NEW YORK (TheStreet) -- Johnson & Johnson (JNJ) - Get Report subsidiary Ortho-McNeil-Janssen Pharmaceuticals signed an agreement to pay Stockholm-based Diamyd Medical $45 million upfront to collaborate on developing and globally commercializing type-1 diabetes treatment and prevention.

Under the agreement, Diamyd could receive additional development and sales milestone payments of up to $580 million, as well as royalties on future sales. The companies equally will share costs for the development program until results of a phase III study arrive, expected in the first half of 2011. Ortho-McNeil has the right to fully assume responsibility for the development program after reviewing these results.

The transaction is expected to close in the third quarter.

-- Reported by Andrea Tse in New York

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