Eli Lilly to Take Over Development of Diabetes Drug

As per an agreement initially entered into in 2010, Eli Lilly (NYSE: LLY  ) will pay Transition Therapeutics (NASDAQ: TTHI  ) $7 million to exercise its right to take development and commercialization ownership of the type 2 diabetes drug candidate TT-401, Transition Therapeutics announced today.

Transition Therapeutics also announced that the original agreement with Eli Lilly relating to TT-401 has been amended. Eli Lilly will assume all costs for testing and commercialization, however, Transition Therapeutics has agreed to make a total of $14 million in payments to Eli Lilly in three separate installments during TT-401's phase 2 clinical study trials, according to the press release.

Should the type 2 diabetes and obesity drug TT-401 successfully make it to the commercialization stage, Eli Lilly has also agreed to make milestone payments to Transition Therapeutics totaling an estimated $240 million, in addition to royalty payments on product and related compound sales.

David Moller, Eli Lilly's vice president of endocrine and cardiovascular research and clinical investigation, said in a statement, "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."

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