Hyderabad-based Dr. Reddy's Laboratories would pay $50 million to the U.S-based biopharmaceutical company, Xenoport for the development and commercialisation of XenoPort's clinical-stage oral new drug — XP23829 — under a licence agreement.

Dr. Reddy's said Monday in a corporate filing to the Bombay Stock Exchange (BSE) that it plans to develop XP23829 as a potential treatment for moderate-to-severe chronic plaque psoriasis and may potentially develop XP23829 for relapsing forms of multiple sclerosis (MS).

Dr. Reddy's said it would be granted exclusive U.S. rights for the development and commercialisation of XP23829. "In exchange for these rights, XenoPort will receive a $47.5 million up-front payment and an additional $2.5 million for transfer of certain clinical trial materials to the company. XenoPort will also be eligible to receive up to $190 million after it receives the necessary regulatory approvals over a period of several years," the filing said.

It added that XenoPort will be eligible to receive up to $250 million upon the achievement of commercial milestones and up to mid-teens royalty payments based on potential net sales of XP23829 in the U.S.

Psoriasis is a chronic inflammatory disease that manifests itself in skin and joints. It is the most prevalent autoimmune disease in the U.S, with nearly 7.5 million people in the country suffering from the condition. MS is a chronic and progressive neurodegenerative disease in which the body's immune system attacks the protein, Myelin that wraps around the nerve fibres. Nearly 250,000-350,000 people in the U.S. have been diagnosed with this disease, which afflicts about one million people globally.

"Based on today's available treatments, physicians need additional oral medications that are both safe and effective for patients with psoriasis. Fumaric acid esters possess a unique anti-inflammatory mechanism of action and have been used to treat psoriasis in Germany for over 20 years. XP23829, a novel fumaric acid ester, has the potential to be a meaningful treatment option for patients with moderate-to-severe psoriasis," Mark Jackson, clinical professor of medicine, Dermatology, University of Louisville, said.

Dr. Reddy's said it will start the registration process for XP23829 soon. "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, executive vice president, proprietary products group, Dr. Reddy's, said.

The agreement is subject to review by the U.S. government under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act, as amended, and will become effective only after clearing HSR review, the statement said.

[1 lakh = 100,000|1 crore = 10 million|100 crore = 1 billion]