Staff Writer

TransPharma Medical Ltd. said it will receive an up-front payment of $35 million as part of a deal with Eli Lilly & Co. to develop TransPharma's needle-free ViaDerm-PTH (1-34) for osteoporosis.

Under the deal, TransPharma also is entitled to development and sales milestones, as well as royalties on sales if a transdermal PTH product is successfully commercialized.

The transaction is expected to become effective in either June or July, subject to clearance under U.S. antitrust law. At closing, Lilly said it would expect a 2-cent per share charge to earnings for acquired in-process research and development.

The ViaDerm-PTH product, which is administered transdermally using TransPharma's proprietary technology, contains the bone-building parathyroid hormone, or PTH.

Indianapolis-based Lilly already has its own PTH product, Forteo for osteoporosis, but that drug is delivered via an injection. ViaDerm-PTH, on the other hand, is needle-free and is designed to be self-administered by the patient.

TransPharma CEO Daphna Heffetz described the ViaDerm device as "non-intimidating," similar to a pen or marker, requiring no special training by for patient use. She referred questions about the Phase II study to Lilly.

The product currently is in Phase II clinical testing in female patients. This dose-ranging study is still enrolling and no target date for completing enrollment has been set, Mark Taylor, a Lilly spokesperson said. The Phase II study is being jointly funded by the two companies. But after that Lilly would be responsible for further development activities and the potential commercialization of any transdermal PTH products, both companies said.

One question Lilly hopes to find out through the research is "how different this is" from its own PTH product, Taylor said. However, the companies have not yet disclosed which therapies - beyond PTH - are being tested in the ViaDerm-PTH study, he said.

A Phase I study of ViaDerm-PTH showed similarities between Lilly's Forteo and TransPharma's PTH product. According to TransPharma, once-daily transdermal delivery of all doses tested in this trial demonstrated a safety profile similar to the one observed in the Forteo subcutaneous injection. In addition, pharmacokinetic profiles also were similar, the company announced last year, suggesting that ViaDerm-PTH could provide a viable alternative administration route for hPTH.

Lilly also has an oral osteoporosis drug called Evista. However, Evista is bone-maintaining drug - not a bone-building drug like its PTH product Forteo, Lilly's Taylor explained.

Lod, Israel-based TransPharma has other molecules in development using the same pen-like delivery system, Heffetz said. In addition, it also has completed a Phase Ib study for transdermal delivery of human growth hormone (somatropin).