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August 7, 2006

Taisho and Lilly Have Terminated a License Agreement for Taisho's Potential New Drug for Treatment of Type 2 Diabetes

Taisho Pharmaceutical Co., Ltd. [Headquarter: Toshima-ku, Tokyo, Japan, President: Akira Uehara] (hereinafter, Taisho) and Eli Lilly and Company [Headquarter: Indianapolis, Indiana, USA, President and COO: John Lechleiter, Ph.D.] (hereinafter, Lilly) have terminated a license agreement for potential new drug, TS-021, an inhibitor of dipeptidyl peptidase-IV (DPP-IV) for the treatment of type 2 diabetes originated by Taisho (Phase I clinical trial in Japan and USA). The decision was made by the fact that pre-clinical study results did not meet certain criteria set by Lilly.

Taisho granted Lilly exclusive rights for development and commercialization of TS-021 worldwide except for Japan and China under the license agreement executed in July 2005. Taisho will nevertheless continue development of TS-021 in Japan by itself, and Taisho's affiliate company, Taisho Pharmaceutical R&D Inc. [Morristown, New Jersey, USA], will pursue the development outside Japan.

Taisho is the leading non-prescription pharmaceutical company in Japan and has also been strengthening its research and development efforts including development of its research infrastructure in the area of prescription drugs. As an outcome from such efforts, Taisho has succeeded in initiating clinical trials on several original new drugs. Taisho continues efforts to strengthen its prescription drug business through expansion of its novel original R&D and active collaboration with domestic and foreign pharmaceutical companies.