Metabolex, a private pharmaceutical company, has entered into a license and development agreement with Ortho-McNeil-Janssen Pharmaceuticals, a subsidiary of Johnson & Johnson, for the development of compounds to treat type 2 diabetes. Meanwhile, Diamyd Medical also is collaborating with Ortho-McNeil to develop and market its GAD65 antigen-based therapy to treat type 1 diabetes and other related conditions.

Under the terms, Metabolix will receive upfront payments and royalties of global sales and could be eligible to receive commercial milestones in excess of $330 million.

According to Stockholm-based Diamyd, Ortho-McNeil will pay Diamyd $45 million upfront and could receive milestone payments up to $580 million and future sales royalties. Diamyd said that both parties will share development costs, but Ortho-McNeil will take over the costs after results of the ongoing European phase III trial are released in 2011.

Under the latter agreement, Diamyd will hold exclusive rights to all marketing in Nordic countries and for the therapeutic use of GAD65 gene fragments and variants of the GAD65 protein. The deal is expected to close in the third quarter of 2010 but is contingent upon clearance from the Hart-Scott-Rodino Anti-Trust Improvements Act.