Pfizer has entered into a pact to develop and market Auxilium Pharmaceuticals’ late-stage biologic Xiaflex in a deal that could be worth up to $485 million to the Malvern, Pennsylvania-based firm.

Auxilium has completed Phase III trials for Xiaflex (clostridial collagenase) for the treatment of Dupuytren's contracture and expects to file a US Biologics License Application early next year for the disease which affects the connective tissue that lies beneath the skin in the palm.

Nodules develop in the palm as collagen deposits accumulate and as the disease progresses, the deposits form a cord that stretches from the palm to the base of the finger, causing them to contract. Currently, surgery is the only effective treatment for Dupuytren's contracture and Pfizer expects to file Xiaflex for approval in Europe in 2010.

The biologic is also being evaluated in a Phase IIb trial for Peyronie's disease, which involves the development of collagen plaque, or scar tissue, on the shaft of the penis that hardens and reduces flexibility. This causes pain and forces the penis to bend or arc during erection. It is also being tested in a Phase II trial for Frozen Shoulder syndrome (adhesive capsulitis).

Cashwise, Pfizer will make an upfront payment of $75 million to Auxilium, and an additional $150 million if the drug achieves certain regulatory milestones and up to $260 million based on sales. In return, the New York-based drugs behemoth will receive exclusive rights to commercialise the treatment in the 27 member states of the European and 19 other European and Eurasian countries. Auxilium will also receive increasing tiered royalties based on the sales of the drug in Pfizer's territories.

Armando Anido, chief executive at Auxilium, said that “with the strength of Pfizer's commercialisation and development organisation, this relationship greatly enhances our ability to effectively introduce this potentially groundbreaking technology” in Europe.