UPDATE 2-Incyte sells autoimmune therapies to Lilly

* To get $90 mln upfront, up to $665 mln in milestone payments

* Incyte retains co-development, co-promotion rights

* Eli Lilly sees Q4 charge of $0.05/shr

* Eli Lilly reconfirms FY adj EPS view

* Incyte shares rise 6 pct (Adds conference call details, analyst comment; updates share movement)

By Vidya L Nathan

BANGALORE, Dec 21 (Reuters) - Incyte Corp (INCY.O) sold global rights to its oral anti-inflammatory and autoimmune therapies to Eli Lilly and Co (LLY.N) for up to $755 million, the companies said.

Under the deal, Eli Lilly will pay Incyte $90 million upfront and up to $665 million in potential performance-based payments for the therapies, including its lead compound for rheumatoid arthritis, INCB28050, they said in a joint statement.

Incyte shares rose 6 percent to $9.00 early Monday morning, before shedding some gains to trade up 5 percent at $8.90 on Nasdaq.

Leerink Swann analyst Joshua Schimmer and Cowen & Co's Ziad Bakri said a deal was partly built into Incyte stock, which has risen 174 percent in the last six months.

The analysts expect the deal to strengthen Incyte's balance sheet, and said that at least some investors had expected the company to sign an agreement.

Eli Lilly gains world-wide rights to the product, INCB28050, while Incyte retains co-development and co-promotion rights, the companies said.

"The earliest we expect to consider exercising the co-development option would be in the second half of 2010, concurrent with the potential initiation of a mid-stage trial with INCB28050 in rheumatoid arthritis," Incyte Chief Financial Officer Dave Hastings said in a call with analysts.

Other oral compounds in development as a treatment for the same indication are Pfizer Inc's (PFE.N) CP-690,550; Rigel Pharmaceuticals Inc's (RIGL.O) R788 and Lexicon Pharmaceutical Inc's (LXRX.O) LX2931.

"To say that (the deal) represents an entry-point for Eli Lilly in the potential multi-billion-dollar oral rheumatoid arthritis market is justified," Cowen & Co's Bakri said.

Eli Lilly, which expects to take a transaction-related charge of 5 cents per share in the fourth quarter, stood by its full-year profit view of $3.90 to $4.00 per share on a pro-forma basis.

Eli Lilly shares were up 2 percent $36.28 on the New York Stock Exchange. (Reporting by Vidya L Nathan in Bangalore; Editing by Gopakumar Warrier and Aradhana Aravindan)