Pfizer and Eli Lilly will resume a late-stage study testing their pain drug tanezumab after the US Food and Drug Administration lifted a partial hold on it. Pfizer expects to receive a $200 million upfront payment from Lilly as a result of the development, the companies said on Monday.

The FDA in December 2012 placed restrictions on clinical studies of tanezumab and other pain drugs that work by blocking a protein called nerve growth factor (TNF), because of nervous system side effects seen in animal studies conducted by other companies.

In 2013, Pfizer forged a deal with Lilly to jointly develop and sell tanezumab for an array of pain-related conditions, with the companies equally sharing development expenses and future sales. Tanezumab had shown initial promise in relieving pain in the knee and lower back, but Pfizer in 2010 suspended large late-stage trials of the drug for those conditions due to reports that patients’ osteoarthritis had worsened.

The FDA, however, later recommended that the osteoarthritis trials continue if safeguards were put in place and patients did not simultaneously take other nonsteroidal anti-inflammatory drugs.

One of Pfizer’s biggest products is Celebrex, another pain and arthritis drug, which had global sales last year of $2.7 billion. But its sales are expected to plunge this year, following the drug’s loss of US marketing exclusivity in December. Cowen and Co has forecast that tanezumab, if approved, could have sales of $100 million in 2020, although sales could grow as the drug is tested and approved for new pain conditions.

But tanezumab could face competition from anti-TNF drugs being developed by others, including a partnership of Regeneron Pharmaceuticals and Sanofi. Shares of Pfizer were up 1.5 per cent at $34.78 in early trading. Eli Lilly was up 0.5 per cent at $76.52.

Reuters