Lantibio, a drug development firm based in Chapel Hill, has signed a contract with a Canadian firm for further development of its proposed treatment for dry eye.

Lantibio, which has filed two investigational new drug applications with the Food and Drug Administration, plans to launch a Phase II study of its Moli1901 compound in the third quarter.

In the meantime, Lantibio said it would work with Apotex Fermentation for the development and supply of the drug substance, method development, clinical batches and regulatory support.

In return, Apotex will receive royalties on drug sales.

Lantibio is using the same molecule involved in the dry-eye treatment in a Phase I trial for treatment of cystic fibrosis. It has been formulated for inhalation for that trial.

The company licensed Moli1901 from GlaxoWellcome and the University of North Carolina when it launched as a company in 1997. It changed the corporate name to Lantibio in 2003 from MoliChem Medicines.