Lilly and MacroGenics Announce Licensing and Collaboration Agreement

Lilly to Acquire Phase III Molecule Teplizumab for the Treatment of Type 1

Diabetes

Companies to Collaborate on the Development of Autoimmune Disease

Treatments

    ROCKVILLE, Md., and INDIANAPOLIS, Oct. 18 /PRNewswire-FirstCall/ -- Eli
 Lilly and Company ( LLY) and MacroGenics, Inc. today announced that
 the two companies have entered into a global strategic alliance to develop
 and commercialize teplizumab, a humanized anti-CD3 monoclonal antibody, as
 well as other potential next generation anti-CD3 molecules for use in the
 treatment of autoimmune diseases. As part of the deal, Lilly will acquire
 the exclusive rights to the molecule. Teplizumab is currently being studied
 in the PROTEGE trial, a global pivotal Phase II/III clinical trial for
 individuals with recent-onset type 1 diabetes. MacroGenics will continue to
 oversee the PROTEGE trial.
     Under the terms of the agreement, MacroGenics will receive an initial
 payment of $41 million, as well as $3 million in other committed funds.
 MacroGenics may also receive up to $200 million in potential development
 milestones for the type 1 diabetes indication. If teplizumab is
 successfully commercialized, MacroGenics may receive up to $250 million in
 potential sales milestones and would receive escalating royalties on sales
 commensurate with the current stage of development of the product. In
 addition, MacroGenics would have the option to co-promote teplizumab for
 certain indications in the U.S. Lilly may make an equity investment in
 MacroGenics of up to $10 million in the company's next private financing
 round or initial public offering. Lilly may also decide to pursue several
 additional indications for teplizumab or other next generation anti-CD3
 molecules developed with MacroGenics. If Lilly pursues each one of those
 indications and they all ultimately gain approval, additional milestone
 payments to MacroGenics could exceed $600 million. Other terms of the deal
 were not disclosed.
     The transaction is expected to become effective in the fourth quarter
 of 2007, contingent upon clearance under the Hart-Scott-Rodino Anti-Trust
 Improvements Act, if required. At closing, Lilly would expect a charge to
 earnings for acquired in-process research and development. The amount of
 the charge has not yet been determined, but is estimated to be $0.03 per
 share. The impact to Lilly's fourth quarter and full-year 2007 earnings per
 share guidance is included in the 2007 Financial Guidance section of
 Lilly's third quarter financial results press release that was issued
 today.
     "This agreement will expand Lilly's pipeline of late stage molecules
 and will strengthen one of our core therapeutic areas," said David Moller,
 M.D., Lilly, vice president of endocrine and cardiovascular research and
 clinical investigation. "We remain committed to maintaining our leadership
 role in diabetes care, including an expanded presence in the area of type 1
 diabetes. We will continue to seek out innovative molecules to add to our
 diabetes portfolio in order to best respond to the growing health crisis
 posed by diabetes worldwide."
     "Teplizumab is a significant addition to our growing portfolio of
 biotechnology-derived medicines, which are a key strategy for Lilly," said
 Thomas Bumol, Ph.D., Lilly, vice president, biotechnology discovery
 research, and president, Applied Molecular Evolution. "Immune tolerance
 represents a novel therapeutic approach to the treatment of autoimmune
 disease, and we are excited to be partnering with MacroGenics to clinically
 evaluate this mechanism in type 1 diabetes."
     "We are delighted to enter into this deal with Lilly, an established
 leader in diabetes care, to develop teplizumab in multiple T-cell-mediated
 autoimmune diseases and to advance the molecule toward regulatory
 submission for recent-onset type 1 diabetes," stated Dr. Scott Koenig,
 president and CEO of MacroGenics. "We also look forward to working with
 Lilly to develop next generation CD3 product candidates to potentially
 treat a variety of autoimmune diseases, such as psoriasis and rheumatoid
 arthritis."
     About Teplizumab
     Teplizumab, also called MGA031, is a humanized, non-Fc receptor
 binding, anti-CD3 monoclonal antibody. Teplizumab binds to an epitope of
 the CD3- epsilon chain expressed on mature T lymphocytes and, by doing so,
 may modulate the pathological immunologic responses underlying multiple
 autoimmune diseases. Specifically, teplizumab may inhibit unwanted effector
 T cells and enhances beneficial regulatory T cell functions, thus promoting
 immune tolerance.
     About the PROTEGE Trial
     The PROTEGE trial, a global, pivotal Phase II/III clinical trial study,
 is evaluating the safety and efficacy of three teplizumab dosing regimens
 administered at the start of the study and again at six months in
 individuals with recent-onset type 1 diabetes ages 8 to 35 who are up to 12
 weeks from their diagnosis.
     Type 1 diabetes is an autoimmune disease in which the body's immune
 system attacks and destroys the insulin-producing beta cells of the
 pancreas. Researchers believe teplizumab may control the T lymphocytes that
 mediate destruction of the insulin-producing beta cells of the islets of
 the pancreas. In doing so, they believe teplizumab may have the ability to
 preserve and protect the remaining beta cells of the pancreas.
     Additional information regarding the PROTEGE trial is available online
 at www.protegediabetes.org.
     About Lilly
     Lilly, a leading innovation-driven corporation, is developing a growing
 portfolio of first-in-class and best-in-class pharmaceutical products by
 applying the latest research from its own worldwide laboratories and from
 collaborations with eminent scientific organizations. Headquartered in
 Indianapolis, Ind., Lilly provides answers - through medicines and
 information - for some of the world's most urgent medical needs. Additional
 information about Lilly is available at www.lilly.com.
     About MacroGenics, Inc.
     Founded in 2000, MacroGenics is a private, venture-backed biotechnology
 company headquartered in Rockville, Maryland that focuses on the
 development, manufacture, and commercialization of immunotherapeutics for
 autoimmune disorders, cancer and infectious diseases. The company's
 proprietary Fc engineering technology offers ways of improving antibody
 function, such as enhancing the antibody's ability to eliminate cancer
 cells, cells that contribute to autoimmune disorders, or those infected
 with certain pathogens. The company is developing first-in-class product
 candidates from its autoimmunity, oncology and infectious disease
 portfolios. For more information about MacroGenics, please visit
 www.macrogenics.com.
     This news release contains forward-looking statements. These statements
 are subject to known and unknown risks and uncertainties that may cause
 actual future experience and results to differ materially from the
 statements made. Factors that might cause such a difference include, among
 others, the completion of clinical trials, the FDA and other foreign review
 processes and other governmental regulation, Lilly and MacroGenics'
 abilities to successfully develop and commercialize drug candidates,
 competition from other pharmaceutical companies, the ability to effectively
 market products, and other factors described in Lilly's most recent filings
 with the Securities and Exchange Commission. Lilly undertakes no duty to
 update forward looking statements.
     C: LLY
 
 

SOURCE Eli Lilly and Company