US biotech Dermira has agreed to license certain rights from Swiss drugmaker Roche and its subsidiary Genentech for the investigational atopic dermatitis drug, lebrikizumab. The transaction is expected to close in the third quarter of 2017.

Under the terms of the deal, which could be worth more than $1.4 billion for Roche, Dermira will gain exclusive, worldwide rights to develop and commercialize lebrikizumab, a monoclonal antibody that targets interleukin 13 (IL-13).  Roche will retain certain rights, including exclusive rights to develop and promote the drug for interstitial lung diseases, such as idiopathic pulmonary fibrosis.

Dermira will make an initial payment of $80 million, then further payments totalling $55 million in 2018. The California-based company will also be required to make additional payments upon achieving certain milestones. These include $40 million on the initiation of Dermira’s first Phase 3 clinical study; up to $210 million for regulatory and first commercial sale milestones in certain territories; and up to $1.025 billion based on reaching certain thresholds for net sales of lebrikizumab for indications other than interstitial lung disease.

“Atopic dermatitis is one of the most common skin diseases in the world, affecting millions of adults and children, and moderate to severe forms of this condition present a tremendous burden for patients,” said Tom Wiggans, Dermira’s chairman and CEO. “We believe atopic dermatitis is one of the greatest unmet needs in dermatology and lebrikizumab, if successfully developed and approved, could represent a meaningful advancement in the treatment of this disease.”

Dermira plans to initiate a Phase 2b dose-ranging study assessing lebrikizumab in adult patients with moderate-to-severe atopic dermatitis in the first quarter of 2018.