Eli Lilly and Company and Hypnion Inc. announced that they have signed a definitive merger agreement whereby Lilly will acquire Hypnion, a privately held neuroscience drug discovery company focused on sleep disorders.

The transaction has received the requisite approval of Hypnion stockholders and is expected to close near the end of the first quarter of 2007, contingent upon clearance under the Hart-Scott-Rodino Anti-Trust Improvements Act and other customary closing conditions. Financial terms of the deal were not disclosed.

"The acquisition of Hypnion provides Lilly with a broader and more substantive presence in the area of sleep disorder research," said Steven M. Paul, MD, executive vice president, science and technology for Lilly. "Hypnion has leveraged its expertise in this area to develop both innovative technologies and molecules, including the promising insomnia compound HY10275. We are excited to bring this expertise to Lilly and continue the efforts to discover better treatments for patients struggling with insomnia and other sleep disorders."

Nick Galakatos, PhD, chairman of Hypnion, commented, "Having demonstrated the promise of our pipeline of sleep medicines in the clinic and our enabling SCORE technology, we recognized that a partnership with a leading pharmaceutical company was our best strategy for moving forward quickly. Given Lilly's long record of achievement in neuroscience, we are confident that together we can produce safer and more efficacious sleep medications."

In January, Hypnion announced that its compound HY10275 met the primary and secondary endpoints in the company's initial phase II clinical trial at doses of 1 mg and 3 mg in adults with transient insomnia. HY10275 is a proprietary compound discovered and developed by Hypnion as a dual-acting H1/5HT2a compound using the Score-2004 technology.

Lazard Freres served as financial advisors to Hypnion, while Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC served as their legal advisors. For Lilly, Lehman Brothers served as financial advisors and Dewey Ballantine served as legal advisors on the deal.

Hypnion is a neuroscience drug discovery and development company that is focused on sleep disorders. The system is predictive of human response and allows high-throughput pre-clinical testing of non-addictive sleep disorder drug candidates.