U.S. based-Regeneron Pharmaceuticals Inc and Germany's Bayer AG said they would co-develop an antibody for use in combination with Eylea, their treatment for a form of age-related blindness.
Bayer's unit, Bayer HealthCare, will pay Regeneron $25.5 million upfront and share global development costs for the program, the companies said in a joint statement.
Both the Eylea injection and the new combination treatment is to treat wet age-related macular degeneration (wet AMD) - the leading cause of blindness in the elderly.
"Given the multi-factorial nature of wet AMD, there is a potential for additional benefits to patients by addressing different pathways responsible for this devastating condition", Bayer HealthCare global development head Kemal Malik said.
Regeneron will hold marketing rights to the drug in the United States, while Bayer will have rights outside the U.S. The two companies will split the profits from outside the U.S.
Regeneron is eligible to get up to $40 million in option and milestone payments once the drug is approved. The drug is expected to be tested for safety and efficacy early this year.
AMD is a chronic condition that requires visually impaired patients to make monthly visits to the clinic.
Since its launch in late 2011, Eylea has become one of the fastest-growing medicines in the history of biotechnology, grabbing market share from rivals such as Roche AG's Lucentis.
Bayer and Regeneron are also collaborating on the development of Eylea, which is currently being tested for use in diabetic macular edema (DME) and macular edema following branch retinal vein occlusion (BRVO).
Tarrytown, New York-based Regeneron closed at $268.68 on the Nasdaq on Monday.
(Reporting by Natalie Grover in Bangalore; Editing by Savio D'Souza)