XenoPort has granted exclusive U.S. rights for the development and commercialization of its Phase III psoriasis drug candidate XP23829 to Dr. Reddy’s Laboratories, the companies said today.

The licensing deal—which could generate up to $490 million for XenoPort—covers all indications. Dr. Reddy’s plans to develop XP23829 for moderate-to-severe chronic plaque psoriasis and potentially for relapsing forms of multiple sclerosis (MS) as well, the companies said.

XP23829 is an oral fumaric acid ester compound that is a prodrug of monomethyl fumarate (MMF) and is protected by a U.S. composition-of-matter patent set to expire in 2029. In September 2015, XenoPort announced positive results from a Phase II trial assessing XP23829 as a potential treatment for moderate-to-severe chronic plaque-type psoriasis.

“We intend to initiate the registration program for XP23829 as soon as feasible so that we can accelerate the availability of this important treatment choice for moderate-to-severe psoriasis patients in the U.S. market,” Raghav Chari, evp with Dr. Reddy’s proprietary products group, said in a statement.

Dr. Reddy’s agreed to pay XenoPort $47.5 million upfront and $2.5 million toward transfer of clinical trial materials. XenoPort will also be eligible for up to $190 million in payments tied to regulatory milestones over several years, plus up to $250 million tied to achieving commercial milestones, and royalty payments up to the mid-teens based on potential U.S.net sales of XP23829.

The deal is subject to review by the U.S. government under the Hart–Scott–Rodino (HSR) Antitrust Improvements Act, as amended.

The licensing deal came 5 months after XenoPort said it would pursue a development partner for XP23829 and other pipeline products as part of a restructuring that included layoff of 25 staffers and the retirement of the company’s CEO and co-founder Ronald W. Barrett, Ph.D. Dr. Barrett was succeeded by evp and COO Vincent J. Angotti.

In its October 2015 announcement of the restructuring, XenoPort said it would focus on maximizing value for its sole commercial product HORIZANT® (gabapentin enacarbil) extended-release tablets. XenoPort last month reported 2015 HORIZANT net product sales of $39.5 million, compared with $20.2 million in 2014.

HORIZANT is indicated for moderate-to-severe primary restless legs syndrome (RLS) in adults and for the management of postherpetic neuralgia (PHN) in adults.

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