Eisai has granted exclusive worldwide development and commercialization rights, excluding Japan and Asia, to its Phase II cancer drug candidate E7777 to Dr. Reddy’s Laboratories.

The value of the deal was not disclosed, although Dr. Reddy’s said it will pay Eisai milestone payments tied to obtaining marketing approval and achieving sales targets.

Eisai will oversee development and marketing of E7777 in Japan and Asia, but Dr. Reddy’s retains rights to develop and market the candidate through an option in India, one of the company’s five major markets, along with the U.S., Russia and the Commonwealth of Independent States (CIS), and Venezuela.

E7777 is a fusion protein that combines the interleukin-2 (IL-2) receptor binding domain with diphtheria toxin fragments. The agent is designed to work by binding to IL-2 receptors on the cell surface, causing diphtheria toxin fragments that have entered cells to inhibit protein synthesis.

“This therapy represents an extension of our current efforts in the dermatology space to an important segment of skin-related cancers,” Raghav Chari, evp of Dr. Reddy’s Proprietary Products Group, said in a statement. “E7777 has significant potential as an important component of systemic therapy for cutaneous T-cell lymphoma (CTCL).”

E7777 is the subject of a Phase II clinical study in Japan assessing the drug candidate in patients with CTCL or peripheral T-cell lymphoma. Eisai and Dr. Reddy’s said preparations are in progress for a Phase III clinical study of the agent in patients with CTCL in the U.S.

Oncology is one of two therapeutic areas of emphasis for Eisai (the other is neuroscience) and one of nine for Dr. Reddy’s. The other eight areas Dr. Reddy’s focuses on include cardiovascular, dental, dermatology, diabetes, gastrointestinal, nephrology, pain management, and urology.

The agreement is the second portfolio-building deal announced this week by Dr. Reddy’s. On Monday, the company bought exclusive U.S. rights to XenoPort’s Phase III psoriasis drug candidate XP23829 for all indications, in return agreeing to pay XenoPort up to $490 million.

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