The good news outweighed the bad news for Ligand Pharmaceuticals ( LGND), whose shares rose 3.1% in heavy volume Friday after the company announced it won another milestone payment.

Ligand said that it earned a $1 million payment from TAP Pharmaceuticals, a joint venture between Abbott Laboratories ( ABT) and Takeda Chemical Industries of Japan, after TAP picked one of its androgen receptor modulators as a second clinical candidate. Androgen receptor modulators are used to treat hypogonadism and osteoporosis, amongst other things.

In reaction, shares of Ligand were extremely active, rising 43 cents to $14.24. Some 1 million shares traded, set to pass the average daily volume of 1.5 million shares. Abbott shares rose 33 cents, or 0.8%, to $40.61 after the company announced second-quarter earnings that met Wall Street expectations.

Under the terms of the agreement, Ligand will receive additional milestone and royalty payments if its products show progress in clinical trials. Ligand also notified TAP that it will be exercising an option to select a compound and a backup to develop for other uses than the ones covered under its agreement with TAP. Currently, the two companies are working together to create drugs to treat prostate cancer, benign prostatic hyperplasia, acne and hirsutism.

The good news about the milestone payments offset bad news that Ligand's phase 3 clinical trials of naveglitazar, its experimental diabetes treatment with Eli Lilly ( LLY), could be delayed by up to two years.

In a news release Friday night, the company said that the Food and Drug Administration has expressed concern about a class of drugs called peroxisome proliferator-activated receptors, or PPAR. Fearing PPAR could be dangerous if taken over a long period of time, the FDA has delayed any clinical trials set to last longer than six months until a rodent toxicity study is performed.

In just-completed phase 2 testing, Ligand said that naveglitazar showed promise as a diabetes treatment, reducing blood sugar in 151 patients.

Shares of Lilly dropped 57 cents, or 0.8%, to $67.31.

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