J & J Forms Partnership For Diabetes Drug

RARITAN, N.J. (AP) -- A unit of Johnson & Johnson has partnered with a Nordic pharmaceutical company to develop a potential treatment for Type 1 diabetes, the company said Monday.

Sweeden's Diamyd Medical AB is conducting late-stage clinical tests on the drug, which is designed to prevent further destruction of pancreatic islet cells, delay or prevent disease progression and other related complications.

Johnson & Johnson's Ortho McNeil Janssen Pharmaceuticals will pay $45 million to Diamyd upfront, and share the costs of current research and development. Janssen can assume full responsibility for development after it sees results from the first of two late-stage trials. Data from the first study is due in the first half of 2011.

Diamyd can get additional payments if the drug reaches development and regulatory milestones and is approved. It could also receive royalties on sales, and sales milestone payments.

Diamyd, however, retains the rights to the drug in Nordic countries.

Separately, Metabolex Inc. said it licensed potential Type 2 diabetes drugs to Ortho McNeil. The Metabolex drugs are in preclinical development, meaning they have not undergone human testing.

The deal includes an upfront payment, and other payments for development, regulatory, and sales milestones that could be worth more than $330 million combined, Metabolex said.

Ortho McNeil will also pay royalties on sales if any of the drugs are approved.

Metabolex is a privately held drug developer based in Hayward, Calif.