Holding Ltd. (PINK:RHHBY) made a bid for Illumina, Inc. (NASDAQ:ILMN) as part of a wave of M&A speculation that drove most genome-mapping stocks upward. Though most of those speculations didn't pan out, some did, as they did in the hepatitis-C front. The Bristol Myers Squibb acquisition of Amylin Pharmaceuticals may now do the same on the diabetes front.

The question is, which stocks are potential takeover targets? Answer: MannKind Corporation (NASDAQ:MNKD) and Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX).

Those are just educated guesses, of course, though very good ones. Both companies have what are arguably the most promising drugs (aside from Amylin's) on the diabyes front that aren't already being developed by a major pharma name.... 'major' meaning it's too big to buy, and is more likely the suitor.

MannKind Corporation's claim to diabetes fame is a drug called Afrezza, which has a long and bizarre - though promising - history.

The inhaled insulin therapy was all but approved by the FDA in early 2010, when an embarrassing misuse of that data by an FDA analysis uncovered he had been front-running (buying stocks before the rest of the market had information he had) biotech approvals for quite some time. And, if there was any lingering hope that the FDA might still give Afrezza the green light after knowing one of its own had been profiting illegally due to his 'in the know' position, a hedge fund manger known for shorting biotech stocks around drug approval dates sent (unsolicited) letters to key people a the FDA explaining why they couldn't approve the drug. [To read the whole crazy story, go here.]

Whether it was one reason or the other or both that the drug didn't win approval isn't clear. Either way, Afrezza was sent back to the drawing boards when all signs pointed to a positive decision. Now the drug's getting lined up with the FDA again, and investors as well as possible suitors are taking notice.

As for Lexicon Pharmaceuticals, its LX4211 drug as a treatment for type 2 diabetes is also starting to turn heads. Its phase 2b's efficacy profile showed that patients using the drug saw mean HbA1C reductions as high as 0.95 percent. That's significant, particularly when paired with minimal side effects.

Lexicon Pharmaceuticals plans on starting Phase 3 trials in early 2013.

What's interesting about LX4211 - and this is something glossed over by the media that covers LXRX - is that this isn't really a 'better' insulin treatment or 'better' insulin delivery idea, which only address symptoms of diabetes. LX4211 as addressing the underlying causes of diabetes and its symptoms. Though the efficacy may not be earth-shattering, the drug's results are more encouraging than some of the developments being undertake n by much bigger and deeper-pocketed pharma firms.

Just some food for though, there in the shadow of Bristol Myers Squibb's addition of Amylin Pharmaceuticals.

http://www.smallcapnetwork.com/Bristol-Myers-Squibb-BMY-Nabs-Diabetes-Player-Amylin-Pharmaceuticals-AMLN-Whos-Next-LXRX-MNKD-GILD-RHHBY-INHX-ILMN/s/via/10/article/view/p/mid/3/id/162/