UPDATE 1-Lilly in deal for rights to BioMS Medical MS drug

(Adds company comment, Lilly outlook)

NEW YORK, Dec 17 (Reuters) - Eli Lilly and Co (LLY.N) said on Monday it has entered a deal that gives it exclusive worldwide rights to an experimental multiple sclerosis drug being developed by Canada's BioMS Medical Corp (MS.TO).

The drug, MBP8298, is currently in late-stage clinical trials for secondary progressive multiple sclerosis (MS) and in mid-stage trials for relapsing-remitting MS, the companies said.

BioMS Medical will receive an upfront payment of $87 million, potential development and sales milestones up to $410 million and escalating royalties on sales if the drug is approved.

Lilly and BioMS Medical will collaborate on the development of MBP8298 and will share in certain development costs, while Lilly will be responsible for future research and development, manufacturing and marketing, the companies said.

"MBP8298 has shown potential in slowing the progression of secondary progressive MS, and thus may provide an effective therapeutic option for patients with this debilitating disease," Dr William Chin, Lilly's vice president of discovery research and clinical investigation, said in a statement.

"We are also hopeful that MBP8298 may prove beneficial in treating patients with relapsing remitting MS," Chin said. "We intend to fully leverage our expertise in neuroscience to continue the development of this novel molecule."

The deal is expected to be finalized in the first quarter of 2008. Lilly said it expects to take a charge to earnings of about 5 cents per share at closing of the deal.

Lilly said its 2008 pro forma adjusted earnings forecast remains unchanged at $3.85 to $4.00 per share. Including the charge for the transaction with BioMS Medical, Lilly now expects 2008 earnings of $3.80 to $3.95 per share.

Analysts on average expect the company to earn $3.88 per share in 2008, according to Reuters Estimates. (Reporting by Bill Berkrot, editing by Tim Dobbyn)