Salix Pharmaceuticals (Nasdaq: SLXP) will invest as much as $130.5 million in a colon cancer detection drug, the Raleigh-based firm said Wednesday before the markets opened.

Salix is paying a $4 million upfront fee and will add up to $126.5 million in milestone payments to Norway-based Photocure for the rights to Lumacan. Described as a “novel agent” by Salix, Lumacan is intended to help detect precancerous and cancerous lesions in the colon.

Salix gains worldwide license to Lumacan with the exception of Nordic area countries.

Salix, which concentrates on gastrointestinal drugs, believes annual sales of Lumacan could top $500 million.

As part of the deal, Photocure will provide up to $3 million for development of Lumacan. Salix is responsible for worldwide development and commercialization.

“After further development and, if approved by the FDA, Lumacan has the potential to significantly improve the earlier detection and diagnosis of colon cancer, with the possibility to innovate the way in which colorectal cancer screening is conducted today,” said Salix Chief Executive Officer Carolyn Logan in a statement.

“We believe this groundbreaking agent could serve a strategic role in expanding our current bowel cleansing business and advancing our mission to provide healthcare providers with the most effective solutions in gastrointestinal disease,” she added.

Lumacan contains hexamiolevulinate, which is already approved in Europe and the U.S. for detection of bladder cancer.

Salix wants to develop an oral formulation of Lumacan. The company believes it will increase identification of 65 percent more lesions in the colon than a standard colonoscopy.

Colon cancer is the third most diagnosed cancer. Salix noted that more than 14 million colonoscopies are conducted each year.

Salix believes annual sales of Lumacan could top $500 million.

For the full announcement, read here.

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