UPDATE 1-Furiex says J&J returns sexual dysfunction drug rights

May 14 (Reuters) - Furiex Pharmaceuticals Inc said its partner Johnson & Johnson returned the worldwide rights for its oral drug to treat premature ejaculation.

Furiex said it has licensed the rights of the drug to European pharmaceutical company Menarini in Europe, most of Asia, Africa, Latin America and the Middle East for $15 million in cash. Furiex will also get up to $60 million if the drug clears certain regulatory and sales milestones.

The drug, Priligy, which is still not approved in the United States, is marketed by J&J unit Janssen Pharmaceutica in 15 countries in Europe, Asia and Latin America.

The company expects to close the asset transfer agreement with Janssen in the third quarter.

Furiex will retain full development and commercialization rights in the United States, Japan and Canada.

Furiex, which had licensed the drug to Janssen, was earning royalties and sales-based milestones from Janssen.

Shares of Furiex closed at $14.23 on Monday on the Nasdaq.