Salix Pharmaceuticals (Nasdaq: SLXP) is investing up to $35 million in a potential addition to its drug portfolio.

The Raleigh-based pharmaceutical firm has signed a licensing deal with longtime partner Alfa Wassermann for U.S. and Canadian rights to an extended release version of the drug Rifaximin.

Salix believes the drug could be a treatment for Crohn’s Disease as well as other gastrointestinal and respiratory ailments.

As part of the deal, Salix is paying Wassermann a $10 million upfront fee. If testing progresses and a new drug application is nfiled with the U.S. FDA, Salix will pay another $25 million.

“We believe gastrointestinal-specific oral antibiotic rifaximin has the potential to treat numerous gastrointestinal diseases,” said Salix Chief Executive Officer Carolyn Logan. “In particular, we believe the EIR formulation we are acquiring in this transaction could be ideally suited to treat patients with Crohn’s disease. Earlier this year in the Journal of Gastroenterology, promising results were published of a Phase 2 Study which indicate that EIR rifaximin might be beneficial in inducing remission in patients with moderately active Crohn’s disease. We intend to further develop EIR rifaximin with the goal of securing FDA approval to market EIR rifaximin for the treatment of Crohn’s disease.”

Salix announced the deal after the markets closed Wednesday. The company also reported a big surge in quarterly revenues.