Eli Lilly has entered into an agreement with Chugai Pharmaceutical for the Japanese drugmaker’s oral non-peptidic GLP-1 receptor agonist OWL833, which is currently being developed for type 2 diabetes.

Under the terms of the deal, Lilly will receive worldwide development and commercialization rights to the drug, which is ready for Phase 1 clinical trials. In return, Chugai will receive an upfront payment of $50 million and milestone payments along with royalty payments if the drug makes it to market.

“We believe OWL833 can be a best-in-class oral non-peptide GLP-1 receptor agonist and that its value will be further enhanced through Lilly’s clinical development to contribute to people around the world who live with diabetes,” said Yasushi Ito, Chugai’s executive vice president, co-head of Project & Lifecycle Management unit.

In separate news, Lilly announced has details of its proposed initial public offering (ipo) for its Elanco animal health business. The company is offering 62.9 million shares of its common stock at an anticipated price of between $20 and $23 per share, potentially raising up to $1.45 billion.

Following the ipo, Lilly is expected to hold around 80% of Elanco. The ipo process is expected to be completed by the end of 2018.