Shares in Actelion have shot up this morning on the news that the Swiss biotechnology firm has signed a licensing deal with GlaxoSmithKline on its investigational insomnia compound almorexant which could be worth up to 3.3 billion Swiss francs.

Under the terms of the agreement, GSK will receive exclusive worldwide rights (excluding Japan) to co-develop and co-commercialise almorexant, a first-in-class orexin receptor antagonist which is in Phase III trials. Actelion will continue to lead the ongoing development programme and potential registration for almorexant in the first indication, primary insomnia, with GSK contributing 40% of the costs.

Cash-wise, the Actelion will receive an upfront payment of 150 million francs and will be eligible for milestone payments of up to 415 million francs depending on the success of almorexant in primary insomnia. In addition, the Allschwil-based firm said it can get more cash “pending successful development of two other major indications for almorexant yet to be evaluated”.

If all three indications were successfully registered, approved and commercialised, and “exceptional sales targets met for all these indications”, Actelion could receive additional milestone payments of up to over 2.7 billion euros. Costs and profits from the collaboration will be shared equally.

The deal is a great boost for Actelion which has been under pressure to reduce its reliance on Tracleer (bosentan), its treatment for pulmonary arterial hypertension, which makes up pretty much all of the Swiss firm’s revenues at the moment. Investors are certainly pleased with the GSK link-up and Actelion shares at 10.30 this morning were up over 3% to 54.25 francs per share (though earlier this morning they had climbed over 9%).

Moncef Slaoui, chairman of R&D at GSK, said the two firms “share the vision - based on our individual research efforts - that orexin receptor antagonists have tremendous potential”. By targeting orexin, which is known to help regulate the sleep-wake cycle, “these novel molecules could help to reduce or even eliminate some of the side-effects associated with current sleep treatments”.

GSK has its own orexin antagonist called SB-649868 which is in Phase II but appears to have stalled somewhat.