Encore Dermatology, formed two years ago as a vehicle for three ex-Valeant products, has picked up a late-stage pipeline drug via a deal with India's Dr. Reddy's Laboratories.

The Malvern, Pennsylvania, company says it has licensed a steroid candidate developed by Dr. Reddy's Promius Pharma subsidiary that has passed phase 3 testing in adults with moderate to severe plaque psoriasis and could claim U.S. approval within weeks.

Encore is paying up to $32.5 million for development, manufacturing and commercialization rights to the drug, a topical corticosteroid called DFD-06 that is administered twice daily as a cream and is also in phase 2 testing for psoriasis in children and adolescents.

If approved, the drug will slot into its portfolio alongside dermatologic creams Hylatopic and Tetrix—acquired from Valeant along with acne drug BenzEFoam in 2015—as well as low-potency corticosteroid cream Tridesilon (desonide) which was licensed from Perrigo and launched earlier this year for skin conditions such as atopic dermatitis.

Dr. Reddy's has been funneling 40% of its R&D spend into biosimilars and proprietary medicines—primarily for the U.S. market—as it tries to move beyond its heartlands in generic small-molecule drugs that have been hampered of late by regulatory compliance problems at manufacturing facilities.

So far, that drive has focused on improved formulations of established drug molecules and has resulted in two drug launches in the U.S.—Zembrace Symtouch, an injectable form of sumatriptan for migraine and Sernivo, a spray formulation of the steroid drug betamethasone. The company has targeted sales of $500 million for its proprietary business within the next five years.

"We believe Encore and its management team are well positioned to realize the full potential of this asset DFD-06," said Anil Namboodiripad, Ph.D., president of Promius Pharma.

"We look forward to obtaining NDA approval this fall, enabling Encore's management team to quickly deliver this product to the providers and their patients," he added.