Updated from 8:49 a.m. EST

Adolor ( ADLR) shares shot higher early Wednesday on news of a new partnership with Pfizer ( PFE - Get Report) under which the small-cap drugmaker and Big Pharma company will develop two compounds for pain conditions.

Amid expiring patents and other pressures, big pharmaceutical companies have been recently hungry for R&D and portfolio-expanding opportunities. Pfizer on Friday commenced its offer for the outstanding shares of Coley Pharmaceutical ( COLY). And GlaxoSmithKline ( GSK - Get Report), which bought Reliant Pharmaceuticals less than a month ago for $1.65 billion, announced a research and development deal earlier this week with Santarus ( SNTS).

Exton, Pa.-based Adolor is already co-developing its lead product candidate, Entereg, with Glaxo. Entereg is designed to block the side effects of opioid analgesics on the gastrointestinal tract without affecting analgesia. After hiccups in development, Adolor announced a week ago that the Food and Drug Administration's Gastrointestinal Drugs Advisory Committee will review the new-drug application (NDA) for Entereg on Jan. 23.

"We believe investors' attention has been almost entirely focused on Entereg and its prospects, with very little value attributed to the delta program," noted Cowen and Co. analyst Leland Gershell in a Thursday morning brief. "Hence, this partnership comes as an unexpected positive and shares will be strong on the news."

The Adolor compounds central to the Pfizer deal announced today are proprietary Delta opioid receptor agonist candidates designed to treat inflammatory, neuropathic and acute pain conditions. Adolor said in a Wednesday morning conference call that in earlier trials the Delta receptor allowed it to provide analgesia without some of the limiting side effects known to this class.

ADL5859 is in midstage development for pain related to rheumatoid arthritis and acute post-dental surgery pain. The company said it expects data on the post-dental surgery pain study in the early part of 2008. Also Adolor expects to begin early stage clinical testing of ADL5747 in the first quarter of 2008, an investigational new-drug application (IND) for this compound is pending.

Adolor will receive an upfront payment of $30 million, a $1.9 million reimbursement for earlier phase II costs, and potentially up to $232.5 million more that's tied to development and regulatory milestones. Adolor said in the conference call that the first such milestone is tied to Phase IIb trial initiation.

The companies will split revenue and expenses in the U.S. -- Pfizer with 60% and Adolor with 40% -- and Pfizer will fund development and commercialization outside the U.S., paying Adolor royalties on sales.

The companies will form a joint steering committee to guide development of the compounds.

Adolor said its cash burn has been in the range of $11 million per quarter and that's its expectation for the immediate near-term quarter as well. Going forward, the company said its gross spending will increase, but net spending will likely be less in 2008 vs. 2007. Adolor expects to say more about its burn rate in its year-end filing.

Pfizer shares rose 36 cents, or 1.5%, to $ 23.83, and Adolor climbed 59 cents, or 15.7 %, to $4.34 in recent trading.