US-based biotechnology firm Ignyta has secured an exclusive global licence to Eli Lilly and Company’s taladegib, an orally bioavailable small molecule hedgehog/smoothened antagonist being developed to treat a range of cancers.

As part of the deal, Lilly will receive an upfront payment of $2m in cash, 1.2 million shares of Ignyta common stock, up to $38m in milestones and royalties on net sales.

Based on results from prior clinical studies, taladegib has achieved clinical proof-of-concept and a recommended Phase II dose.

"We are grateful to Lilly for sharing Ignyta’s precision oncology vision and recognising the strong strategic fit of taladegib with our pipeline and capabilities, which led to its $30m investment in the company."

In addition, Ignyta also licensed exclusive worldwide rights to the topical formulation of taladegib, which is a late pre-clinical programme being developed to treat patients with superficial and nodular basal cell carcinoma.

Separately, the companies have also signed a stock purchase agreement under which Lilly will buy 1.5 million shares of Ignyta common stock at $20 per share through private placement.

Ignyta has also granted Lilly exclusive rights for the development and commercialisation of taladegib-containing products in combination with other Lilly compounds.

Ignyta will be eligible to receive sales-based royalties on the combination products that Lilly launches.

Lilly has agreed not to sell or otherwise transfer any of the shares acquired from Ignyta until 10 May 2016. Ignyta is required to register the resale of the shares issued to Lilly with the Securities and Exchange Commission (SEC) prior to such date.

Ignyta chairman and CEO Jonathan Lim said: "The exclusive licence from Lilly of this clinical programme with demonstrated compelling Phase I activity is well aligned with our strategic vision of developing first-in-class and/or best-in-class therapeutics that can potentially eradicate residual disease in precisely defined patient populations.

"This new targeted oncology programme is a hedgehog/smoothened antagonist that complements our pipeline well and provides us with exciting potential monotherapy and combination therapy approaches across multiple solid tumour indications.

"We are grateful to Lilly for sharing Ignyta’s precision oncology vision and recognising the strong strategic fit of taladegib with our pipeline and capabilities, which led to its $30m investment in the company."