Eli Lilly, Amylin End Collaboration, Litigation

The drugmakers?said they were ending their long-standing agreement to develop diabetes drugs after their relationship soured earlier this year.

INDIANAPOLIS (AP) -- The drugmakers Eli Lilly and Co. and Amylin Pharmaceuticals Inc. said Tuesday that they were ending their long-standing agreement to develop diabetes drugs, sending their shares lower in premarket trading.

The companies also said they were resolving a lawsuit Amylin had filed over another agreement Lilly started earlier this year with German drugmaker Boehringer Ingelheim.

Shares of Amylin sank nearly 10 percent, or $1.05, to $9.88 in premarket trading, while Lilly shares fell 20 cents to $38.15.

San Diego-based Amylin will assume full responsibility for sales of the diabetes treatments Byetta and Bydureon and pay Indianapolis-based Lilly $250 million.

Amylin also will pay Lilly 15 percent of global sales for Byetta and Bydureon up to $1.2 billion plus accrued interest. That agreement ends if Bydureon doesn't receive U.S. approval by 2014. Amylin will then pay Lilly 8 percent of global sales afterward. Bydureon is a once-a-week version of Byetta that received European approval earlier this year.

The U.S. Food and Drug Administration declined to approve Bydureon last year and asked the companies to run a thorough study that evaluated the effects of high doses of Bydureon on patients' heart rates. It also asked for data from a study that tested the effectiveness and the labeling of the safety and effectiveness, of the commercial formulation of the drug. The FDA is reviewing the data from those studies, and the companies expect a decision by late January.

Lilly received $106.7 million in total revenue in the third quarter from the agreement. The drugmaker lost patent protection for its top-selling drug, the antipsychotic Zyprexa, last month, and investors and analysts question whether Lilly can make up for that and other patent expirations it will face in the next few years.

The company has cut costs and said it will depend on its pipeline of drugs under development, its animal health business, and foreign sales to get through the revenue slump. A spokeswoman declined to comment Tuesday morning on how the Lilly's revenue from Byetta and Bydureon will change after the agreement ends.

Amylin and Lilly had worked together for years, but the relationship soured earlier this year after Lilly teamed with the German company Boehringer Ingelheim to develop diabetes treatments. Amylin sued Lilly over that deal and accused the larger drug company of breaking their commercialization agreement for diabetes drugs.