Transition Therapeutics is in-licensing TT-601, Eli Lilly’s small molecule transcriptional regulator for the treatment of osteoarthritis (OA) pain.

Per the agreement, Transition has acquired the rights to develop and potentially commercialize TT-601, but Lilly retains an option to reacquire all rights to TT-601 following review of clinical proof-of-concept study results. If Lilly exercises this option, Transition would be eligible to receive milestone payments of approximately $130 million and a high single-digit royalty on sales of products containing TT-601 should they be commercialized successfully; if it does not, Lilly would be eligible for a low single-digit royalty from Transition on sales of products containing TT-601 if they are successfully commercialized.

TT-601 is a selective ligand for a novel nuclear receptor target, and the companies believe that modulating the activity of this target in patients with OA may provide pain relief to many who do not adequately respond to therapy with NSAIDs. TT-601 has reportedly completed preclinical development to date, and Transition hopes it will be ready to enter the clinic in the first half of 2014.

“Molecules in this novel class have shown target engagement in the joint space and efficacy in multiple animal models of joint pain,” said Tony Cruz, Ph.D., chairman and CEO of Transition. “We look forward to TT-601 clinical studies as this drug candidate has the potential to provide an important new source of pain relief to the more than 27 million Americans suffering from OA.”

Transition has worked with Lilly before, having acquired the rights to a series of preclinical compounds from them in the area of diabetes back in March 2010. Lilly received an upfront payment of $1 million and retained the option to reacquire the rights to the compounds at a later date. For one of those compounds, type 2 diabetes candidate TT-401, that later date came just last month; Transition got a $7 million milestone payment when Lilly assumed all development and commercialization rights to that drug.

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