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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A San Diego federal court granted a temporary restraining order sought by San Diego diabetes drug developer Amylin Pharmaceuticals (NASDAQ: AMLN) against Eli Lilly. Amylin sued Lilly a few week ago for violating their joint marketing agreement for exenatide. The court ordered Lilly to halt its plans to use the same sales force to sell both Amylin’s exenatide and linagliptin, a rival diabetes drug from Germany’s Boehringer Ingelheim. The order also prohibits Lilly from disclosing any confidential information about exenatide to any of its sales representatives or employees who are marketing linagliptin.

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While overall venture funding in San Diego was off dramatically during the first quarter, three life sciences deals disclosed last week suggest that a turnaround is underway. We’ve got those details and more.

—By making a few management changes, shedding some commercial initiatives, and distancing itself from Qualcomm (NASDAQ: QCOM), San Diego’s West Wireless Health Institute is recasting itself as a more independent and impartial nonprofit research organization. The two-year-old institute also is now emphasizes its philanthropic funding and commitment to cutting the costs of healthcare.

—The MoneyTree venture capital survey found that VCs invested just over $100 million in 22 San Diego startups during the first quarter of 2011. That’s a 55 percent drop in capital and a 29 percent decline in deals from the same quarter a year ago. The top five life sciences deals were Conatus Pharmaceuticals ($25.3 million); Elcelyx Therapeutics ($6.1 million); Mpex Pharmaceuticals ($5.1 million); Opthonix ($4.1 million); and Next Therapeutics ($3 million).

—The San Diego Venture Group hosted a spirited debate that had Avalon Ventures’ Kevin Kinsella and Bob More of Frazier Healthcare arguing against the long-term viability of biotech with Camille Samuels of Versant Ventures and Wende Hutton of Canaan Partners. More won my imaginary door prize for funniest jibes (e.g.”venture capital is a math exercise for people who never took math.”). But the audience grew somber when all four VCs agreed that venture-backed venture biotech is going to shrink substantially.

—The European Commission is expected to act in the next two to three months on an application from San Diego-based Amylin, along with Eli Lilly and Waltham, MA-based Alkermes, to market their once-weekly version of exenatide (Bydureon). Last week a European advisory committee recommended approving the drug for human use in the European Union. The U.S. application for once-weekly exenatide was sent back in October by the FDA, which wants … Next Page »

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The hits just keep coming for San Diego’s Amylin Pharmaceuticals (NASDAQ: AMLN), and not in a good way.

Amylin and Japanese strategic partner Takeda Pharmaceutical said today they have suspended a clinical trial examining the safety and effectiveness of an obesity drug candidate that combines pramlintide acetate, a synthetic analog of the natural hormone Amylin, with metreleptin, an analog of human leptin.

The companies formed a collaboration in November 2009 to co-develop the combination of pramlintide and metreleptin for obesity, in a deal with potential value to Amylin of more than $1 billion The partners say the study was voluntarily halted to investigate a new antibody-related laboratory finding with metreleptin treatment in two patients who participated in a previously completed clinical study of obesity.

Amylin notes that its decision does not affect another drug development program that is investigating the use of metreleptin to treat rare forms of lipodystrophy.

Earlier this month, Amylin, Lilly, and Alkermes suffered a setback in their development of exenatide once-weekly (Bydureon) for Type 2 diabetes, when they disclosed the treatment did not provide superior efficacy over an existing treatment.

The biggest shock came last October, when the FDA refused to approve exenatide once-weekly (Bydureon) for U.S. sale to diabetes patients. Regulators insisted that the company provide more data on the drug’s effect on heart rhythms.

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It was a big news week for the intersection of information technology and healthcare, with our first ever forum completely dedicated to the topic, and a few startups in the space nabbing funding. Headlines from big pharma companies rounded it out for us, too.

—Athenahealth (NASDAQ: ATHN), the Watertown, MA-based maker of electronic health records software systems, announced it has hired IBM’s Managed Process Business Services unit for IT and administrative support. The deal with IBM (NYSE: IBM) will allow Athenahealth to focus on improving the administrative and reimbursement aspects of its products, it said in an announcement.

