Amylin Pharmaceuticals (Nasdaq: AMLN) and Eli Lilly (NYSE: LLY) decided staying together for the kids just wasn't worth it, but that shouldn't come as much of a surprise to anyone who's followed the partnership. Eli Lilly already had a mistress, and Amylin had sued to stop the fraternization.

The duo has sold beleaguered Byetta since the diabetes medication was approved in 2005, but the drug never really took off, in part because it had to be injected twice a day. Two needle pricks a day is hard to justify with readily available oral medications such as Merck's (NYSE: MRK) Januvia and GlaxoSmithKline's (NYSE: GSK) Avandia -- before side effects derailed it.

The solution was a once-weekly version of Byetta called Bydureon, which is scheduled to be reviewed by the Food and Drug Administration in Jan. A second kid -- thanks to godparent Alkermes (Nasdaq: ALKS), which contributed the extended-release technology -- couldn't rekindle the spark, though; it appears that Eli Lilly likes its new diabetes mate Boehringer Ingelheim better. The German drugmaker did bring two drugs to the relationship, one of which has already gained FDA approval.

Amylin gets to keep the kids, but it will have to pay alimony. There's an upfront payment of $250 million and a 15% royalty until payments reach $1.2 billion plus accrued interest. Amylin is working on a once-monthly version of Byetta, which, if approved, would trigger a $150 million milestone payment to Lilly. There's also a contingency to lower the royalty rate if Bydureon isn't approved by the middle of 2014, but I'm sure both companies hope it doesn't come to that. Bydureon was made out of love, after all.

Investors think Amylin got a raw deal in the divorce -- shares were down 11% yesterday -- but I'm not so sure. Amylin is essentially paying $1.45 billion for half of Byetta and Bydureon if we ignore the potential milestone payment for the once-monthly phase 2 product. Before the decline and handing over the cash to Eli Lilly, Amylin had an enterprise value of more than $1.8 billion. If someone had wanted to buy Amylin's half of Byetta and Bydrueon, that someone would have had to pay that much, probably more for a premium. Sure, the buyer would get a manufacturing plant and Amylin's smaller diabetes drug Symlin, but it's clear the price Amylin is paying isn't outrageous.

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