NEW YORK (TheStreet) -- Eli Lilly (LLY) - Get Report shares are up 1.28% to $74.48 in trading on Thursday after the pharmaceutical and animal health company agreed to an exclusive license and collaboration agreement with HanmiPharmaceuticals to develop Hanmi's autoimmune disease treatment.

The two companies agreed to collaborate to investigate whether Hanmi's HM71224 treatment is effective for treating rheumatoid arthritis and lupus with Eli Lilly receiving world-wide rights to the formula as part of the deal.

Hanmi will receive a $50 million payment initially with a chance to earn up to $640 million if certain sales milestones are reached. If the treatment is commercialized Hanmi will see tiered double digit royalty payments.

"Significant unmet medical need exists in many prevalent autoimmune diseases where individual patient needs are not adequately being met with available treatments. Lilly is committed to changing patient expectations in some of the world's most debilitating disease areas, and we're building a portfolio of potential advances in immunology through our own research and key collaborations such as with Hanmi. We're highly encouraged by the potential of HM71224 to deliver an innovative, first-in-class treatment option," said Thomas Bumol, Ph.D., senior VP, biotechnology and immunology research at Lilly.

TheStreet Ratings team rates LILLY (ELI) & CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate LILLY (ELI) & CO (LLY) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
• The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.77 is somewhat weak and could be cause for future problems.
• The gross profit margin for LILLY (ELI) & CO is currently very high, coming in at 82.16%. Regardless of LLY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.36% trails the industry average.
• LLY, with its decline in revenue, slightly underperformed the industry average of 10.3%. Since the same quarter one year prior, revenues fell by 11.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
• LILLY (ELI) & CO's earnings per share declined by 40.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, LILLY (ELI) & CO reported lower earnings of $2.23 versus $4.31 in the prior year. This year, the market expects an improvement in earnings ($3.16 versus $2.23).
• You can view the full analysis from the report here: LLY Ratings Report

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