After Bristol-Myers Squibb (NYSE: BMY) and Exelixis (Nasdaq: EXEL) split up on XL184 last June, you'd think one side would be a little bitter.

Apparently not. The duo announced yesterday that they're working together again on two new drug programs.

Bristol-Myers is handing over $60 million up front and up to $505 million in milestone payments in exchange for drug candidates to treat diabetes and inflammation. The diabetes program is ready for Bristol-Myers to take over while the inflammation drug candidates still need some work; Exelixis will continue working on them in collaboration with Bristol-Myers until a predefined transition point in preclinical development.

Exelixis is actually only giving up rights to one drug because Bristol-Myers had rights to a cancer drug as part of their 2006 pact, but is trading in that option as part of this deal. The duo also made "minor amendments" to their pacts that cover XL281 and liver X receptor (LXR); further details weren't given.

Finally, Exelixis has opted out of further development of XL139, yet another drug the duo had been developing together. Bristol-Myers will take over full development and Exelixis will get an accelerated milestone payment.

Putting the deal terms aside since they're somewhat convoluted with quite a few undisclosed variables, the fact that Bristol-Myers is willing to come back to the tree after throwing back the unwanted XL184 apple is a good sign.

Exelixis' strength has always been its drug discovery business; just witness its laundry list of pacts with GlaxoSmithKline (NYSE: GSK), Roche, Daiichi-Sankyo, Pfizer (NYSE: PFE), Boehringer Ingelheim, and sanofi-aventis (NYSE: SNY). Investors should be relieved that even though former CEO George Scangos has run off to Biogen Idec (Nasdaq: BIIB), it appears to be business as usual at Exelixis.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is an Inside Value pick and GlaxoSmithKline is a Global Gains selection. The Fool owns shares of Exelixis and GlaxoSmithKline and has a disclosure policy.