Staff Writer

Amylin Pharmaceuticals Inc. got a double dose of good news Monday, signing a $1 billion-plus deal to co-develop obesity compounds with Japanese partner Takeda Pharmaceutical Co. Ltd., and getting FDA approval for expanded use of diabetes drug Byetta as a first-line therapy.

In addition to approving Byetta as a monotherapy, the FDA also revised the safety information in the label to warn about potential kidney problems with Byetta. But analysts were relieved that the new warning did not take the form of a black box, FDA's most severe warning. Shares in San Diego-based Amylin were up 10 percent.

But it was the collaboration with Takeda that drew headlines.

"We're very excited about this deal for several reasons," Alice Izzo, Amylin's executive director of corporate affairs, told BioWorld Today. "Overall, this collaboration allows both companies to advance more programs for obesity treatments more quickly than either company could do alone," she said.

Leerink Swann analyst Joshua Schimmer stated in a research note that the deal monetizes the obesity compounds and reduces future expenditures as the company works toward positive cash flow from operations by the end of 2010." He noted that in the second quarter, Amylin spent $8.1 million on obesity research and development, or about 13 percent of its R&D expenditures.

Under the deal, Amylin will receive $75 million up front and could draw more than $1 billion in additional payments for achieving milestones over the term of the agreement. The deal covers Phase II obesity compounds pramlintide/metreleptin and davalintide in Amylin's pipeline and also includes additional compounds from both companies' obesity research programs.

Last quarter, Amylin announced positive top-line Phase II data from a pramlintide/metreleptin study. That study is continuing, and data from the extension study will be announced later this quarter.

Amylin also will report data from a Phase II study of davalintide by the end of the year.

For its part, Amylin will work to take U.S. development of the partnered obesity compounds through Phase II, while Takeda will be responsible for activities beyond that point.

The two companies will split the costs related to obtaining U.S. approval 80-20, with Takeda taking on the lion's share. However, Takeda will be 100 percent responsible for costs associated with obtaining approval outside the U.S. Amylin will have the option to co-commercialize the first two approved products in the U.S. and any follow-on products containing the identical active ingredients.

Izzo pointed out that Amylin is an expert in peptide and protein science and is a diabetes market leader in the U.S., and that Takeda is a leader in metabolic disease therapeutics. In addition, she noted that Takeda provides a global reach for the development and commercialization of the obesity compounds.

Amylin would appear to be in an enviable position with a partnership for its midstage obesity program, given that late-stage obesity programs at Arena Pharmaceuticals Inc., Orexigen Therapeutics Inc. and Vivus Inc. remain unpartnered. But Leerink Swann's Schimmer said the Amylin-Takeda partnership "bodes well for" the partnership prospects for those three firms.

Concerning the Byetta label extension, he said he does not see a big change in sales due to the expanded Byetta approval, since, he said, "doctors have been already using it as monotherapy with due caution about pancreatitis."

Cowen & Co. analyst Phil Nadeau agreed, writing in a research note that "the monotherapy claim itself is less notable as it is unlikely to change the way in which Byetta is prescribed, and will most likely not reaccelerate scrips growth."

According to the FDA, from April 2005 through October 2008, the agency has received 78 reports of problems with kidney function in patients using Byetta. The 78 cases, the FDA said, represent a small percentage of the total number of patients using the drug to control blood sugar (glucose) levels.

Shares in Amylin (NASDAQ:AMLN) were up $1.09, closing at $12.13.