Regulators approved Amylin Pharmaceuticals Inc.'s diabetes drug Symlin on Wednesday after an 18-year quest that investors had once written off as hopeless.
It was the first Food and Drug Administration endorsement for the small San Diego company, which was close to closing seven years ago after a clinical trial of Symlin went badly.
Amylin shares surged nearly 20% in after-hours trading. The approval was announced after the market closed.
"This has been a trailblazing experience, arduous and very emotional," said Ginger Graham, Amylin's chief executive. "Today is one of the best days in the company's history."
Symlin is a synthetic version of the natural hormone amylin, which works with insulin to control the flow of sugar from food into the bloodstream. It was approved for use by the estimated 4.5 million diabetics in the U.S. who use insulin to control their disease.
It will carry a boxed warning about the risk of hypoglycemia, or low blood sugar. Concern about low blood sugar was one reason why it took the FDA so long to approve the drug.
Low blood sugar can lead to confusion and brain injury. In an early clinical trial, one patient died in a car accident that regulators said might have been related to low blood sugar.
Indeed, analysts said FDA approval hadn't been viewed as a sure thing on Wall Street. Jim Birchenough of Lehman Bros. said there was speculation that the agency would become cautious after the abrupt withdrawal from the market of the multiple sclerosis drug Tysabri this month.
"It really weighed on Amylin's shares," he said.
Now, he said, Amylin is poised to become a leader in diabetes, a disease that affects an estimated 18 million Americans and has seen few new treatments.
In fact, Symlin is the first new drug in 80 years for patients with Type 1 diabetes, which strikes in childhood. The drug also was approved for patients with Type 2 diabetes, which develops in adults.
Patients would take Symlin with insulin to control spikes in blood sugar, which take their toll on patients and can lead to blindness, kidney failure and heart disease. Regular insulin shots can control diabetes, but Symlin is an additional tool for keeping blood sugar in check, though it can be tricky to use because patients must adjust their insulin when taking it.
Birchenough said he expected that Symlin would have peak sales of $240 million.
Next month, Amylin is expected to receive FDA approval of its second drug, Exenatide, also for diabetes. The company is developing that drug with industry giant Eli Lilly & Co., the leading provider of insulin. Birchenough estimated peak Exenatide sales at $1.5 billion.
Amylin "looks like it could emerge as a true leader" in diabetes, Birchenough said. "This is very exciting. It is what biotech investors have been looking for."
Few would have made such a prediction for Amylin in 1998, when Johnson & Johnson pulled out of a deal to co-promote Symlin.
The action pushed Amylin's stock to its lowest levels. At one point, the company had only 90 days of cash.
Amylin almost abandoned Symlin when later in 1998, clinical trials showed no benefit to patients receiving the drug.
Graham attributed some of the hurdles Amylin faced to the fact that the company was developing a drug that was totally new.
"It was a brand-new science," she said. "We had many disappointments, but Amylin took on the challenge to advance new ideas."
On Wednesday, shares of Amylin closed down 58 cents to $19.53 on Nasdaq. In after-hours trading, the stock rose to $23.36.