J&J's Ortho-McNeil unit buys rights to Diamyd diabetes therapy for up to $625 million

Swedish company Diamyd Medical AB has signed an agreement with Ortho-McNeil-Janssen Pharmaceuticals, a subsidiary of US health care giant Johnson & Johnson, to develop and commercialize the former's diabetes therapy. The agreement relates to the development and world-wide commercialization of the GAD65 antigen-based therapy Diamyd for the treatment and prevention of type 1 diabetes and associated conditions.

Under the terms of the deal, which is expected to close in the third quarter, the US firm will pay an upfront $45 million, and Diamyd has the potential to receive additional development and sales milestone payments of up to $580 million, as well as tiered royalties on future sales. The parties will equally share costs for the development program until results from the ongoing European Union Phase III study, expected in the first half of 2011. Ortho-McNeil has the right to fully assume responsibility for the development program upon reviewing the results.

Following its strategy, Stockholm-based Diamyd has secured exclusive rights for commercialization in the Nordic countries. It also retains the rights to the therapeutic use of the GAD65 gene and derivatives, fragments and variants of the GAD65 protein.