Lundbeck could earn up to $825 million after long-time partner Otsuka Pharmaceutical Co expanded the firms' central nervous system pact to license one of the Danish drugmaker's investigational Alzheimer’s drugs.

The treatment in question is Lu AE58054, a selective 5HT6 receptor antagonist. The drug will go into a late-stage  programme later in 2013 which will consist of several studies and include more than 2,500 patients. The first Phase III trial will enroll patients with mild-to-moderate Alzheimer's and Lu AE58054 will be tested as adjunct treatment to Eisai's now off-patent Aricept (donepezil).

Cashwise, Otsuka will pay an upfront fee of $150 million and the firms will share sales, development, and commercialisation costs. Lundbeck will be entitled to up to $675 million in regulatory and sales milestones, while Otsuka will get co-rights to Lu AE58054 in the USA, Canada and east Asia (including Japan), as well as the major European and Nordic countries.

Lundbeck and Otsuka have been working together since November 2011 and recently celebrated getting US approval of Abilify Maintena, an extended-release injectable of the schizophrenia blockbuster Abilify (aripiprazole).  They are also co-developing brexpiprazole, which is currently in Phase III for multiple psychiatric disorders and other compounds.

Taro Iwamoto, Otsuka's president, said Lu AE58054 will "further enhance the synergy between the companies", claiming that it is "a potentially promising development in a very difficult disease area". Lundbeck chief executive Ulf Wiinberg added that "there is a serious, global, unmet medical need regarding treatments for Alzheimer's disease" and the two partners, "with their development capabilities, commercial experience and geographical reach, will provide a solid foundation in the development of Lu AE58054".