Vanda Pharmaceuticals Inc. (>> Vanda Pharmaceuticals Inc.) agreed to pay Eli Lilly Co. (LLY) up to $100 million for the exclusive right to develop a drug that has shown some promise as a treatment for alcohol addiction.
Under its deal with Lilly, the biopharmaceutical company will pay a $1 million initial license fee and take responsibility for all development costs of the VLY-686 drug.
Lilly is also eligible to receive additional payments based upon certain milestones and royalties on sales. These milestones include $4 million for milestones achieved prior to a new drug application and up to $95 million for future regulatory approval and sales milestones.
Vanda, which focuses on treatments for central nervous system disorders, noted that prior research of VLY-686 has focused on its potential as a novel therapeutic for individuals struggling with dependence on alcohol.
"The licensing of VLY-686 is an important milestone for Vanda, as we continue to realize our vision of developing treatments to address unmet medical needs," said Chief Executive Mihael H. Polymeropoulos.
Vanda in February reported it swung to a loss in the fourth quarter as increased expenses outweighed higher revenue for the period.
Shares closed Friday at $4.49 and were inactive in premarket trade. The stock has slumped 42% over the past year.
-By Mia Lamar, Dow Jones Newswires; 212-416-3207; firstname.lastname@example.org