Eli Lilly sells rights to diabetes compounds to Transition Therapeutics

Canada's Transition Therapeutics says that it has acquired the rights to a series of preclinical compounds from US drug major Eli Lilly in the area of diabetes. Under the licensing and collaboration agreement, Transition will receive exclusive worldwide rights to develop and potentially commercialize a class of compounds that, in preclinical diabetes models showed potential to provide glycemic control and other beneficial effects including weight loss.

Under the terms of the deal, Lilly will receive an upfront payment of $1 million and will retain the option to reacquire the rights to the compounds at a later date. The US firm retains this option up until the end of Phase II. If Lilly exercises these rights, Transition would be eligible to receive milestone payments of approximately $250 million and up to low double-digit royalties on sales of products containing such compounds if they are successfully commercialized. If Lilly does not exercise these rights, it would still be eligible for low single-digit royalties from Transition on sales of products containing such compounds.

"We are very pleased to expand our current relationship with Lilly through the acquisition of these preclinical assets," said Tony Cruz, chairman and chief executive of Transition, noting that "the addition of these novel compounds leverages our expertise in metabolic diseases and grows our development pipeline with next generation diabetes therapies."