Damage control: It's such a fine art form.

Amylin Pharmaceuticals (NASDAQ:AMLN) and marketing partner Eli Lilly (NYSE:LLY) were doing some damage control yesterday afternoon. Amylin's stock price had dropped 13% on Aug. 18 and has since trailed down to an overall 20% decline. Investors are worried about a Food and Drug Administration report announcing additional cases of pancreatitis in patients taking the companies' diabetes treatment, Byetta.

From the looks of Amylin's stock price action today -- down an additional 25% -- it seems the companies would have been better off keeping their mouths shut.

Today's drop appears to be because the companies announced that there were an additional four deaths of patients taking Byetta. Oops.

Well, actually, these patients had had pancreatitis sometime during the course of having diabetes and the deaths did not appear to be due to pancreatitis. While the FDA knew about these additional deaths -- Amylin had told it -- the agency didn't report them last week, presumably because of that reason. Apparently, investors aren't so sure.

Perhaps the big worry isn't over the four new deaths, but the idea that more cases of pancreatitis could pop up. The companies are looking for additional cases in an effort to show that diabetics on Byetta don't have an inflated rate of pancreatitis above the already higher rate seen in diabetics in general.

But let's face it: There will be more cases of pancreatitis. About 1 million patients have taken the drug already and prescriptions are still growing. Even if the drug doesn't cause pancreatitis, we'll see more cases because the rate in the general population is 3.3 to 4.4 cases per 10,000 adults per year.

Whether or not the drug is causing the pancreatitis, the value of Amylin will basically come down to two things: whether or not the news changes doctors' prescribing habits for the drug and whether or not the cases will affect the FDA's view of its once-weekly version of Byetta.

While there are a lot of treatment options for type 2 diabetics -- like Merck's (NYSE:MRK) Januvia and GlaxoSmithKline's (NYSE:GSK) Avandia -- Byetta does have the advantage of helping patients shed pounds. The additional reports will affect prescriptions to patients prone to pancreatitis, but those patients probably shouldn't have been getting a drug that targets the pancreas to begin with. (The label does include a warning for pancreatitis.)

Whether the pancreatitis cases will hurt Amylin, Eli Lilly, and their development partner Alkermes' (NASDAQ:ALKS) chances of getting the extended-release Byetta approved remains to be seen. But if the agency is going to nitpick over an unproven side effect, then it's also likely to take a closer look at the main competition: Novo Nordisk's (NYSE:NVO) similar GLP-1 analogue liraglutide, currently under FDA review.

Given the severe reaction the stock price has seen to what has been reported so far, this may represent a buying opportunity. It may not be easy to jump into a stock when everyone else is panicking, but that's sometimes where the best returns are found.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Eli Lilly and GlaxoSmithKline are Income Investor recommendations. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.