Eli Lilly and BioMS Medical announce licensing and development agreement

Eli Lilly and Company and BioMS Medical Corp. have announced that the two companies have entered into a licensing and development agreement granting Lilly exclusive worldwide rights to BioMS Medical's lead multiple sclerosis (MS) compound, MBP8298.

The compound is currently being evaluated in two pivotal phase III clinical trials in secondary progressive MS (SPMS) and one phase II clinical trial in relapsing-remitting MS (RRMS).

Under the terms of the agreement, Lilly and BioMS Medical will collaborate on the development of MBP8298 and will also share in certain development costs with Lilly being responsible for future R&D, manufacturing and marketing activities. BioMS Medical will receive an upfront payment of $87 million, as well as potential development and sales milestones up to $410 million and escalating royalties on sales commensurate with the current stage of development of the product if MBP8298 is successfully commercialized. BioMS Medical will continue to oversee the current clinical trials. Other terms of the deal were not disclosed.

"Lilly is pleased to add yet another promising late-stage compound to our portfolio," said Dr. William W. Chin, M.D., vice president of discovery research and clinical investigation for Lilly. "Multiple sclerosis is a disease with significant unmet patient needs. MBP8298 has shown potential in slowing the progression of secondary progressive MS, and thus may provide an effective therapeutic option for patients with this debilitating disease. We are also hopeful that MBP8298 may prove beneficial in treating patients with relapsing remitting MS. We intend to fully leverage our expertise in neuroscience to continue the development of this novel molecule."

"We are very pleased to collaborate with Lilly on the worldwide development of MBP8298," said Kevin Giese, President and CEO at BioMS Medical. "Lilly's well established leadership in the neurology arena and considerable resources, expertise and proven ability to launch first-in-class drugs will help MBP8298 to realize its full development and commercial potential."

The transaction is expected to become effective in the first quarter of 2008, contingent upon clearance under the Hart-Scott-Rodino Anti-Trust Improvements Act, if required. At closing, Lilly would expect a charge to earnings for acquired in-process research and development. The exact amount of the charge has not yet been determined, but is estimated to be $0.05 per share. Lilly's 2008 pro forma adjusted earnings per share guidance remains unchanged at $3.85 to $4.00. On a reported basis, including the charge for this transaction with BioMS Medical, Lilly now expects its 2008 earnings per share to be in the range of $3.80 to $3.95. See the reconciliation below for further detail.