Diamyd Medical, Ortho-McNeil-Janssen Pharmaceuticals sign agreement for diabetes therapy

Diamyd Medical AB (STO:DIAMB)(Pink Sheets:DMYDY) has signed an agreement with Ortho-McNeil-Janssen Pharmaceuticals, Inc. (OMJPI), a Johnson & Johnson company, to develop and commercialize the Diamyd® diabetes therapy.

“OMJPI is an ideal partner for Diamyd with their significant global resources and strong commitment to diabetes”

The agreement relates to the development and world-wide commercialization of the GAD65 antigen-based therapy (Diamyd®) for the treatment and prevention of type 1 diabetes and associated conditions.

OMJPI will make an upfront payment of USD 45 million, and under the terms of the agreement, Diamyd has the potential to receive additional development and sales milestone payments of up to USD 580 million, as well as tiered royalties on future sales. The parties will equally share costs for the development program until results from the ongoing EU Phase III study, expected in the first half of 2011. OMJPI has the right to fully assume responsibility for the development program upon reviewing the results.

Following its strategy, Diamyd has secured exclusive rights for commercialization in the Nordic countries. Diamyd also retains the rights to the therapeutic use of the GAD65 gene and derivatives, fragments and variants of the GAD65 protein.

"OMJPI is an ideal partner for Diamyd with their significant global resources and strong commitment to diabetes," says Elisabeth Lindner, CEO and President of Diamyd Medical. "This agreement will allow Diamyd to expand and become a significant player as a specialty pharma company in the Nordic region, but most importantly it should make this transformational beta cell preserving therapy available to patients around the world."

The transaction is expected to close in the third quarter of 2010, contingent upon clearance under the Hart-Scott-Rodino Anti-Trust Improvements Act.