Glaxo Signs Development Pact

The company reaches a deal with biopharmaceutical company ChemoCentryx.
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has formed an alliance with biopharmaceutical company ChemoCentryx to develop inflammatory-disease treatments.

According to an agreement between the companies, Glaxo will pay the privately held company $63.5 million in cash and an equity investment. ChemoCentryx will retain certain rights to co-develop and co-promote its experimental inflammatory bowel disease drug Traficet-EN with Glaxo in the U.S.

ChemoCentryx could earn a total of $1.5 billion in milestone payments for the successful development of Traficet-EN and five other products, plus double-digit royalties on product sales. The payments could be padded if ChemoCentryx agrees to co-fund some drug development through late-stage clinical trials.

Under certain conditions, Glaxo could also invest in the biopharma's common stock if it holds an initial public offering.

Shares of Glaxo closed Wednesday at $53.91.