Amylin and Eli Lilly Part Ways on Diabetes Drug; Alkermes Deal Intact

Xconomy San Diego — 

San Diego’s Amylin Pharmaceuticals (NASDAQ: AMLN)) and Eli Lilly today called a cease-fire to litigation that began earlier this year, and outlined an agreement to end the alliance they formed in 2002 to commercialize exenatide (Byetta), Amylin’s diabetes drug. A replay of Amylin’s conference call with analysts about the deal is available here.

Amylin sued Lilly in federal court in May, alleging that Lilly had violated their agreement to develop and market exenatide after Lilly agreed to work with a new partner, Boehringer Ingelhiem, to commercialize linagliptin (Tradjenta), a competing diabetes drug.

The deal reflects just how much a drug development partnership with a Big Pharma is worth to a small biotech. Amylin agreed to take over the development and commercialization of exenatide, beginning with the U.S. market on Nov. 30, and to make a one-time, upfront payment of $250 million to Indianapolis, IN-based Lilly. Amylin also agreed to share 15 percent of its worldwide exenatide revenue until Amylin has made aggregate payments of $1.2 billion, plus accrued interest.

The deal makes no mention of a third party in the drug development partnership, Waltham, MA-based Alkermes (NASDAQ: ALKS). In an e-mail this morning Amylin spokeswoman Anne Erickson says, “Our relationship with Alkermes does not change because of today’s announcement.  Alkermes has provided the microsphere drug delivery technology for Bydureon and will receive a royalty on global sales.”

Under their agreement, Amylin will gradually assume responsibility for marketing exenatide as well as a long-lasting version of exenatide (Bydureon) in foreign markets over the next two years. The former partners agreed to work together, market-by-market, to make the transition, and Amylin agreed to pay Lilly as much as $60 million to ensure that Lilly won’t lose money on “exenatide-related activities” during the transition period.

Dan Bradbury

Just over a year ago, the U.S. Food and Drug Administration said the once-weekly version of exenatide required additional data to determine what effect, if any, the drug might have on a particular heartbeat arhythmia in patients enrolled in the the clinical trials. That data was collected and the new drug application was re-submitted to the FDA in July. If the one-injection-weekly version of exenatide fails to win FDA approval by June 30, 2014, the companies agreed that Amylin’s global revenue-sharing obligations will end, and Amylin will continue to pay Lilly a flat 8 percent of global net sales of all exenatide products.

In their joint statement, Amylin CEO Dan Bradbury says, “We anticipate working with one or more partners outside the U.S. in order to maximize the global potential of this innovative molecule and achieve greater operational flexibility and efficiency. This clarity of focus will provide us with an enhanced opportunity to increase shareholder value.”

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