Amylin Pharmaceuticals will pay Eli Lilly and Company $250 million up front and as much as $1.2 billion in the future for rights to their diabetes products, ending what was once one of the drug industry's most successful partnerships.

The agreement to terminate the alliance over Byetta and related medicines resolves litigation between the companies that began after Lilly struck another diabetes partnership with Germany's Boehringer Ingelheim.

The agreement, announced by the companies on Tuesday, brings an abrupt end to a partnership that led to Byetta, the first in a class of diabetes medicines called GLP-1s that stimulate insulin release when glucose levels become too high.

Byetta, also known as exenatide, initially was a significant product for both companies after it was launched in 2005. But sales stalled due to safety concerns and the arrival of competitors.

Meanwhile, a long-acting version, Bydureon, suffered repeated regulatory delays.

Under the agreement, Lilly will transition US commercial operations to Amylin by November 30. Outside the US, Lilly will transfer commercialization of Byetta and Bydureon, which is approved in Europe, to Amylin on a market-by-market basis in 2012 and 2013.

Amylin said it anticipated working with "one or more partners" outside the United States in the future.

Amylin will make revenue-sharing payments to Lilly equal to 15 percent of global net sales of exenatide products until Amylin has made aggregate payments of $1.2 billion plus interest.

If Bydureon has not received U.S. approval before June 30, 2014, Amylin will pay Lilly 8 percent of global sales of exenatide products. U.S. regulators are due to make a decision on Bydureon by Jan. 28.

Amylin will also pay Lilly $150 million should a once-monthly version of exenatide, currently in mid-stage testing, win US approval.

Amylin sued Lilly in May over the Boehringer partnership, seeking to stop Lilly from using the same sales force to sell a potential rival to Byetta, known as Tradjenta.-Reuters