As part of the alliance, Lundbeck has given Otsuka co-development and co-commercialisation rights to Lu AE58054, a selective 5HT6 receptor antagonist, in the US, Canada, East Asia and major European countries.
Otsuka Pharmaceutical president and representative director Taro Iwamoto said the global collaboration between Otsuka and Lundbeck continues to grow stronger with the addition of Lu AE58054.
"Not only does the product further enhance the synergy between the companies as we work together to bring to the market solutions for better health, Lu AE58054 is a potentially promising development in a very difficult disease area," Iwamoto said.
According to the terms of the deal, Lundbeck will earn an initial payment of $150m and be eligible for $675m in regulatory and sales milestones from Otsuka.
The sales, development and commercialisation costs will be shared by both the companies.
Further financial details of the agreement were not disclosed.
Lundbeck president and chief executive officer Ulf Wiinberg said; "Together, Otsuka and Lundbeck with their development capabilities, commercial experience and geographical reach will provide a solid foundation in the development of Lu AE58054."
The pivotal clinical programme, consisting of several studies with Lu AE58054, is scheduled for commencement in 2013.
The first Phase III study will enrol patients with mild-to-moderate Alzheimer's disease to test Lu AE58054 as adjunct treatment to donepezil.