The groups believe the treatment could prevent potentially life-threatening clots in millions of people recovering from heart attacks or major surgery.
The treatment could eventually be developed as an alternative to existing remedies which include Warfarin, a rat poison, and aspirin. These drugs can lead to serious side effects such as bleeding disorders which can lead to hospitalisation.
Lilly has agreed to pay Xenova $35m (pounds 21m) in licence fees, research funding and milestone payments. It will also put up millions of pounds of marketing and development costs and pay Xenova royalties of 10-15 per cent if the treatment gets through clinical trials. Xenova specialises in discovering drugs from natural sources such as fungi and plant extracts and the new treatment is based on chemicals found in soil. Its share price has suffered along with the rest of the biotech sector over the last 12 months. But news of the deal saw its shares jump 31p to 225p yesterday.
Lilly and Xenova believe a new class of drugs known as PAI inhibitors can stop overproduction of a key enzyme which helps the blood to clot in the event of a cut.
More than 13 million people could use the drug in the US alone and Xenova estimates it could attract annual sales of more than a billion dollars.
Lilly is best known for Prozac, the world's best selling anti-depressant. The tie-up with Xenova is part of a strategy to develop a portfolio of cardio-vascular treatments before Prozac goes off patent in 2001.Reuse content