Neurocrine Biosciences has signed a licence and collaboration agreement valued at more than $1.7bn with Xenon Pharmaceuticals to develop epilepsy treatments.

As part of the deal, Neurocrine receives an exclusive licence to a selective Nav1.6 sodium channel inhibitor candidate, XEN901. The drug is being developed to potentially treat SCN8A developmental and epileptic encephalopathy (SCN8A-DEE) and other epilepsies.

Neurocrine also gets a licence to exclusively develop pre-clinical compounds, including selective Nav1.6 and dual Nav1.2 / 1.6 inhibitors.

Furthermore, the agreement includes a multi-year research alliance to discover and develop additional Nav1.6 and Nav1.2 / 1.6 inhibitors.

Neurocrine Biosciences CEO Kevin Gorman said: “The agreement with Xenon strengthens Neurocrine Biosciences’ diverse and growing pipeline and reinforces our long-term commitment of becoming a leading neuroscience-focused biopharmaceutical company.”

Neurocrine will bear developments costs of all programmes covered under the partnership. The company will pay $50m to Xenon, including an upfront cash payment of $30m and an equity investment of $20m.

Furthermore, Neurocrine will pay up to $25m upon the US Food and Drug Administration (FDA) acceptance of XEN901’s investigational new drug (IND) application. Of this payment, 55% will be paid as an equity investment.

The company expects to file an IND next year for the clinical trial of XEN901 in SCN8A-DEE patients.

Xenon will also gain up to $1.7bn in development, regulatory and commercial milestones associated with XEN901 and additional licenced Nav1.6 or Nav1.2 / 1.6 inhibitors, as well as sales royalties.

The company holds an option to fund 50% of the US development costs of a product candidate and will, in turn, receive royalties for XEN901 sales in the country.

Xenon Pharmaceuticals CEO Dr Simon Pimstone said: “Importantly, this collaboration represents a significant investment in XEN901 and Xenon’s earlier-stage Nav1.6 and Nav1.2 / 1.6 inhibitor programs and allows for a broader development of these promising compounds than we could accomplish independently.

“Furthermore, the additional capital from this transaction will support our efforts to advance and expand our proprietary pipeline.”