Ligand Pharmaceuticals Inc. and Eli Lilly and Co. extended until November 2003 an existing research collaboration that focuses on Type II diabetes, cardiovascular disorders and obesity.

The collaboration will focus on developing three clinical compounds based on peroxisome proliferation activated receptor modulators (PPARs), a subfamily of intracellular receptors that regulate lipid and glucose homeostasis, Ligand said. They also play an important role in fat tissue stores and metabolism, in addition to enhancing cellular responses to insulin.

“It has been an incredibly productive collaboration,” said Michael Watts, director of investor relations and corporate communications for San Diego-based Ligand.

The collaboration already has resulted in one clinical candidate, LY818 for Type II diabetes and metabolic diseases. LY818 completed Phase I trials, resulting in a milestone payment from Lilly to Ligand in September. Another advanced PPAR modulator, LY929, is in final preclinical studies for Type II diabetes, metabolic diseases and dyslipidemias. An investigational new drug application is scheduled to be filed for LY929 this quarter, Watts said.

Ligand also plans to file an investigational new drug application for a third undisclosed candidate for dyslipidemias in the fourth quarter.

While Watts said Ligand would not disclose “the financial impact of the decision” to extend the collaboration, the company did disclose that it received 2001 revenues from Lilly of $13.7 million, with the same revenues in 2000. In 1999, Ligand received $9.1 million.

With this extension, Lilly has the option to extend the collaboration for two additional one-year terms.

The collaboration includes research funding for Ligand during the first year, milestones as it moves through certain stages of development and royalties in the “low double-digit range,” Watts said.

The original collaboration was initiated in 1997 and was projected at the time to mean up to $190 million for Ligand. It was to focus on oral Targretin, which was discovered by Ligand. However, Lilly stopped development of Targretin in early 1999, opting instead to focus on diabetes with Ligand. (See BioWorld Today, Oct. 21, 1997, and Feb. 19, 1999.)

Ligand secured FDA approval for Targretin capsules for treating all stages of refractory cutaneous T-cell lymphoma in December 1999. It received approval for Targretin gel for the same indication in June 2000. (See BioWorld Today, Dec. 30, 2000, and June 30, 2000.)

Sales of Targretin capsules were $14.6 million in 2001, compared to the 2000 launch year of $5.7 million, Watts said.

Ligand Chief Scientific Officer Andres Negro-Vilar told BioWorld Today the collaboration with Lilly to date has been “extraordinary.”

“We have been in the collaboration for four and a half years and have molecules in the clinic,” he said, explaining that the companies want “to continue to expand this platform of molecules.”

Negro-Vilar said it is known from previous molecular cell biology work that PPARs are strategically placed in tissues relevant to fat and glucose metabolism. PPARs are expressed in fat cells, liver cells and pancreatic cells with the greatest presence in fat cells.

There are two marketed drugs based on PPARs to treat Type II diabetes Avandia by GlaxoSmithKline plc, of London, and Actos by Lilly, he said.

“We want to come up with a whole new generation of molecules that have properties that are quite distinct,” he said.

In addition to PPARs, Ligand is focusing on the hepatic nuclear factor 4 (HNF-4), also a nuclear receptor, to focus on a type of diabetes called maturity onset of diabetes of the young (MODY), Negro-Vilar said.

Ligand’s stock (NASDAQ:LGND) fell 10 cents Friday to close at $18.29.