NEW YORK ( TheStreet) -- Biopharmaceutical company Transition Therapeutics ( TTHI) is set to pay Eli Lilly ( LLY) $1 million to acquire exclusive rights to develop and potentially commercialize a series of preclinical compounds for diabetes, which could later be more than recouped if Lilly decides to reacquire these rights. Eli Lilly will be receiving an upfront payment of $1 million and will retain the option to reacquire the rights to the compounds at a later date. If Lilly decides to exercise these rights, Transition would be eligible to receive about $250 million in payments and up to low double digit royalties on sales of products containing such compounds if they're successfully commercialized. If Lilly does not exercise these rights, Lilly would be eligible for low single digit royalties from Transition on sales of products containing such compounds should such products be successfully commercialized. Transition Therapeutics ended Tuesday's trading session at $2.60, down 2.6%, but has risen 1.7% to $2.70 in pre-market trading. Meanwhile Lilly finished Tuesday 0.7% higher at $34.60. -- Reported by Andrea Tse in New York Follow TheStreet.com on Twitter and become a fan on Facebook.