UPDATE 1-Bristol, Allergan in pact for new pain drug

* Bristol-Myers, Allergan in pact to develop new pain drug

* Bristol-Myers to make initial payment of $40 mln

* To pay milestone payments up to $373 mln, plus royalties

CHICAGO, March 3 (Reuters) - Bristol-Myers Squibb Co (BMY.N) and Allergan Inc (AGN.N) on Wednesday said they entered into an agreement to develop and commercialize Allergan's experimental drug to treat neuropathic pain.

The drug, dubbed AGN-209323, is an orally administered drug that is ready for Phase II trials.

Under the terms of the agreement, Allergan will give Bristol-Myers exclusive worldwide rights to develop, manufacture and commercialize the drug and backup compounds.

The deal includes all potential indications except ophthalmology indications for products formulated for local delivery to the eye, where Allergan will retain certain rights.

Bristol-Myers will make an initial payment of $40 million, potential AGN-209323 related development- and regulatory-based milestone payments of up to $373 million, and royalty payments on worldwide sales.

Bristol-Myers, which named its chief operating officer Lamberto Andreotti as its new chief executive on Tuesday, said the agreement is subject to antitrust clearance by the U.S. Federal Trade Commission and Department of Justice.

Bristol-Myers is holding an analyst meeting today.

(Reporting by Debra Sherman, editing by Dave Zimmerman)