Roche and Chiasma have entered into an agreement to develop and commercialize Chiasma’s late stage experimental drug Octreolin, for the hormonal disorder acromegaly, and subsequently for neuroendocrine tumors.

Octreolin is an oral formulation of a peptide that is now only available as an injectable medicine. The drug is being tested in a pivotal trial for acromegaly, a rare condition in which the body produces too much growth hormone. The study is expected to wrap up at the end of the second quarter of 2013.

As part of their agreement, Chiasma has granted Roche an exclusive global license to Octreolin for an upfront payment of $65 million with the potential for another $530 million based on successful completion of development and commercial milestones, as well as tiered, double-digit royalties on net sales of Octreolin.

Chiasma will continue development through completion of the late-stage trial for acromegaly. Roche will assume responsibility for its commercialization and Roche’s subsidiary Genentech will market the product in the United States after regulatory approval there. The arrangement includes an upfront payment to Chiasma of $65 million, future considerations of up to $530 million in development, and commercial milestones, as well as tiered, double-digit royalties on Octreolin net sales.

Chiasma’s drug delivery technology coats the active small molecule drug so that it remains intact until it gets to the small intestine. Once there, the technology also facilitates transfer of the active drug into the bloodstream. Chiasma has received orphan drug designation for Octreolin in the United States and plans to pursue that designation in Europe as well.

Chiasma raised $38.5 million in July 2012 to see it through its late stage trial. Investors in the deal included MPM Capital, Abingworth, 7 Med Health Ventures, Arch Venture Partners, F3 Ventures, and Frederic Price, chairman and CEO of Chiasma.