When 7 percent of the U.S. population is stricken with diabetes, it becomes an area of focus for many researchers, not just to address a large market potential, but to try to reduce the complications associated with the disease.

Just last week, Melville, N.Y.-based OSI Pharmaceuticals Inc. received $25 million up-front in a licensing deal with Eli Lilly & Co., of Indianapolis, for a glucokinase activator program. And on Thursday, two more diabetes research deals came into play.

First, Bristol-Myers Squibb Co., of New York, signed with London-based AstraZeneca plc to develop and commercialize two compounds for Type II diabetes: saxagliptin, a dipeptidyl peptidase-4 inhibitor, and dapagliflozin, a sodium-glucose cotransporter-2 inhibitor.

And discovery company Biomedical Research Models Inc. licensed from Neuralstem Inc. compounds to treat certain cognitive and neurological impacts of diabetes. The compounds were discovered using Rockville, Md.-based Neuralstem's human neural stem cells, which have demonstrated their ability to recruit and stimulate the body's stem cells to form new neurons in the brain.

"Diabetics suffer from a variety of complications, including retinopathy, which negatively impacts the eyes; nephropathy, which is the leading cause of kidney failure in the country; and the very severe, debilitating problem called peripheral neuropathy," said Dennis Guberski, president of Biomedical Research, of Worcester, Mass.

The neuropathies cause pain all day and all night, and "current treatments today dull the pain," Guberski told BioWorld Today. "There is no treatment that works on the underlying pathogenesis of diabetic peripheral neuropathies."

The license agreement represents Neuralstem's first major agreement to date and should produce Biomedical Research's first clinical product. It includes annual license fees to Neuralstem, as well as clinical milestone payments that could reach up to $38 million for each product approved by the FDA. Also, Neuralstem would be due royalties on marketed products.

Diabetes is a disease marked by high levels of blood glucose as a result of defects in insulin production and/or insulin action. According to the American Diabetes Association, about 20.8 million people had the disease in 2005 in the U.S., and the numbers are rising.

"It certainly is increasing in epidemic proportions," said John Buse, the ADA's president-elect of medicine and science. "The best evidence is it's a result of changing lifestyles, less activity and more food, more calorie consumption."

Obesity and physical inactivity are two of the biggest risk factors of Type II diabetes, which accounts for 90 percent to 95 percent of all diagnosed cases. In December, the ADA applauded the New York City Board of Health's decision to eliminate artificial trans fat in all city restaurants, acknowledging that many American adults and their children are eating out several times a week. The fats are linked to heart disease, the leading cause of diabetes-related deaths.

"Some are concerned it's the kind of foods that we eat that's really the problem, but that's not been proven yet," Buse told BioWorld Today. "There are some very spooky studies where if you feed mice moms while they're pregnant with certain types of fats, you can change the metabolism of their babies and even their babies' babies."

The rise of diabetes is a growing concern since a number of other conditions can result from the disease, including heart disease and stroke, high blood pressure, blindness, kidney disease, amputations, dental disease, pregnancy complications and so on. About 60 percent to 70 percent of diabetes patients have mild to severe forms of nervous system damage, which include impaired sensation or pain in the feet or hands, slowed digestion of food, carpal tunnel syndrome and other problems.

Biomedical Research, founded in 1996, received a five-year contract recently with the National Institutes of Diabetes Digestive and Kidney Diseases to develop potential therapies to prevent Type I diabetes, which accounts for 5 percent to 10 percent of all diabetes cases. That form of the disease develops when the immune system destroys the pancreatic beta cells that make insulin, and its risk factors are autoimmune, genetic and environmental.

The company has been working with Neuralstem compounds for a few years under a $1 million Small Business Innovation Research grant. The funds were used to study the compounds in rat experimental models of Type I human diabetes. The small-molecule candidates showed they were able to enhance neurogenesis and protect neurons from apoptosis.

"Most importantly, we don't see any toxicology with animal studies that have been performed for nine months," Guberski said.

The SBIR grant was funded in the third quarter of 2004 and came as the result of management from Biomedical Research and Neuralstem sitting down casually with a neuropathy expert.

"This is where scientists get together - and the thunderbolts go, and the angels kind of watch over you, too," Guberski said. He described a scenario in which a discussion on stem cells led to one on diabetic neuropathies and then to the possibility of getting grant money from the National Institutes of Health.

Biomedical Research hopes to complete preclinical studies and move into clinical trials soon with its first compound. The license from Neuralstem involves three classes of compounds and covers only diabetes indications. Neuralstem is developing its products for ischemic spastic paraplegia, spinal cord injury, Parkinson's disease and amyotrophic lateral sclerosis, and expects to move its first product into the clinic this year. (See BioWorld Today, Jan. 2, 2007.)

The company recently received its own $500,000 grant from the NIH to study its compounds as treatments for depression. Neuralstem holds all rights to the compounds, except for diabetes.

Diabetes accounted for $92 billion in direct medical costs in 2002. Within the same time period, about 57 percent of those with the disease took oral medication only, while 28 percent took insulin with or without oral medication. In the near-term, Bristol-Myers and AstraZeneca's deal Thursday could provide patients with two more choices.

They plan to file for approval of saxagliptin in the first half of 2008 following Phase III trials, and dapagliflozin remains in Phase IIb development. The agreement between the companies is worldwide, except Japan, and includes an up-front payment of $100 million to Bristol-Myers, which could earn up to $650 million on development and regulatory milestones for the two compounds, as well as up to $300 million each for sales milestones.