—Waltham, MA-based drugmaker Alkermes (NASDAQ: ALKS) revealed its royalty rate for exenatide once-weekly (Bydureon), a diabetes drug from Eli Lilly and Amylin Pharmeceuticals that uses Alkermes’ chemistry technology. The Waltham company will take in 8 percent of sales of the first 40 million units of the treatment sold per year, which could bring in about $160 million if Bydureon is priced comparably to an existing twice-daily version of exenatide. Alkermes would also take a 5.5 percent royalty rate on sales beyond those first 40 million units.

—Novartis exercised its option to buy 55,223 more shares of Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY), for a total of about $1 million. The deal allows pharmaceutical giant Novartis to maintain its 13.4 percent stake in the company, which is developing treatments using RNA interference technology.

—Charles River Laboratories International plans to buy Chinese R&D services firm WuXi PharmaTech for $1.6 billion in cash and common stock, the companies announced on Monday. The $21.25-per-share deal, which is subject to shareholder approval, represents a 28 percent premium over WuXi’s closing stock price on Friday.

—Ryan caught up with the CEO of Cambridge’s Gene Network Sciences, a startup that’s out to match patients with the drugs that best suit them, and help prevent the wasteful spending that results when insurance companies reimburse for treatments that just don’t work. The company formed in 2000 and is widely know for its computer-simulated drug research for big pharma companies, but its new GNS Healthcare subsidiary will attempt to tackle these inefficiencies in the healthcare market.

—We held our first ever event dedicated solely to exploring the role information technology will play in improving the quality of patient care. Our Healthcare In Transition forum featured speakers from … Next Page »

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Amylin Pharmaceuticals (NASDAQ: AMLN) co-founder and original CEO Howard Greene is urging shareholders to vote for Carl Icahn’s or Eastbourne Capital Management’s proposed slate of directors, the Associated Press is reporting today. Greene’s support for dissident nominees adds new twist to a hot proxy fight at the diabetes drug maker.

In a letter to shareholders of the San Diego company, Greene says owners of the company’s stock have suffered with disappointing sales of its products, and argues that the directors responsible for the company’s marketing should be replaced. He adds that big stockholders should be better represented in Amylin board. Greene himself resigned from the board in April.

Amylin is scheduled to hold its annual meeting on May 27. The company says its sales strategy is working. It charges that Icahn and Eastbourne want to sell the company, and that any sale in the near term would undervalue the company. Amylin recently announced layoffs among its sales force, and last Tuesday it introduced a new diabetes drug, a once-a-week medicine called Byetta.

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Amylin Pharmaceuticals (NASDAQ: AMLN) became one of San Diego’s Cinderella success stories in 2005, when the U.S. Food and Drug Administration approved two of its diabetes drugs—some 18 years after the biotech was founded. But the company has been buffeted by some unusual challenges in recent months.

Demand for exenatide, Amylin’s lead diabetes drug, has slumped since last summer, when the FDA reported that six patients using the drug marketed as Byetta had developed pancreatitis, an inflammation of the pancreas that in some cases can be fatal. The agency didn’t link those cases to exenatide, in fact, diabetic patients are at greater risk for such infections. But the warning put a big question mark over Amylin, which gets almost 90 percent of its product revenue from this drug. The price of Amylin shares have tumbled by two thirds since Aug. 18, when the FDA issued its warning .

Since then, a more significant question has arisen, which is whether the pancreatitis issue will affect Amylin’s request for FDA approval of a longer-lasting version of exenatide that requires injections only once-a-week, instead of twice daily. The company has been working on winning FDA approval with Eli Lilly(NYSE: LLY), which also markets Byetta in a partnership with Amylin. The progress of their application once seemed assured, but now the course is much more uncertain. After a setback with the FDA in November, when the price of Amylin shares fell to a seven year low, the company cut 340 employees, or 16 percent of its workforce. Amylin said the move was intended to save about $100 million and put the company in a stronger financial position for 2010.

In the meantime, the decline in Amylin’s stock price also stoked trouble on a different front with a couple of dissident shareholder groups, including one headed by Carl Icahn, the billionaire investor and corporate raider. Icahn began to significantly increase his stake after Amylin’s plunge last August, and now owns a 9.4 percent stake in the company.

