PTC Therapeutics (PTCT) signed a licensing deal with Novartis (NVS) unit Novartis Pharmaceuticals worth up to $2.9 billion for PTC518, its candidate treatment for Huntington's disease, the companies said in separate Monday statements.

The Swiss pharmaceutical giant will pay PTC $1 billion upfront under the terms of the license and collaboration agreement, and up to $1.9 billion in development, regulatory and sales milestones. PTC will receive double-digit tiered royalties on sales outside the US.

PTC and Novartis will share US profits and losses on a 40%-60% basis, respectively.

"This collaboration combines PTC's expertise in developing small molecule splicing therapies with Novartis's expertise in global development and commercialization of neuroscience therapies," PTC Chief Executive Matthew Klein said in a statement. "We are excited to collaborate with Novartis to accelerate the potential of PTC518 for the hundreds of thousands of (Huntington's disease) patients worldwide."

The deal, which requires approval from regulators, is expected to close in the first quarter of 2025.

PTC's product is currently being evaluated in a phase 2 clinical trial. In June, interim results of PTC518 demonstrated a reduction in blood and cerebrospinal fluid mutant Huntingtin protein levels, as well as early signs of dose-dependent benefit on key clinical measurements at 12 months.

PTC aims to use the proceeds of the transaction to expand its splicing platform and support its commercial and development portfolio activities, according to Klein.

Novartis will take over the development, manufacturing and commercialization of the product after the completion of the placebo-controlled portion of the ongoing phase 2 trial expected to occur in the first half of 2025. The agreement strengthens the Swiss company's neuroscience pipeline and is part of its strategic focus on neurodegenerative diseases, it said in a separate statement.

"We look forward to building on our expertise in neurodegenerative diseases and experience in (Huntington's disease) with the intention to advance this potential first in class oral therapy for the HD community," Novartis CEO Vas Narasimhan said.