Amylin, Lilly terminate diabetes alliance

SAN DIEGO—Amylin Pharmaceuticals, Inc. and Eli Lilly and Co.have announced an agreement that will terminate their alliance for exenatideand resolve the outstanding litigation between their companies. Under the agreement,full responsibility for the worldwide development and commercialization ofexenatide will be transitioned to Amylin, beginning in the United States onNov. 30, 2011, and progressing to all other markets by the end of 2013.

Under the terms of the global agreement, Lilly will receivea one-time, upfront payment of $250 million. In addition, Amylin will agree tomake future revenue-sharing payments to Lilly in an amount equal to 15 percentof global net sales of exenatide products until they have made aggregatepayments of $1.2 billion plus accrued interest. Amylin will issue a securednote in the amount of $1.2 billion to Lilly, under which any revenue sharingpayments made to Lilly will reduce amounts outstanding under the note. If theinvestigational once-weekly version of exenatide, BYDUREON, does not gain U.S.Food and Drug Administration (FDA) approval before June 30, 2014, Amylin'srevenue sharing obligations will be terminated, and the company will pay Lilly8 percent of global net sales from then on. Lilly will also receive a $150million milestone if a once-monthly suspension version of exenatide, currentlyin Phase II, gains FDA approval. Lilly and Amylin have agreed that the maturitydate for the $165 million line of credit that Amylin drew from Lilly this yearwill be extended from Q2 2014 to Q2 2016.

"This marks an amicable end to a very productive10-year collaboration that will continue to benefit many people worldwide.Lilly and Amylin are proud of the important accomplishments we achievedtogether," Enrique Conterno, president of Lilly Diabetes, said in a pressrelease. "Lilly remains confident that the resubmission package forBydureon has addressed the requirements outlined by the FDA and looks forwardto Amylin achieving the alliance's long-held goal of making Bydureon availableto patients in the U.S. Looking forward, Lilly Diabetes remains committed toproviding a comprehensive portfolio of diabetes treatment options for patientsthrough our currently marketed products and robust clinical pipeline."

Amylin and Lilly decided that it was in the best interst ofconstituents to amicably terminate their collaboration. The two companies arecommitted to making the transition seamless and maintaingin continuity ofpatient care while the transition is made.

"As pioneers in the GLP-1 market, we are proud of thetruly innovative diabetes products that our two companies have providedpatients," Daniel M. Bradbury, president and CEO of Amylin, said in apress release. "Amylin is excited to assume full responsibility fordeveloping and commercializing exenatide. We anticipate working with one ormore partners outside the U.S. in order to maximize the global potential ofthis innovative molecule and achieve greater operational flexibility and efficiency.This clarity of focus will provide us with an enhanced opportunity to increaseshareholder value."

The transition of U.S. commercial operations will becompleted by Nov. 30, and outside the United States, Lilly will transferresponsibility for commercialization of BYETTA injection and Bydureon to Amylinon a market-by-market basis in 2012 and 2014. Amylin will work with Lilly onplans for markets beyond the United States to ensure that Lilly does notexperience losses during the transition period, up to a total cap of $60million.

SOURCE: Amylin Pharmaceuticals