Theravance in partnership on gastroparesis drug

NEW YORK -- Theravance Inc. said Tuesday it formed a partnership with Italian drugmaker Alfa Wassermann SpA to develop its gastrointestinal disorder drug velusetrag.

Theravance said the companies will work together on mid-stage clinical testing of the drug. Alfa Wassermann will fund those studies and it will have the option to market velusetrag in the European Union, Russia, China, Mexico, and select other countries. Theravance will get $10 million if that option is exercised, and it could receive another $53.5 million in payments if the drug reaches development and regulatory milestones and reaches sales targets.

Alfa Wassermann will also pay Theravance royalties on sales of velusetrag if it is approved. Theravance said the royalties will range from the low teens to 20 percent. Theravance is retaining the rights to develop and market velusetrag in the U.S., Canada, Japan, and certain other countries.

Velusetrag is intended to treat gastroparesis, a condition in which the stomach takes too long to clear out food.

Theravance stock rose 67 cents, or 2.6 percent, to $26.39 Tuesday. The South San Francisco, Calif., company's shares were unchanged in after-hours trading.