Lilly to buy Hypnion for insomnia pipeline

NEW YORK (CNNMoney.com) -- Eli Lilly & Co. agreed to buy Hypnion, a privately owned company specializing in treatments for sleep disorders, the companies said Monday.

Lilly (down $0.29 to $51.48, Charts), an Indianapolis-based drug maker, said the merger with Lexington, Mass.-based Hypnion is expected to close towards the end of the first quarter, 2007, according to the companies.

Steven Paul, executive vice president for Lilly, said in a statement that his company was interesting in Hypnion's insomnia research, particularly its experimental insomnia treatment called HY-10275.

Lilly spokesman Mark Taylor did not disclose the price of the deal, and told CNNMoney.com that HY-10275 is years away from potential market approval.

Hypnion said in January it had successfully completed mid-stage testing for HY-10275. But the drug has to successfully complete late-stage testing before it can be submitted for review by regulators at the Food and Drug Administration.

The market for sleeping pills, estimated at about $2 billion, is getting crowded. Ambien, the insomnia drug from the French drugmaker Sanofi-Aventis (down $0.13 to $41.82, Charts), has gotten squeezed by newer products like Rozerem from Takeda Pharmaceutical and Lunesta from Sepracor Inc. (up $0.48 to $49.93, Charts)

The next new insomnia drug could come from Somaxon Pharmaceuticals (up $0.15 to $11.93, Charts), a San Diego drugmaker that has competed late-stage testing for its experimental drug Silenor. Vanda Pharmaceuticals (up $0.64 to $23.88, Charts) is also conducting late-stage testing on an insomnia drug, called VEC-162.

Kid cold medicine overdoses prompts FDA review

Feds scrutinize Amgen, investors dump stock