Isis, J&J Ink Diabetes Drug Deal

Isis Pharmaceuticals(ISIS Quote) announced a collaboration Thursday with Johnson & Johnson's (JNJ Quote) Ortho-McNeil, to develop and market drugs for metabolic diseases such as type II diabetes and obesity.

The partnership garners Isis a $45 million licensing fee upfront and as much as $230 million more in milestone payments.

Ortho-McNeil will fund the joint effort, and Isis is granting Ortho-McNeil worldwide development and commercialization rights to two of its diabetes development candidates, ISIS 325568 and ISIS 377131.

After the collaboration phase, J&J's Pharmaceutical Research & Development will continue development of the drugs, which are designed to selectively inhibit the production of glucagon receptor (GCGR) and glucocorticoid receptor (GCCR).

Isis is eligible for royalties on sales should the two products come to market, and it may also receive milestones and royalties for additional drugs discovered in association with the collaboration.

Isis said it will purchase the equity in Symphony GenIsis before closing the transaction with OrthoMcNeil and reacquire the intellectual property related to the GCGR and GCCR programs as well as regain full ownership of lipid-lowering drug ISIS 301012. Isis previously licensed the above to Symphony GenIsis for $75 million with the right to buy back all of the intellectual property involved.

Isis shares climbed 79 cents, or 6.2%, to $13.55, while J&J edged up 60 cents, or 0.9%, to $63.10.