Eli Lilly spurns a PhIII-ready diabetes drug, and Transition tanks (again)

Eli Lilly HQ

Six years after first corralling rights to Transition Therapeutics’ diabetes drug TT401, pharma giant Eli Lilly ($LLY) is walking away from the Phase III-ready program.

In a statement out early today, Transition reported that Lilly is handing back commercialization rights to the drug.

Toronto-based Transition put a bold face on the retreat of its big partner today, saying that it was free to go it alone or turn to a new partner for a late-stage study of the drug, a dual GLP1-glucagon receptor agonist. Transition said back in February that its drug had produced HbA1c improvements that were “similar” to Byetta (exenatide).

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Investors weren’t optimistic. Transition’s share price ($TTHI) plunged 26% on the news, putting the company back into penny stock territory.

This is the second time in 9 months that Transition has been hammered by bad news. Its share price tanked last June when the company announced that its Phase II/III study of its lead therapy--ELND005, designed to address agitation in Alzheimer’s patients--had failed to hit its primary endpoint. Transition later highlighted subsequent analysis indicating the drug’s activity in patient subsets, but the drug appears to be in limbo for now.

Transition will need some help moving on from here. Alzheimer’s and diabetes are two diseases that require big, expensive late-stage studies for any prospective therapy. But the biotech still feels that it has a pipeline worth boasting about.

“As a leader in this new class of therapies, TT401 offers the unique opportunity of being a first-to-market product with a differentiated mechanism and activity from currently approved diabetes therapeutics,” said Dr. Tony Cruz, chairman and chief executive officer of Transition.

- here's the release

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