It's back to the good old days for Array BioPharma (NASDAQ:ARRY). The development-stage drugmaker was founded by three ex-Amgen (NASDAQ:AMGN) scientists and the company has come full circle, partnering with its biotech big brother.

The two announced a deal yesterday that will send Array's phase 1 diabetes drug, ARRY-403, to Amgen for $60 million plus "additional contingent payments for certain clinical and commercial milestones." How refreshing that they didn't even bother listing the lofty hundreds-of-millions-of-dollar milestone number in the press release. The chance of the licenser getting the full amount is about as likely as you actually catching your mom kissing Santa Claus under the mistletoe. And besides, the absolute number --  $666 million as disclosed in the 8-K filing with the SEC -- is fairly useless to investors anyway because companies usually don't disclose the breakdown of milestone payments.

If ARRY-403 is approved, Array will get double-digit royalties and has retained the right to co-promote the drug in the United States.

But we're getting way ahead of ourselves. The $60 million alone will go a long way toward keeping Array solvent; it'll more than double the amount of cash that Array had at the end of last quarter. Amgen also agreed to pay the salaries of some Array scientists to develop a follow on to ARRY-403, which should also help the cash burn rate.

Investors sure seem to like what the extra cash brings to the table; the stock is trading up more than 25% today.

For Amgen the deal further expands its pipeline away from anemia and cancer. It already has a couple of diabetes drug candidates, so it's not like the license is out of left field. The company is late to the diabetes game, but a molecule in a novel class like ARRY-403 should be able to compete with offerings from big pharmaceutical companies like Merck (NYSE:MRK) or Eli Lilly (NYSE:LLY), and even Bristol-Myers Squibb (NYSE:BMY) and AstraZeneca (NYSE:AZN).

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