AstraZeneca has sold rights to experimental respiratory drug AZD7986 to US biotech Insmed in a deal valued at around $150 million.

AZD7986 is an early-stage, novel oral inhibitor of dipeptidyl peptidase I (DPP1, also known as cathepsin C), an enzyme that catalyzes activation of neutrophil serine proteases (NSPs), which play a key role in pulmonary diseases.

Insmed has renamed the compound INS1007, and intends to pursue an initial indication of non-cystic fibrosis bronchiectasis, a rare, progressive, neutrophil-driven pulmonary disorder in which the bronchi become permanently dilated due to chronic inflammation and infection.

The estimated global prevalence of the condition exceeds 2 million, and there is currently no cure. The company is planning to start a Phase II study for this indication sometime next year.

Under the terms of the deal, Insmed will pay AZ an upfront payment of $30 million, as well as potential future payments totalling $120 million from clinical, regulatory, and sales-related milestones.

AZ is also be entitled to receive tiered royalties ranging from a high single-digit to mid-teen, and has the option to negotiate a future agreement with Insmed for commercialisation of AZD7986/INS1007 in chronic obstructive pulmonary disease or asthma.