Lilly announces strategic collaboration with KeyBioscience AG

The collaboration includes access to the DACRA platform with multiple molecules including KBP-042, KBP-089 and KBP-056. KeyBioscience has initiated phase 2 development with KBP-042. Other assets included in the collaboration, engineered for differences in effect or potency, range from phase 1 to pre-clinical.

Under terms of the agreement, Lilly will receive worldwide rights to develop and commercialize these molecules. In exchange for these rights, KeyBioscience will receive an initial payment of $55 million and is eligible for additional potential development, regulatory, and commercialization milestones, as well as tiered royalty payments on future sales.

"We are extremely excited about the promise of this new mechanism, which could potentially improve insulin sensitivity, reduce weight and improve blood glucose control," said Morten Karsdal, chairman of the board, KeyBioscience AG. "The dual activation of the calcitonin and amylin receptors is exciting research in the diabetes space. We look forward to partnering with Lilly to advance this important work."

The dual activation of calcitonin and amylin receptors is thought to improve insulin sensitivity, suppress food intake, reduce fat deposition, improve blood glucose levels and cause weight reduction.

More than 400 million people around the world have diabetes, according to the International Diabetes Federation, and approximately 9 of 10 people with diabetes have type 2 diabetes. In addition to diet and exercise, current therapies for type 2 diabetes include insulins, oral treatments, and non-insulin injectables.

"This is an exciting opportunity," said Enrique Conterno, president, Lilly Diabetes and Lilly USA. "Our strategic collaboration with KeyBioscience AG will open the door to a potentially innovative treatment approach for people with type 2 diabetes and, possibly, other metabolic conditions."

This transaction is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions. Subject to the closing of this transaction, Lilly expects to incur an acquired in-process research and development charge to earnings in 2017 of approximately $0.03 per share. The company's reported earnings per share guidance in 2017 is expected to be reduced by the amount of the charge. There will be no change to the company's non-GAAP earnings per share guidance as a result of this transaction.

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