Every time the FDA turns around, a few more people have died from the diabetes drug Byetta, a product developed and marketed by Eli Lilly (NYSE: LLY) and Amylin Pharmaceuticals (NASDAQ: AMLN). It has to make one wonder how the regulators spend their spare time.

According to The Wall Street Journal, the two companies "disclosed the deaths of four patients taking the diabetes drug Byetta that had been previously reported to regulators but not yet made public." The drug has already killed two people previously, at least.

Lilly and Amylin said they were a bit slow coming forward with the news because they wanted to "provide context" and "avoid confusion" in the future. That is double talk for the two companies not wanting to say anything at all. Dead is dead and there is no way of getting around that.

Why the FDA has allowed the drug to stay on the market is anyone's guess.

Douglas A. McIntyre is an editor at 247wallst.com.

When should the FDA pull a drug off the market? When one person dies from side-effects? How about two or three?

Eli Lilly (NYSE: LLY) and Amylin Pharmaceuticals (NASDAQ: AMLN) produce a highly successful diabetes drug called Byetta. According to The Wall Street Journal, "The Food and Drug Administration on Monday said it has received six new reports of patients developing a dangerous form of pancreatitis while taking Byetta."

Two of the patients died.

The drug makers said that the poor results were very rare. The people who got sick probably view it a little differently.

There have been questions for some time about whether the FDA does an effective job of regulating drug companies. The problems with Byetta say that the answer is "no." A drug, which causes even one death, yet stays on the market speaks volumes about how the consumer's interests are cast aside.

Douglas A. McIntyre is an editor at 247wallst.com.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• AFLAC Inc. (NYSE: AFL) reported better-than-expected earnings for the first quarter.
• Ambac Financial Group Inc. (NYSE: ABK) posted a wider-than-expected loss; shares hit new low.
• Amdocs Ltd. (NYSE: DOX) beat Q2 estimates on strength in the managed services businesses.
• Amphenol Corp. (NYSE: APH) beat expectations in the first quarter and raised its guidance.
• Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) posted a larger-than-estimated Q1 loss.
• Aptar Group Inc. (NYSE: ATR) posted record Q1 results and raised its Q2 guidance.
• Bank of America (NYSE: BAC) Q1 earnings plunged on further housing-related write-downs.
• Brinker International Inc. (NYSE: EAT) narrowly beat earnings expectations on cost cutting.
• Bristol-Myers Squibb Co. (NYSE: BMY) beat analysts' estimates for the first quarter.
• Credit Suisse Group (NYSE: CS) reported a wider-than-forecast loss on subprime-related write-downs.
• Cree Inc. (NYSE: CREE) earnings slipped while revenues soared 29%.
• Eli Lilly & Co. (NYSE: LLY) reported worse-than-expected Q1 earnings on discontinued product charge.
• Gannet Inc. (NYSE: GCI) beat low expectations as earnings and revenue continue slump.
• Hasbro Inc. (NYSE: HAS) posted better-than-expected Q1 earnings on international strength.
• JAKKS Pacific Inc. (NASDAQ: JAKK) missed Q1 expectations on restructuring and litigation costs.
• Kimberly-Clark Corp. (NYSE: KMB) beat EPS estimates by a penny, as revenue jumped 10%.

MOST NOTEWORTHY: Heelys, Citigroup, Alvarion, UBS AG and Alcatel-Lucent were today's noteworthy downgrades:

• CIBC downgraded Heelys (NASDAQ: HLYS) to Underperformer from Sector Performer. The analyst has little confidence sales will recover following the recent drop.
  
• CIBC also downgraded Citigroup (NYSE: C) to Sector Underperformer from Sector Performer, as they believe the company may have to cut its dividend, raise cash or sell assets in order to raise $30B over the near-term; the firm believes such a move would pressure shares significantly.
  
• Merriman downgraded shares of Alvarion (NASDAQ: ALVR) to Neutral from Buy after the in-line results as they now believe increased competition will pressure gross margins and minimize operating leverage in FY08.
  
• Merrill downgraded shares of UBS AG (NYSE: UBS) to Neutral from Buy to reflect the potential of further write downs.
  
• Banc of America lowered its rating on Alcatel-Lucent (NYSE: ALU) to Neutral from Buy to reflect poor execution of the company's turnaround strategy.

OTHER DOWNGRADES:

• Goldman removed Vimpelcom (NYSE: VIP) from its Pan European Buy List and downgraded shares to Neutral from Buy.
  
• Silicon Precision (NASDAQ: SPIL) was downgraded to Hold from Buy at ABN Amro.
  
• Lehman downgraded Amylin Pharmaceuticals (NASDAQ: AMLN) to Underweight from Equal Weight.
  
• Baird downgraded Dionex (NASDAQ: DNEX) to Underperform from Neutral.

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.

Visit AOL Money & Finance for more earnings coverage.

"After its run to a new all-time high last month, Amylin (NASDAQ: AMLN) appears to be undergoing some upper level consolidation," notes biotech specialist John McCamant.

Following a presentation by the firm's CEO at a biotech conference, the editor of The Medical Technology Stock Letter concludes, "Management has made a compelling case why the stock's current trading range should be just a weigh station on the way to an even loftier valuation."

The advisor explains, "At the Newsmakers in the Biotech Industry Conference -- which took place September 6 – CEO Dan Bradbury discussed the still unrealized growth potential of both Byetta and Symlin."

Regarding Byetta, he notes that Mr. Bradbury indicated that over 85% of diabetes specialists have prescribed the drug at this point, we are now starting to see prescription growth among primary care physicians."

"Right now I'm having a love affair with Amylin Pharmaceuticals Inc. (NASDAQ: AMLN); frankly, you should be in love with it, too." says Michael Shulman, editor of the industry-leading ChangeWave Biotech Investor.

The advisor notes, "Not only is it up a whopping 169%+ since I put it on the Buy List, it's also a hidden-value play -- more so than at any time in the past year. Simply put, Amylin is a great pick for patient investors."

Shulman continues, "Amylin no longer appears sexy or hot to some investors. It has a market cap north of $5 billion and its two newest drugs have been on the market for a couple of years, so the story on the stock appears to be over in terms of upside potential, right?

"Wrong," he exclaims. "Amylin is going to benefit in the coming months from a string of good news, beginning with the strong earnings it announced two weeks ago. The diabetes marketplace is exploding and Amylin is 'the' leading diabetes company."

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."

Here is a look ahead to next week's three day trading week:

Monday January 1

• Markets closed for New Year's Day holiday
• PDUFA date for Amylin Pharmaceutical's (NASDAQ: AMLN) Byetta

Tuesday January 2

• Markets closed in observance of President Ford's death

Wednesday January 3

• Earnings conference calls for AngioDynamics (NASDAQ: ANGO), Landec Corporation (NASDAQ: LNDC) and the Topps Company (NASDAQ: TOPP)
• Sales conference call for American Eagle Outfitters (NASDAQ: AEOS)

Thursday January 4

• Earnings conference calls for Arrow International (NASDAQ: ARRO), Monsanto Company (NYSE: MON) and Sonic Corporation (NASDAQ: SONC)
• Sales conference calls for Abercrombie & Fitch (NYSE: ANF), AnnTaylor Stores (NYSE: ANN) and bebe stores (NASDAQ: BEBE)

Friday January 5

• Shareholder meeting for Serono S.A. (NYSE: SRA)