By Karen Bernstein

Investors took the easy way out last week, assuming that the gain of one partner and the loss of another by Amylin Pharmaceuticals Inc. was a wash - the stock finished the week at $7.75, up $0.125.

But all partnerships are not created equal, and bringing Johnson & Johnson on board to complete development of AMLN's AC137 amylin agonist outweighs the loss of the Glaxo-Wellcome plc R&D partnership to develop the amylin receptor antagonists.

At the surface, the J&J transaction is easy to explain. The agreement with LifeScan Inc., a subsidiary of J&J, provides the long-anticipated partnership for AC137, AMLN's lead compound which is completing a series of Phase II studies and probably will enter Phase III trials in the second half of the year. AMLN's primary financial goal in finding a partner for AC137 was to cover the financial risk of the compound through product launch.

Three legs

For J&J (New Brunswick, N.J.), the deal puts in place the third leg of a strategy to establish a disease management approach to diabetes. Closely monitoring patient glucose levels in conjunction with efforts to reduce glucose has been shown to reduce the complications of diabetes by up to 60 percent, which in turn should lower health care costs. LifeScan is already a key player in glucose monitoring, which forms a $500 million annual business for the company.

The second leg is a strategic alliance between J&J and Novo Nordisk, announced earlier this month, under which the companies will jointly market Novo Nordisk's insulin products and future oral hypoglycemic agents and LifeScan's blood glucose monitoring systems.

Looking beyond these more obvious aspects of the J&J deal, the implications for the changes at AMLN can be understood along two parameters: scientific and financial.