Nov. 2 (Bloomberg) -- Japan’s Takeda Pharmaceutical Co., maker of the world’s top-selling diabetes treatment, will pay as much as $1 billion to Amylin Pharmaceuticals Inc. to co-develop the U.S. company’s obesity treatments.

Amylin rose 9.9 percent, the most since March, in Nasdaq trading and Takeda dropped 1.4 percent in Tokyo. Takeda, based in Osaka, will pay $75 million upfront for medicines including Amylin’s experimental therapy that combines the diabetes drug Symlin with a form of leptin, a hormone implicated in weight loss, Takeda and San Diego-based Amylin said in a statement.

The purchase may help Takeda buffer losses after Actos, its top seller with $4 billion generated for the year ended March 31, loses patent protection in January 2011. The drugmaker needs products to replace sales lost when U.S. regulators delayed approval of a combination diabetes therapy that includes Actos.

“The purchase will surely boost Takeda’s product lineup,” Takashi Akahane, a health-care analyst at Tokai Tokyo Research Center Co. in Tokyo, said by telephone today. “Still, this drug alone won’t be enough to make up for the sales decline in Actos, and the company needs to make more acquisitions.”

The agreement also includes davalintide, a next-generation form of Symlin being developed as an obesity treatment. Davalintide and the Symlin/leptin combination are in the second phase of testing needed for U.S. regulatory approval. As much as $2 billion in annual sales await a safe and effective weight- loss drug, according to analyst Michael King, of Merriman Curhan Ford & Co. in San Francisco.

Drug Expertise

Takeda fell 1.4 percent to close at 3,600 yen, while the benchmark Topix index dropped 1.6 percent. Amylin rose 9.9 percent, or $1.09, to $12.13 at 4:15 p.m. New York time in composite trading.

“What was most important to us was to find a partner who could help us to advance compounds quickly, and achieve something that we couldn’t by ourselves,” Amylin Chief Executive Officer Dan Bradbury said in a telephone interview. “We looked across the entire spectrum of companies, and looked for those with expertise in metabolic disease. We also wanted someone with a global presence.”

Amylin’s biggest product is the diabetes drug Byetta, co- marketed with Eli Lilly & Co. The injection had sales of $678.5 million for Amylin last year, or about 81 percent of revenue. Byetta, injected twice daily, is a synthetic hormone that spurs pancreas cells to make insulin when blood sugar is high.

Once-Weekly Version

Amylin and Lilly are trying to gain U.S. approval for a once-weekly version of the product. On Oct. 30, U.S. regulators approved Byetta as a stand-alone medication for those with diabetes. Previously, it had been approved for use only with other medications. The once-weekly shot uses technology developed by Alkermes Inc., of Cambridge, Massachusetts.

The number of obese adults may reach 700 million worldwide by 2015, from 400 million in 2005, the World Health Organization estimates. About 34 percent of Americans are obese. Obesity is defined as having a BMI greater than 30, which is equivalent to about 186 pounds for a person who is 5 feet 6 inches tall.

Prescription-drug sales account for less than 1 percent of the $59 billion market for weight-loss products, from Nutrisystem meals to health-club memberships, according to Marketdata Enterprises Inc., in Tampa, Florida.

The best-selling weight-loss drug, Roche Holding AG’s Xenical, generated $465 million in sales last year, followed by Abbott Laboratories’ Meridia with sales of $41 million and generic phentermine with $40 million, according to IMS Health Inc., a market data company in Norwalk, Connecticut.

More Compounds

The Takeda-Amylin agreement also will include other compounds being developed by the two companies, according to the statement dated Nov. 1. Under the deal, Amylin gets added payments as they achieve certain milestones based on development, commercialization and sales, the statement said.

Takeda will pay 80 percent of costs linked with U.S. Food and Drug Administration marketing approval and all of the development costs of obtaining clearance for approval of products outside the U.S.

“Both Amylin and Takeda have extensive experience in the diabetes and metabolic disease area, and this collaboration should allow us to more quickly bring promising new treatments to patients in need,” Takeda Chief Executive Officer Yasuchika Hasegawa said in the statement.

Regulatory Setback

Takeda, Asia’s biggest drugmaker, failed to win FDA approval for its experimental diabetes medicine alogliptin and a treatment combining Actos and alogliptin after regulators asked for more safety data. The company was counting on those drugs to replace Actos.

The FDA said it wants more information, consistent with a request in June for additional data on heart risks relating to alogliptin as a single treatment.

Sales of Actos, which accounts for about one-quarter of Takeda’s revenue, are already falling before the patent expiry. Revenue from Actos dropped 4.1 percent to 195 billion yen ($2.16 billion) in the six months ended Sept. 30 as the stronger yen eroded the value of overseas earnings, Takeda said on Oct. 30.

Takeda is also developing an obesity compound called cetilistat, which is in the last stage of clinical trials generally required for regulatory review in Japan.

To contact the reporter on this story: Elizabeth Lopatto in New York at elopatto@bloomberg.net; Kanoko Matsuyama in Tokyo at kmatsuyama2@bloomberg.net.

Last Updated: November 2, 2009 16:22 EST