Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) caught an early morning boost after reporting positive results from its obesity drug trials. A mid-stage study of its pramlintide/metreleptin combination product revealed no significant side effects on a cardiovascular or neuropsychiatric level, and patients treated with the highest dose experienced much greater weight loss than those participants treated with a placebo.

AMLN was up more than 2% at its intraday peak, but the equity has since pulled back near the break-even line. The stock settled Wednesday below its 20-day moving average for the first time in more than a month, and it has been unable today to reclaim a foothold above this trendline. Meanwhile, stubborn resistance from the $14 region looms not far overhead.

Amylin Pharmaceuticals (NASDAQ: AMLN) is scheduled to report its Q3 2007 earnings after today's market close. Analysts are predicting a loss of $0.42 per share, down significantly year-over-year and quarter-over-quarter. The company had a big miss last quarter, coming in 16% below expectations, earning just $0.42 per share.

Though the company has a long string of EPS losses on record, its previous earnings miss was back in Q1 2006. AMLN shares fell hard yesterday after the FDA warned that the company's diabetes drug Byetta may be linked to acute pancreatitis in some patients. This warning came too late to affect the most recent earnings, but could have a negative effect on the company's next quarter. If you think the stock won't rise by too much over the next few months, then now could be a good time to take a look at a bearish hedged trade on AMLN.

After hitting a 52-week high of $53.25 in August, the stock had been mostly flat until entering a sharp descent about two weeks ago. AMLN opened this morning at $45.17. So far today the stock has hit a low of $44.91 and a high of $46.47. As of 12:15, the stock is trading at $46.12, up $0.71 (1.56%). The chart for AMLN has rapidly deteriorated from bullish to neutral, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a January bear-call credit spread above the $65 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in 3 months as long as AMLN is below $65 at January expiration. AMLN would have to rise by more than 40% before we would start to lose money on this trade.

AMLN has not ever been above the mid-$50s, and has shown resistance just below $51 recently. This trade could be risky if AMLN posts a positive surprise tomorrow, but even if that happens, the recent warning from the FDA could keep investors wary of this stock over the coming weeks.

Meg Massie is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Meg neither owns nor controls positions in AMLN.

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A press release [PDF] out this morning confirmed positive Phase III results of Novo Nordisk's (NYSE: NVO) potential blockbuster drug, Liraglutide, which is an analogue of the naturally-occurring hormone GLP-1 in development by Novo for the treatment of type 2 diabetes. The clinical results of the first of five late-stage studies showed that Liraglutide provided significantly better glucose control and led to significantly more weight loss than patients who used Sanofi-Aventis SA's (NYSE: SNY) Lantus.

Novo CEO Lars Rebien Sorensen said the company is looking to apply for regulatory approval of the drug in the U.S. and Europe in the middle of next year, and hopes to receive approval by mid-2009.

This data is excellent news for Novo, who has been trying to gain market share against competitors for some time in the attractive U.S. diabetes market. Unfortunately, the data is also a negative for rivals Amylin Pharmaceuticals Inc (NASDAQ: AMLN), Eli Lilly and Company (NYSE: LLY) and Pfizer Inc (NYSE: PFE), who all have diabetes drugs on the market - Byetta and the inhalable insulin Exubera, respectively.

Shares of Novo were up nearly 4.5% this morning on the Liraglutide data, which some analysts called "a positive surprise."