The company has also completed a Phase II trial of ZP-PTH to treat severe osteoporosis as well as intends to carry out Phase III development.
As part of the deal, Lilly secured exclusive worldwide license to commercialize ZP-PTH, while Zosano will be responsible for funding and developing the product, including clinical, regulatory and manufacturing scale-up activities.
Lilly Bio-Medicines president and Lilly senior vice-president David Ricks said: "The treatment of osteoporosis has advanced significantly in recent years, and if approved Zosano’s microneedle patch system could offer a potentially innovative way to deliver this important medicine.
"Zosano shares our commitment to making life better for the tens of millions of people with osteoporosis around the world, and we look forward to helping advance this potential innovation to improve the patient’s experience."
Lilly will make an equity investment of about $15m in Zosano concurrent with the closing of its initial public offering of equity securities.
In addition, Lilly will make payments upon achievement of certain regulatory and sales milestones totaling about $300m for regulatory approvals and up to $125m for sales milestones.
Zosano is also eligible to receive double-digit royalties on sales of products in major markets as well as receive reimbursement of all manufacturing costs.