Takeda and Amylin had signed an agreement in October 2009 for the co-development and commercialization of obesity compounds. However, back in 2011, both companies decided to discontinue the development of obesity candidate, pramlintide/metreleptin. At that time, pramlintide/metreleptin had been in a phase II program.

On a financial basis, the termination of the partnership will not affect Takeda’s business in fiscal 2012. Takeda said that it will continue to focus on obesity as well other core therapeutic areas. Obesity is an attractive market that could be worth many billions of dollars. Moreover, obesity is linked to increased health risk of several medical conditions. Recently approved obesity treatments include Vivus Pharma’s (VVUS) Qnexa and Arena Pharma’s (ARNA) Belviq.

Meanwhile, we currently have a Neutral recommendation on Bristol-Myers, which carries a Zacks #3 Rank (Hold) in the short run. The company is going through a challenging phase given the genericization of blockbuster blood-thinner Plavix. Bristol-Myers is looking to combat the generic threat through partnering deals and acquisitions. Towards fulfilling this objective and bolstering its position in the lucrative diabetes market, Bristol-Myers acquired Amylin in August 2012.

We note that the Amylin acquisition is the second major deal for Bristol-Myers this year. In February 2012, Bristol-Myers had purchased Inhibitex, Inc., for $2.5 billion targeting the lucrative hepatitis C virus (HCV) market.

Pharma stocks that currently look attractive include companies like Novo-Nordisk (NVO) and Allergan Inc. (AGN). Both companies carry a Zacks #2 Rank (Buy).