Isis and Eli Lilly have extended their four-year deal in the field of antisense therapies for an additional two years as the US giant seeks to identify new drugs to stock up its pipeline.

Several antisense drug candidates have already been derived from the union, and are either in or approaching clinical trials. And, as part of the new deal, a second-generation antisense drug will boost Lilly’s oncology portfolio, joining two other Isis offerings there: signal transducer and activator of transcription-3 (STAT-3) is a protein that regulates cell division and growth and prevents cell death.

In addition to royalties and milestone payments, a $100 million loan from Lilly to Isis has been converted into 2.5 million shares of the latter’s common stock. Lilly has committed not to sell these shares until the fourth quarter of 2006 in exchange for certain clauses against milestones and royalties should the company suffer a stock price decline. Said Lynne Parshall, Isis’ chief financial officer: “The $100 million dollar loan funded our four-year strategic research collaboration from which two drug candidates emerged. The loan was shown on our books as debt, so we are pleased that we’ve also substantially improved our balance sheet in this transaction.”