Eli Lilly and Co. and Boehringer Ingelheim entered a global agreement to jointly develop and commercialize a portfolio of diabetes compounds currently in mid- and late-stage development. The portfolio includes Boehringer’s two oral diabetes agents, linagliptin and BI10773, and Lilly’s two basal insulin analogues, LY2605541 and LY2963016, with the option to co-develop and commercialize Lilly’s anti-TGF-beta monoclonal antibody.

Linagliptin is being developed as an oral once-daily tablet for the treatment of Type 2 diabetes and is currently under review in the U.S., Europe and Japan. Boehringer’s BI10773 began enrollment in Phase III trials last year. It belongs to a new class of diabetes compounds that block tubular reabsorption of glucose in the kidney.

Lilly’s two basal insulin analogue candidates, LY2605541 and LY2963016 are expected to enter Phase III development in 2011. The agreement also includes an option for Boehringer to co-develop and commercialize another Lilly diabetes molecule, an anti-TGF-beta monoclonal antibody, which is currently in Phase II trials in patients with diabetes with chronic kidney disease.

Lilly will make an initial one-time payment of $387 million. Boehringer will be eligible to receive as much as $807 million in success-based milestones for linagliptin and BI10773. Lilly will be eligible to receive as much as $650 million in success-based regulatory milestones on its two basal analogue insulins. If Boehringer opts-in to the Phase III development and potential commercialization of the anti-TGF-beta monoclonal antibody, Lilly would be eligible to receive as much as $525 million in success-based milestone payments. The companies will share ongoing development costs and upon successful regulatory approval of any product resulting from the alliance, the companies will share commercialization costs and gross margin.