By Charles Craig

Inhale Therapeutic Systems Inc. could receive up to $20 million from Eli Lilly and Co. for use of the former's pulmonary delivery system with an osteoporosis drug, which was not disclosed.

Inhale's dry powder form of the osteoporosis treatment completed Phase I trials this month in collaboration with Alza Corp., of Palo Alto, Calif.

Joyce Strand, Inhale's director of communications, said because of the expense associated with later stage clinical trials, the strategy was to find a pharmaceutical company partner if initial trials of the product were successful.

The Phase I study of the osteoporosis drug showed the product was absorbed systemically when delivered through the lungs. Lilly will continue clinical trials this year.

Alza will receive an undisclosed amount of compensation for its part, but Inhale, of Palo Alto, will receive the bulk of Lilly's funding commitment.

The pharmaceutical company agreed to licensing fees, research funds and milestone payments totaling as much as $20 million. Inhale also will manufacture the powdered drug and supply the inhalation devices. Lilly received worldwide commercialization rights to the aerosolized version of the osteoporosis product.

The Lilly pact is the second alliance in seven days signed by Inhale for use of its dry powder pulmonary system for delivery of drugs through the lungs.

Last week Inhale negotiated a $15 million collaboration with Centeon Inc., of King of Prussia, Pa., for development of an aerosolized version of alpha-1 proteinase inhibitor to treat alpha-1 antitrypsin deficiency, a genetic disease that causes emphysema. (See BioWorld Today, Jan. 15, 1997, p. 1.)

Strand said Inhale's pharmaceutical company collaborations targeting adaptation of injected or infused peptides and proteins for pulmonary delivery are worth a potential $220 million in funding to her company prior to market launch.

Inhale's most advanced product is a dry powder pulmonary form of insulin, which is in Phase IIb trials in collaboration with Pfizer Inc., of New York.

Inhale's stock (NASDAQ:INHL) closed Tuesday at $19.375, up $1.125. *