Transition Therapeutics Announces Milestone Payment from Elan

    TORONTO, Dec. 24 /CNW/ - Transition Therapeutics Inc. ("Transition" or
the "Company") (TSX: TTH; NASDAQ:   TTHI), announced today that the Company will
receive a US$5million milestone payment under its global collaboration
agreement with a subsidiary of Elan Corporation, plc ("Elan") (NYSE:   ELN). The
milestone payment was triggered by the initiation of a Phase 2 clinical study
of Alzheimer's disease drug candidate, ELND005 (AZD-103), which was jointly
announced by Transition and Elan on December 21, 2007.
    In connection with the enrolment of the first patient in the Phase 2
clinical study, Transition will issue the former shareholders of Ellipsis
Neurotherapeutics Inc. ("ENI") 174,123 Transition common shares at a price of
$10.86 per share, which represents the weighted average trading price for the
last five trading days. The financial terms associated with the acquisition of
ENI were previously disclosed in a press release dated March 13, 2006.

    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 or 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

    Notice to Readers: Information contained in our press releases should be
considered accurate only as of the date of the release and may be superseded
by more recent information we have disclosed in later press releases, filings
with the OSC, SEC or otherwise. Except for historical information, this press
release may contain forward-looking statements, relating to expectations,
plans or prospects for Transition, including conducting clinical trials. These
statements are based upon the current expectations and beliefs of Transition's
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 factors
beyond Transition's control and the risk factors and other cautionary
statements discussed in Transition's quarterly and annual filings with the
Canadian commissions.

    %SEDAR: 00015806E

For further information:

For further information: on Transition, visit or contact: Dr. Tony Cruz, Chief Executive
Officer, Transition Therapeutics Inc, Phone: (416) 260-7770, x.223,; Elie Farah, Chief Financial Officer,
Transition Therapeutics Inc., Phone: (416) 260-7770, x.203,

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