GlaxoSmithKline has signed a licensing agreement worth up to €445.5 million euros ($577 million) for global rights to an experimental rheumatoid arthritis drug developed by German antibody specialist MorphoSys.

MorphoSys has been looking for a partner for MOR103 - an antibody targeting GM-CSF - after reporting positive data from a Phase I/II study of the drug in patients with mild-to-moderate rheumatoid arthritis.

GM-CSF is part of the natural immune and inflammatory cascade but has also been identified as an inflammatory mediator in autoimmune disorders like arthritis leading to an increased production of pro-inflammatory cytokines, chemokines and proteases and ultimately leading to joint destruction.

Under the terms of deal, GSK will make an upfront payment of €22.5 million to MorphoSys, with the potential for additional payments of up to €423 million for clinical and regulatory milestones and tiered, double-digit royalties on net sales.

GSK assumes all responsibility for the subsequent development and commercialisation of the drug, which is also being studied in a Phase Ib study in multiple sclerosis.

"This transaction is a major milestone for MorphoSys, "commented the German firm's chief executive Simon Moroney." We hope this alliance will result in a significant return on investment for the MOR103 program and to become a major value driver for MorphoSys."

The deal with GSK gives MorphoSys a fourth multinational pharma partner for a mid- to late-stage project, after Roche, Janssen and Novartis, and fulfils a commitment laid out by the company when

Roche licensed rights to anti-amyloid antibody gantenerumab, which remains in Phase II/III testing in early Alzheimer's disease patients despite setbacks for similar drugs from Eli Lilly and Pfizer and is expected to generate clinical results in 2015.

Meanwhile, Janssen is partnering interleukin 23-targetting antibody guselkumab for rheumatoid arthritis and psoriasis, and Novartis has four MorphoSys antibodies in Phase II for disease such as multiple myeloma, pancreatic cancer and musculoskeletal diseases.

MorphoSys has also hiked its financial guidance for 2013 as a result of the GSK deal, saying it now expects to book revenues of €68 to €72 million. It had previously predicted revenues of €48-€52 million.