It’s a diabetes reunion of sorts.

Marcadia Biotech Inc., the Carmel biotech firm driven by the science of a former scientist at Eli Lilly and Co., has signed a license and development agreement with Indianapolis-based Lilly, the companies announced Monday.

The two companies will jointly develop a short-acting glucagon drug, which they hope proves more convenient than current glucagon medicines, which are made by Lilly, Denmark-based Novo Nordisk and other companies. Current glucagons, produced by genetic engineering, treat patients with severe hypoglycemia.

Marcadia’s chief scientific officer is Richard DiMarchi, who used to head up the biotechnology group at Lilly Research Labs, the research and development arm at Eli Lilly. He is also a professor and researcher at Indiana University, which has rights to some of Marcadia’s experimental drugs.

Financial terms of the Marcadia-Lilly deal were not disclosed. Marcadia will be responsible for winning U.S. regulatory approval for its version of glucagon while Lilly will be responsible for winning approval in foreign countries. Lilly will then do the work to bring the drug to market.

Sales of Lilly’s existing glucagon drug last year totaled less than $80 million—a paltry sum in the pharmaceutical world.

Marcadia is trying to develop a glucagon that could be stored as a solution in an injection “pen,” ready for immediate use. Current glucagon drugs must be stored as a powder, then mixed into a solution before being injected. The companies think convenience could be important for patients suffering an episode of extremely low blood sugar.

Marcadia, which received $15 million in venture capital in 2007, also has signed a strategic collaboration agreement with Lilly rival Merck & Co. Inc. The New Jersey-based pharmaceutical giant is helping Marcadia develop various potential drugs to target glucagon receptors in order to treat diabetes and obesity.