In January, Icahn disclosed plans to nominate five directors to Amylin’s board. That was a sign to some analysts that Icahn wants to shake up Amylin and possibly even push … Next Page »

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Venture and private equity firms apparently have clamped down on much of their funding activities in San Diego, but some local firms were able to take advantage of state and federal sources of cash last week. We also saw the Food and Drug Administration give Amylin a break and Qualcomm’s top executives offer their outlook for next year.

—One significant development for San Diego’s biotech community is that the state’s stem cell agency, the California Institute for Regenerative Medicine, opened its spigot for funding business ventures. The change is important because the institute has doled out more than $614 million through 229 grants since it was created in 2005, with all but one grant going to academic scientists at non-profit universities and research centers. Last week the institute awarded six grants to life science companies, and four with operations in San Diego got a total of more than $3.3 million.

—San Diego’s Cohu, which has traditionally been one of the most cautious players in the semiconductor industry, agreed to pay $80 million in cash to buy German rival Rasco from Dover Corp. Cohu makes thermal pick-and-place test handling machines used by chipmakers to test the performance of semiconductors with wire leads. Rasco specializes in gravity-feed machines that test smaller chips used increasingly … Next Page »

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Leptin was hailed as a magic bullet for obesity based on rat studies in the 1990s, and then it failed miserably when Amgen took it into clinical trials. Now Amylin Pharmaceuticals thinks it has found a way to bring leptin back to life as a weight-loss drug, as part of a new combination with Symlin, a drug it markets for diabetes.

San Diego-based Amylin (NASDAQ: AMLN) is presenting data on its new combination weight-loss drug this weekend at The Obesity Society’s annual meeting in Phoenix, AZ. I got an overview of what Amylin will present there about its experimental treatment during an interview with Christian Weyer, the company’s vice president of corporate development for diabetes and obesity.

The opportunity, and risk, here is huge. About two-thirds of American adults are overweight or obese, according to the Centers for Disease Control and Prevention. The pharmaceutical industry has a history of failures here, and the most-prescribed treatment is still an appetite suppressant from the 1950s that causes side effects like nervousness and sleep problems, Weyer said. Since any new obesity drug will be taken by millions on a chronic basis, its safety has be squeaky clean. Madison, NJ-based Wyeth learned the hard way what happens when it’s not. The drugmaker has shelled out more than $21 billion in legal settlements after its fen-phen obesity drug combination was found to damage heart valves in some patients in the 1990s, according to its most recent quarterly report. And France-based Sanofi-Aventis had its Acomplia medicine rejected by FDA advisers last year after reports of suicidal thinking were linked to the drug.

“Safety is absolutely paramount in obesity drug development,” Weyer says.

The ideal profile that Amylin has in mind is a medicine that can help patients lose 10 percent or more of their body weight, keep it off, and do it without any serious side effects like suicidal thoughts, cognitive impairment, or depression, Weyer says.

Amylin’s game plan is unlike other companies, which tend to develop small-molecule drugs, taken as oral pills, that hit receptors on brain cells that control whether people feel full. The problem with those medicines is that they tend to hit other cells in the brain that control moods, leading to side effects, Weyer says.

The Amylin approach is to use pramlintide, a genetically modified version of a hormone that’s secreted from the pancreas to slow down stomach emptying. It’s combined with metreleptin, a genetically modified version of the leptin hormone that’s secreted from fat cells, which sends a signal to the brain that it’s time to stop eating, Weyer says. The company’s scientists believe the drugs have complementary action, which is greater than the sum of either individual part, Weyer says. Since they are relatively large molecules, they are too big to cross the blood-brain barrier, and shouldn’t cause mood-altering side effects, he adds.

Results from a company-sponsored clinical trial in November 2007 seem to back up this hypothesis. It showed that pramlintide on its own helped patients lose 8.4 percent of their body weight after almost six months, which Weyer says “is probably sufficient to get the drug approved, but we’re aiming for greater weight loss.” When given in combination with metreleptin, though, patients lost 12.7 percent of their body weight, or about 25 pounds from the beginning of the study, compared with 17 pounds for those on pramlintide alone. The side effects included injection site reactions and nausea, which were mild to moderate in severity, and didn’t last long, researchers said.

Since these are genetically engineered protein drugs, they need to be given via injection just under the skin twice daily, Weyer says. This sounds like a drawback to me since most patients would prefer an oral pill, but Weyer brushed off the question. … Next Page »

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