Amylin Pharmaceuticals Shares Plummeted: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Amylin Pharmaceuticals (Nasdaq: AMLN  ) plunged more than 18% in early trading after the company ended a long-standing partnership with Eli Lilly (NYSE: LLY  ) to settle litigation. The stock closed off about 11% while shares of Lilly rallied more than 1.5%.

So what: With the partnership dissolving, Amylin faces higher costs for marketing diabetes treatment Byetta and inherits rights to the drug Bydureon, which, if approved, could allow diabetes sufferers to cut injections to just once weekly. Lilly's linagliptin is designed to compete with both Byetta and Bydureon, Bloomberg reports.

Now what: Investors are selling into the unknowns -- specifically, what higher costs will do Amylin's improving profit margins. Do you agree with the skeptics? Or would you buy shares of Amylin Pharmaceuticals at current prices? Please weigh in using the comments box below.

Interested in more information about Amylin Pharmaceuticals? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

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