Pfizer has agreed to pay a massive $803 million dollars to license drugs with potential in the treatment of rheumatoid arthritis, obesity and a host of other diseases from fellow US firm Incyte.

The deal - which includes an upfront payment from Pfizer of $40 million and shares in Incyte worth a further $20 million - covers a series of compounds in the CCR2 antagonist class, including INCB3284, in Phase IIa testing for rheumatoid arthritis and insulin-resistant obese patients.

Incyte’s shares shot up on the back of the deal, closing up more than 20% at $5.86.

Under the terms of the deal, Incyte has retained the rights to the compound for multiple sclerosis and another undisclosed indication. The company’s website notes that CCR2 antagonists also have therapeutic potential in type 2 diabetes and atherosclerosis.

Other companies developing drugs that inhibit the CCR2 pathway include Millennium Pharmaceuticals, which last month announced the start of a Phase II clinical trial of MLN1202 – a humanised monoclonal antibody – in rheumatoid arthritis patients, and Merck & Co.

The scale of the deal provides a measure of the potential of the portfolio of compounds as well as how much Pfizer needs to bolster its product pipeline as it faces a period of declining sales and earnings.

The number one drugmaker is seeing strong competition to its top-selling product, the cholesterol-lowerer Lipitor (atorvastatin), and is also seeing a fall-off in sales of another blockbuster, COX-2 inhibitor Celebrex (celecoxib), in the wake of the safety scandal surrounding Merck & Co’s now withdrawn competitor Vioxx (rofecoxib).

It is also facing patent expiries on a raft of big selling products over the coming few years, and has suffered disappointments in its product pipeline. Most recently Pfizer withdrew an application in Europe to sell cardiovascular drug Caduet (atorvastatin plus amlodipine), while in September the US Food and Drug Administration (FDA) rejected two of its drugs: Dynastat (parecoxib), an injectable COX-2 inhibitor, and Oporia (lasofoxifene), an osteoporosis treatment.

- Meanwhile, Pfizer also said it has selected a development candidate in its collaboration with France’s NicOx, which is focused on novel nitric oxide-donating compounds in ophthalmology. NicOx will receive a 2 million euro payment under the terms of the deal, and could receive up to 33 million euros, plus royalties, if a product based on the technology reaches the market.