By Mary Welch

Amylin Pharmaceuticals Inc. and Alkermes Inc. will develop, manufacture and commercialize an injectable long-acting formulation of AC2993 (synthetic exendin-4), Amylin's diabetes drug candidate.

"If successful, this could provide a substantially different and highly convenient AC2993 delivery system for people with diabetes," said Alice Bahner, Amylin's senior director, corporate development. "We're extremely pleased to be working with Alkermes' Medisorb technology, which is already established in the marketplace. It was important to us that their product is successfully out in the market."

AC2993, Amylin's second diabetes drug candidate, will be used with Alkermes' proprietary Medisorb injectable sustained-release drug delivery technology. AC2993 is a 39-amino-acid peptide that exhibits several of the antidiabetic actions of the mammalian hormone glucagon-like peptide-1, but with a longer duration of action, the company said. It is a synthetic version of exendin-4, a peptide isolated from salivary secretions of the Gila monster.

The Medisorb drug delivery system provides formulations, made from traditional small molecules and peptides, that last from days to months. The system consists of biodegradable microspheres containing the desired drug incorporated into a polymer matrix.

Initial feasibility studies showed that the formulation would allow once-a-month administration of AC2993 for the treatment of Type II diabetes.

"It's a good deal, absolutely," said Fariba Ghodsian, senior vice president, research with Roth Capital Partners Inc., of Newport Beach, Calif. "The drug Amylin will be putting into Alkermes' system is for Type II diabetes, which is non-insulin dependent. It will be competing with oral drugs. When you're competing with oral drugs you need to develop systems that are convenient and that patients will use. It is wise for Amylim to look for a format with a once-a-month formulation."

AC2993 already is in Phase II studies for Type II diabetes. Although there is no announced timetable for an expected new drug application (NDA) filing, Bahner said the Phase II studies will not be completed by year's end.

The drug will have to enter Phase I trials with the Medisorb technology. "But we will probably save some time because we're using a known drug, just a different formulation," Bahner said.

Under the agreement's terms, Cambridge, Mass.-based Alkermes granted Amylin an exclusive, worldwide license to its formulation technology for the development and commercialization of injectable sustained-release formulations of exendins, such as AC2993, and other related compounds that Amylin may develop.

In exchange, Alkermes will receive funding for research and development, and milestone payments comprised of cash and warrants for Amylin common stock upon achieving certain development and commercialization goals. Alkermes also will receive a combination of royalty payments and manufacturing fees based on product sales. Alkermes will be responsible initially for developing and testing several formulations and manufacturing any products commercialized.

San Diego-based Amylin will be responsible for conducting clinical trials, securing regulatory approvals and marketing.

Bahner refused to disclose further financial details.

"Since they are both biotech companies, I feel that they will share in the upside of the deal rather than handing money over now," Ghodsian said. That tends to be the way with biotech-biotech deals."

Amylin released its first quarter earnings and reported a net loss of $9.5 million, or 17 cents per share. As of March 31, the company had cash on hand of $111 million, and has 62.9 million shares outstanding.

Amylin also said the NDA filing for Symlin (pramlintide acetate) will take place in the fourth quarter of this year, with a European filing no later than the first quarter of 2001. Symlin is in Phase III trials for Type I and Type II diabetes.

Amylin's stock (NASDAQ:AMLN) closed Tuesday at $11.125, down 43.75 cents. Alkermes' stock (NASDAQ:ALKS) closed at $37.625, up $8.437.