Opko Health plans to acquire Transition Therapeutics for approximately $60 million, the companies said today, in a deal that will grow the buyer’s portfolio with a type 2 diabetes and obesity candidate that has completed Phase II and a Phase II androgen deficiency candidate.

“This acquisition provides Opko with two late-stage drug candidates, each of which holds exceptional market potential,” Phillip Frost, M.D., Opko’s CEO and chairman, said in a statement.

The deal will add to Opko’s holdings Transition’s lead metabolic drug candidate TT401, a once- or twice-weekly oxyntomodulin for type 2 diabetes and obesity that the company calls the most advanced candidate among glucagon-like peptide 1 (GLP1)/glucagon receptor dual agonists.

Transition regained full development and commercialization rights to TT401 after Eli Lilly opted not to advance the compound into Phase III in April. Lilly ended a 3-year collaboration between the companies more than 2 months after Transition reported positive Phase II results in a trial carried out by Lilly. Lilly assumed development and commercialization rights to TT401 in 2013, earning Transition a $7 million milestone payment from the pharma giant.

In acquiring Transition, Opko reasons that TT401 will complement the buyer’s existing oxyntomodulin product candidate MOD-6031, a Phase I, once-weekly oxyntomodulin with a proprietary delivery system designed to enable the molecule to penetrate the blood–brain barrier. The potential interaction of MOD-6031 with the central nervous system (CNS) as well as with peripheral receptors is, according to Opko, expected to mimic the satiety and weight loss effect shown naturally by oxyntomodulin.

Also included in the deal is Transition’s TT701, a once-daily oral selective androgen receptor modulator for patients with androgen deficiency. In a 12-week study of 350 male subjects, TT701 showed significantly decreased fat mass and increased lean body mass and muscle strength without significantly changing prostate specific antigen levels.

In April, Transition said the first patient had been dosed in a Phase II study assessing TT701’s safety and efficacy in improving the symptoms of androgen deficiency—including sexual symptoms, fatigue/low vitality, and physical dysfunction—in men with prostate cancer who have undergone radical prostatectomy for organ-localized prostate cancer. The study was expected to enroll up to 125 patients.

“The selective androgen receptor modulator TT701 could meet an important need in patients who can benefit from its anabolic effects without the risks associated with testosterone products,” Dr. Frost added. “We believe it fits well with our Claros® 1 point-of-care diagnostic products under development for testosterone and PSA [prostate-specific antigen], which could serve as companion diagnostics.”

Transition’s pipeline also includes ELND005, an oral Phase II neuropsychiatric small-molecule drug candidate. ELND005 has completed Phase II clinical studies in Alzheimer’s disease and Down syndrome patients.

At $60 million, the deal is valued at $1.55 per share of Transition stock, based on the moving average price of Opko common stock for the 5 trading days preceding the signing of the agreement.

Under terms approved by the boards of both companies, Transition shareholders will receive approximately 6.4 million shares of Opko common stock. Opko and Transition said they expect the deal to close during the second half of this year, subject to approval of Transition stockholders and other customary conditions.