Two companies, TransTech Pharma Inc. and Forest Laboratories Inc., have signed a license deal worth around $1.1 billion with an aim to develop better drugs for the cure of diabetes. The drugs will be composed to lower the levels of glucose in the body.

According to the agreement, Forest is bound to pay straightaway $50 million to TransTech. However, if the formulated drug stands up to the mark on certain developmental and commercial parameters, then Forest will give more than $1.1 billion to TransTech.

Forest Laboratories is also entitled to pay royalties on worldwide product sales to TransTech Pharma. Further, the Company will be in charge for the costs incurred during development and commercialization of the drug. The most marketed drug of Forest Lab is Lexapro, which is an anti-anxiety drug.

With this deal, Forest will get the rights to market the drug throughout the world, except in Middle East and North Africa. In these areas, TransTech Pharma has retained its rights.

Shares of Forest Labs were at $24.64 on Monday.