Shionogi will develop and commercialize “multiple” oral hydrocodone opioid drug candidates that use Egalet’s abuse-deterrent technology, in a deal that could net Egalet up to $425 million.

Under a development collaboration and license agreement disclosed by Egalet Tuesday, Shionogi agreed to fund all development costs associated with the drug candidates, and will obtain exclusive global rights to commercialize the resulting products.

In return, Shionogi agreed to pay Egalet $10 million up front, and buy $15 million in Egalet common stock in a private placement to close at the same time as Egalet’s recently filed IPO. Egalet is eligible for payments tied to development and approval milestones that may exceed $300 million if multiple products are approved.

Egalet will also be eligible to receive tiered royalties – ranging from the mid-single digits to the low-double digits – based on net sales of approved products, as well as a potential more-than $100 million based on attaining specified sales thresholds.

“We believe this collaboration provides validation for our proprietary abuse-deterrent drug delivery platform and positions us to capitalize on our technology, both through the products to be developed under the collaboration and by enabling us to develop additional opioid candidates utilizing our platform technology,” Bob Radie, Egalet’s president and CEO, said in a statement.

Egalet’s pipeline includes a pair of lead products – both Phase I oral opioid-based product candidates, all designed to deter abuse by physical and chemical tampering while also providing tailored release of the API.

In September, Egalet said it would be able to launch a Phase III trial for one of the candidates, Egalet 001, after winning $20 million in financing led by Index Ventures with participation from other existing investors. The investor group gave Egalet $10 million up front, with an option for an additional $10 million investment tied to undisclosed pre-specified conditions. The company said at the time it plans to submit an NDA for Egalet 001 to FDA in the fourth quarter of 2014.

Egalet says it is conducting abuse deterrence studies with both lead candidates based on FDA’s draft guidance issued earlier this year, with the goal of obtaining abuse-deterrent claims for its product labels.

Egalet’s collaboration with Shionogi comes just over a month after FDA voiced support for tightening the prescribing and dispensing of hydrocodone-containing drugs by reclassifying hydrocodone combination products from Drug Enforcement Agency (DEA) Schedule III to Schedule II, the stricter standard now covering oxycodone products. Several drug developers recently told GEN they were already developing products under the expectation that hydrocodone drugs will be reclassified.

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