Lilly, Boehringer to develop diabetic compounds

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Eli Lilly and Boehringer Ingelheim have entered an agreement to develop and market diabetes compounds including two oral diabetes agents—linagliptin and BI10773 (Boehringer)—and Lilly’s basal insulin analogies—LY2605541 and LY2963016.

Under the terms of the agreement, Lilly will make a one-time initial payment to Boehringer for €300 million ($387.8 million U.S.).

Ingelheim, Germany-based Boehringer may receive upwards of €625 million ($807.9 million U.S.) in milestone payments for its linagliptin and BI10773 agents. Similarly, Lilly will be eligible to receive up to $650 million in milestone payments for its analogue insulin.

Under the partnership, the companies also will co-develop and market Eli Lilly’s anti-TGF-beta monoclonal antibody.

Indianapolis-based Eli Lilly said that Boehringer’s linagliptin is a dipeptidyl peptidase-4 (DPP-4) inhibitor under regulatory review in the U.S., Europe and Japan.

In addition, BI10773, Boehringer’s sodium-dependent glucose co-transporter-2 (SGLT-2) inhibitor is currently undergoing evaluation in a phase III clinical trial. If approved, this would be the first SGLT-2 inhibitor approved for use.

Lilly’s diabetic agents are expected to enter phase III clinical testing beginning in 2011. The anti-TFG-beta monoclonal antibody is currently being investigated for use in diabetic patients with chronic kidney disease in a phase II clinical trial.

Additionally, if Boehringer elects to opt-in to the phase III development and commercialization of the anti-TGF-beta monoclonal antibody, Lilly may receive upwards of $525 million in milestone payments.

The companies said that that development costs will be shared equally and that any regulatory approval of the products that produce revenue will be distributed equally to both companies.

Lilly said that it expects 2011 earnings per share dilution in the range of $0.45-$0.50, including a charge of almost $0.27 per share related to the one-time payment. If linagliptin is approved, Lilly said it anticipates less dilution in 2012 and 2014 and expects no dilution in 2014.