Lilly has sold rights to its investigational muscle-boosting drug TT701 to Canada's Transition Therapeutics in a deal that could generate more than $100 million for the US drugs giant.

Transition has picked up exclusive worldwide rights to the novel small molecule drug candidate for just $1 million, but could be paying out up to $100 million in commercial milestones as well as a mid-single digit royalty on TT701 products that hit the market.

TT701 is a selective androgen receptor modulator that significantly increased lean body mass and a measurement of muscle strength in male subjects taking part in a Phase II clinical trial, as well as inducing significant fat mass reduction with no significant change in prostate specific antigen levels.

Transition said it is “evaluating multiple development paths” for the drug, including as a new therapeutic option for patients with androgen deficiency. “The safety and efficacy profile of TT701 creates a number of development opportunities,” said chief executive Tony Cruz, highlighting its potential.