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Furiex jumps after diabetes drug approval

NEW YORK (AP) -- Shares of Furiex Pharmaceuticals Inc. surged Monday after regulators approved three new diabetes drugs that Japanese drugmaker Takeda developed with help from Furiex.

THE SPARK: On Friday, Takeda said the Food and Drug Administration approved the type 2 diabetes drug Nesina and the combination drugs Oseni and Kazano. Furiex, which teams up with drug companies to speed clinical development programs, said it will receive $25 million from Takeda as a result of the approval. It will also get royalties on sales of the drugs.

Nesina, or alogliptin, is designed to treat insufficient levels of insulin. The other two drugs also contain alogliptin, pairing it with other drugs in a single pill. Oseni combines the drug with the main ingredient in the diabetes medication Actos, an older drug made by Takeda that treats resistance to insulin. Kazano combines alogliptin and metformin, which has been used to treat diabetes for decades.

THE BIG PICTURE: Japanese regulators approved Nesina in 2010 and Oseni in 2011, and Furiex gets royalty payments on sales of those products. The Morrisville, N.C., company also has the rights to the premature ejaculation treatment Priligy, which is marketed in some countries by its partner Menarini Group.

Furiex reported a total of $5.6 million in royalty revenue in the third quarter.

Furiex is also studying treatments for irritable bowel syndrome and other diabetes drugs.

THE ANALYSIS: Canaccord Genuity analyst Randall Stanicky started covering Furiex shares with a "Buy" rating and a price target of $45 per share. He said the company should get a steady flow of cash in the form of royalty payments, adding that the Takeda diabetes drugs should be approved in Europe in the second half of the year. Stanicky said investors may be overlooking the value of Furiex's experimental drugs.

SHARE ACTION: Furiex shares rose $11.14, or 52.4 percent, to $32.38 in afternoon trading. Earlier the stock reached an all-time high of $32.97. The company completed its IPO in May 2010.