By Lisa Seachrist

Washington Editor

Having completed a wide-ranging deal with Glaxo Wellcome plc around AIR technology just last week, Alkermes Inc. put into place a second collaboration, with Eli Lilly & Co., to use the technology to develop an inhaled delivery method for human growth hormone.

Unlike the deal involving several product candidates with London-based Glaxo Wellcome, the Lilly deal encompasses a single product; however, this collaboration is also the first to move Alkermes' AIR pulmonary drug delivery technology from simply delivering small-molecule drugs locally into the lungs to delivering large human proteins into a patient's bloodstream.

Alkermes' stock (NASDAQ:ALKS) jumped on the news it had a systemic delivery partner for the technology. The stock closed at $111 a share Tuesday, up $16.50, or 17.5 percent.

"I think the Glaxo Wellcome deal and the Lilly deal are really important in defining the potential of our technology," said Richard Pops, CEO for Cambridge, Mass.-based Alkermes. "We think it's unusual for a drug delivery technology to have such a wide variety of uses. We've talked about a systemic route of delivery before. Now we are collaborating across the delivery spectrum."

The companies aren't releasing the financial details of the collaboration, but Alkermes will receive initial licensing fees, research funding and milestone payments. Alkermes also will receive royalty payments on any sales. Indianapolis-based Lilly will get exclusive worldwide rights to products that result. Alkermes will manufacture the products, while Lilly will conduct all clinical trials, secure necessary regulatory approvals and market the products.

Alkermes' AIR technology uses large, low-density particles and simple inhaler devices to deliver drugs deep into the lungs. The companies will work to develop a dry powder form of recombinant human growth hormone that can be inhaled rather than injected. They had completed a nine-month feasibility study prior to entering into the current arrangement.

Lilly will deliver lyophilized protein to Alkermes. At that point the protein will be spray-dried into Alkermes' proprietary particles. When the particles are inhaled and hit the surface of the lungs, the proteins are rehydrated and delivered into the bloodstream. The first clinical trials of this inhaled form of human growth hormone are expected to begin sometime this year.

"Lilly is just the type of partner we like," Pops said. "They have vast experience in human proteins as well as experience with inhaled delivery. We like to establish our brand with highly capable clinical partners like Lilly and Glaxo." z