Eli Lilly exercises rights to diabetes drug candidate TT-401 from Transition Therapeutics

Canada’s Transition Therapeutics (TSX: TTH) announced this morning (June 17) that US drug major Eli Lilly (NYSE: LLY) has exercised its option to assume all development and commercialization rights to type 2 diabetes drug candidate TT-401, under their original deal signed in 2010 (The Pharma Letter March 4, 2010). In conjunction with this assumption of rights, Transition will receive a $7 million milestone payment.

Lilly and Transition have amended their agreement to address future development of TT-401 and associated financial arrangements. Lilly will assume all costs and perform all future development and commercialization activities of TT-401. Transition will contribute payment of $14 million to Lilly in three separate installments during the Phase II clinical study. If TT-401 is successfully commercialized, Transition will be eligible to receive around $240 million in additional milestone payments. Transition will also be eligible for a double-digit royalty on sales of TT-401 products and a low single digit royalty on related compounds.

"We are encouraged by the early data seen to date with TT-401, and are pleased by the efficient and thorough process by which Transition Therapeutics conducted the Phase 1 studies," said David Moller, vice president of endocrine and cardiovascular research and clinical investigation for Lilly, adding: "We look forward to continuing the development of TT-401, as it supports our strategy of offering a broad portfolio of therapies for people with diabetes."