Hospira and Durect Corporation have entered into a licensing agreement to develop and market Durect’s Posidur, a long-acting version of the anaesthetic bupivacaine currently in Phase III clinical trials.

Hospira will co-develop the drug and will have exclusive marketing rights in the US and Canada following regulatory approval.

Under the agreement, Hospira will make an upfront payment of $27.5m, with the potential for up to an additional $185m in performance milestone payments.

The two companies will jointly direct and equally fund the remaining development costs, while Hospira will have exclusive commercialisation rights with sole funding responsibility.

Posidur is designed to provide up to 72 hours of anaesthetic directly at the site of a surgical wound, with the potential to reduce post-surgical pain and allow earlier patient mobility and hospital discharge.

Phase III trials are expected to be completed in 2011.