Lilly and Transition Therapeutics Announce Licensing and Collaboration Agreement

    Lilly to Acquire Exclusive Rights to Gastrin Based Therapies Program for

    INDIANAPOLIS and TORONTO, March 13 /CNW/ - Eli Lilly and Company
(NYSE:  LLY) and Transition Therapeutics Inc. (TSX:TTH; NASDAQ:  TTHI) today
announced that the two companies have entered into a licensing and
collaboration agreement granting Lilly exclusive worldwide rights to develop
and commercialize Transition's gastrin based therapies, including the lead
compound TT-223, which is currently in early Phase II testing. Gastrin based
therapies are an emerging class of potential disease-modifying therapies for
patients with diabetes, and have been shown to provide sustained improvement
in glycemic control in preclinical models and early clinical studies.
Sustained improvement in glycemic control is a key goal for patients with
diabetes in order to alleviate the symptoms of hyperglycemia and to prevent
diabetic complications, thereby improving their overall quality of life.
    Under the terms of the agreement, Transition will receive a $7 million
upfront payment, and may also receive up to $130 million in potential
development and sales milestones, as well as royalties on sales of gastrin
based therapies if any product is successfully commercialized. Transition and
Lilly will both participate in the currently planned phase II clinical trial
with lead compound TT-223 in type 2 diabetes. Thereafter, Lilly will be
responsible for further development activities and the commercialization of
all gastrin based therapeutic products worldwide. Other terms of the deal were
not disclosed.
    "This agreement represents an exciting new direction for Lilly's diabetes
care research," said David Moller, M.D., Lilly, vice president of endocrine
and cardiovascular research and clinical investigation. "We plan to leverage
Transition's experience in gastrin based therapies with our own internal
expertise, including Lilly's strong biotechnology discovery platform, to
continue our mission to develop innovative, beneficial and cost-effective
treatments for patients with diabetes."
    "We are very pleased to enter into this strategic collaboration with
Lilly, a recognized leader in diabetes care. Lilly has industry-leading
clinical and commercial development capabilities in diabetes that are ideally
suited to maximize the potential of the multiple gastrin based therapy
opportunities," said Dr. Tony Cruz, chairman and chief executive officer of

    About Gastrin Based Therapies
    The gastrin based therapies program is focused on the development of
gastrin analogues, alone or in combination with approved or experimental
diabetes agents as potential disease modifying therapies for diabetes
patients. Preclinical data in diabetes animal models demonstrate the efficacy
of gastrin analogues alone, or in combination with GLP-1 analogues or
epidermal growth factor analogues. In humans, Transition's recent Phase IIa
clinical trial data showed that 4-weeks of E1-I.N.T. therapy (combination of
gastrin analogue, TT-223, and an epidermal growth factor analogue) in type 2
diabetes patients resulted in sustained reductions in blood glucose control
parameters, including haemoglobinA1C, for 6 months post-treatment. These data
suggest that gastrin based therapies might have an important role in beta cell
differentiation and function, capable of providing sustained glucose control
in type 2 diabetes.

    About Lilly
    Lilly, a leading innovation-driven corporation, is developing a growing
portfolio of first-in-class and best-in-class pharmaceutical products by
applying the latest research from its own worldwide laboratories and from
collaborations with eminent scientific organizations. Headquartered in
Indianapolis, Ind., Lilly provides answers - through medicines and information
- for some of the world's most urgent medical needs. Additional information
about Lilly is available at

    About Transition
    Transition is a biopharmaceutical company, developing novel therapeutics
for disease indications with large markets. Transition's lead products include
ELND005 (AZD-103) for the treatment of Alzheimer's disease and TT-223 for the
treatment of diabetes. Transition has an emerging pipeline of preclinical drug
candidates acquired externally and developed internally using its proprietary
drug discovery engine. Transition's shares are listed on the NASDAQ under the
symbol "TTHI" and the Toronto Stock Exchange under the symbol "TTH". For
additional information about the Company, please visit

    Lilly Safe Harbor
    This news release contains forward-looking statements. These statements
are subject to known and unknown risks and uncertainties that may cause actual
future experience and results to differ materially from the statements made.
Factors that might cause such a difference include, among others, the
completion of clinical trials, the FDA and other foreign review processes and
other governmental regulation, Lilly's and Transition's abilities to
successfully develop and commercialize drug candidates, competition from other
pharmaceutical companies, the ability to effectively market products, and
other factors described in Lilly's most recent filings with the Securities and
Exchange Commission. Lilly undertakes no duty to update forward looking

    Transition Safe Harbor
    Notice to Readers: Information contained in this press release should be
considered accurate only as of the date of the release. Except for historical
information, this press release may contain forward-looking statements,
relating to expectations, plans, or prospects for Transition and/or Lilly.
These statements are based upon the current expectations and beliefs of
management and are subject to certain risks and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements. These risks and uncertainties include, among
others, the completion of clinical trials, the FDA and other foreign review
processes and other governmental regulation, the companies' abilities to
successfully develop and commercialize drug candidates, competition from other
pharmaceutical companies, the ability to effectively market products, and
other factors which may be beyond the control of either Transition or Lilly.
Please see Transition's filings with the Canadian commissions and Lilly's
filings with the U.S. Securities and Exchange Commission for further
information about risk factors and other cautionary statements. Neither
Transition nor Lilly undertakes a duty to update forward-looking statements.

    %SEDAR: 00015806E

For further information:

For further information: Lilly: Mark E. Taylor, (317) 276-5795;
Transition: Elie Farah, (416) 260-7770 x.203

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