Transition buys rights to a series of preclinical diabetes assets from Lilly

Transition Therapeutics (TSX:TTH; NASDAQ:TTHI) has expanded its existing relationship with Eli Lilly (NYSE: LLY) by acquiring rights to a series of preclinical diabetes compounds from Lilly under a new licensing and collaboration agreement.

Under the accord, Transition will pay Lilly $1 million (U.S.) and Lilly will retain an option to reacquire rights to the compounds up until the end of Phase 2 testing.

If Lilly exercises these rights, Transition would be receive milestone payments of about $250 million and low double-digit royalties on commercial sales of any products.  If Lilly does not exercise these rights, it would receive low single-digit royalties from Transition on commercial sales of any products.

“We are very pleased to expand our current relationship with Lilly through the acquisition of these preclinical assets,” CEO Dr. Tony Cruz said in a statement.  ”The addition of these novel compounds leverages our expertise in metabolic diseases and grows our development pipeline with next generation diabetes therapies.”

Added Lilly vice president of endocrine and cardiovascular research, Dr. David Moller, “Lilly’s existing partnership with Transition pertaining to the exploration of gastrin-based therapies as potential diabetes disease-modifying agents continues to be productive.”