Novartis is preparing to enter the thriving hepatitis C market by licensing rights to Enanta Pharmaceuticals’ lead experimental HCV inhibitor in a deal could net it as much as $440 million.

Novartis will pay the small Watertown, MA based drug-developer $34 million in upfront payments and up to $406 million more if Enanta hits certain clinical, regulatory, and commercial milestones.

Enanta is eligible to receive double-digit royalties on worldwide sales of any future products of the collaboration. Novartis will be responsible for all of the development, manufacturing, and commercialization costs of the experimental drug, known as EDP-239, as well as funding Enanta’s drug discovery efforts on certain additional compounds.

“We believe EDP-239 has great potential as a potent ingredient in combination drug therapy, and our preclinical studies have demonstrated high potency against multiple genotypes of the virus, excellent safety profile, and a preclinical pharmacokinetic profile amenable to once-a-day dosing in humans,” said Jay Luly, president and CEO of Enanta Pharmaceuticals.

The Novartis-Enanta licensing deal adds to a frenzy of activity by biopharmaceutical companies captivated by the lucrative HCV market, which is expected to grow nearly ten-fold to $16 billion by 2015 a year, according to Decision Resources. In May of 2011, Vertex’s Incivek and Merck’s Victrelis were approved within days of each other and within the last three months, Gilead Sciences paid $11 billion to acquire Pharmasset while Bristol-Myers Squibb completed a $2.5 billion purchase of HCV specialist Inhibitex.

Novartis is hoping that Enanta’s experimental drug can distinguish itself from the pack by providing broad range effects across all three genotypes of hepatitis C. The developmental compound targets a viral protein known as NS5A that is critical to the replication of the virus.