Dr Reddys Laboratories Ltd (DRL) has entered into a co-development and commercialization agreement with Denmark based Rheoscience for the joint development and commercialization of balaglitazone (DRF 2593), a partial PPAR gamma agonist, for the treatment of type 2 diabetes.

Under the terms of the agreement, Rheoscience shall fund all the costs associated with the Phase III clinical trials of DRF 2593 and the DRL shall pay Rheoscience a pre determined amount towards its share of the development costs. Rheoscience will retain the marketing rights to European Union and China and the DRL will retain the marketing rights in the territories of the US and rest of the world. Rheoscience shall obtain all necessary regulatory approvals on behalf of the company in the United States on receiving final approval from the US FDA. DRL is to make a pre determined milestone payment to Rheoscience. The agreement will be valid for a period of ten years from the date of commercialization, the financial terms and conditions of the agreement have not been disclosed.

According to the agreement, if the partners choose to commercialize the product on their own, then there is a staggered royalty on sales payable by the partners to each other. However, if the partners choose to commercialize the product through a third party, then each partner is entitled to share a pre-determined percentage of the net proceeds of commercialization received by it with the other partner. The company will also retain the right to supply clinical development and commercial quantities on arms-length basis, stated a release here.

GV Prasad, chief executive officer, of DRL, said, " This deal provides Dr. Reddy with an opportunity to commercialize NCEs in key markets thereby transforming Dr Reddy's into an innovation driven business. The addition of balaglitazone, a partial PPAR-gamma agonist, would expand the treatment options available to the physicians globally for management of type 2 diabetes. Rheoscience brings in significant development expertise required to take drugs intended for treatment of metabolic disorders all the way to final registration for clinical use and we are looking forward to a successful relationship with them."

Earlier, Novo Nordisk, the company which was reached in pact with DRL to further develop the drug candidate, had terminated the agreement.