LEO Pharma has entered a strategic partnership with AstraZeneca for new medicines for atopic dermatitis and psoriasis, major skin diseases with a significant unmet medical need.

Under the move, LEO gains a the global licence to AZ' tralokinumab in skin diseases and an exclusive licence to brodalumab in Europe.

Tralokinumab is an anti-IL-13 monoclonal antibody that has completed a Phase IIb study for the treatment of patients with atopic dermatitis. Brodalumab is an IL-17 receptor monoclonal antibody under regulatory review for patients with moderate-to-severe plaque psoriasis.

Under the terms of the deal, LEO will make an upfront payment to AZ of $115 million for the exclusive, global rights to tralokinumab in atopic dermatitis and any future additional dermatology indications, as well as up to $1 billion in commercially-related milestones and up to mid-teen tiered percentage royalties on sales.

AZ will manufacture and supply tralokinumab to LEO, and retains all rights to the drug in respiratory disease and any other indications outside of dermatology.

The financial terms surrounding the agreement on brodalumab are being kept under wraps. The drug has been submitted for regulatory approval in moderate-to-severe plaque psoriasis in Europe and an EMA decision is anticipated no later than the first quarter of next year.

It was separately announced that Valeant's right to develop and commercialise brodalumab in Europe has now been terminated. Under the revised terms of its partnership with AZ, Valeant continues to hold the rights to the drug in the US, as well as the remainder of the territory outside of Europe.