BOULDER - Amgen Inc. will pay Array BioPharma Inc. $60 million up front to have exclusive worldwide rights to Array's Type 2 diabetes drug ARRY-403.

Boulder-based Array (Nasdaq: ARRY) will finish the phase 1 trial for the drug and develop other variations of it, but Thousand Oaks, Calif.-based Amgen (Nasdaq: AMGN) will commercialize it.

Upon certain clinical and commercial milestones, Array, which can co-promote the drug in the U.S., will receive additional payments as well as receive royalties upon drug sales.

The diabetes drug, ARRY-403, is suspected to help lower blood glucose levels "by enhancing the ability of the pancreas to sense glucose, which leads to increased insulin production" in Type 2 diabetes patients.

As part of the agreement, Amgen, which has local labs in Longmont and Boulder, will fund an undisclosed number of Array researchers who will continue work on the drug for two years. At that time, the Array researchers will turn their attention elsewhere.

Tricia Haugeto, Array's spokeswoman, said the company was eager to find a partner as a significant amount of resources were required to develop ARRY-403, and Array wants to focus its attention to its other six drugs.