Eli Lilly and Co. announced on Jan. 5th that it will pay $25 million to acquire rights to an experimental diabetes drug under development by OSI Pharmaceuticals Inc.

The agreement gives Lilly rights to experimental compounds that include PSN010, a drug in early stage development that is designed to lower blood glucose levels of type 2 diabetics.

PSN010 is a member of a new class of diabetes medications known as glucokinase activators which stimulating glucokinase, a protein that spurs the pancreas to produce more insulin and helps the liver control glucose.

PSN010 is being developed as an oral medication.

Lilly will pay OSI an upfront fee of $25 million, with potential additional payments of up to $360 million if the drug reaches certain development milestones, plus royalties on sales.