By Tapan Panchal

LONDON-- AstraZeneca PLC (AZN.LN) has terminated its European licensing pact for skin medicine brodalumab with Canadian drug-maker Valeant Pharmaceuticals International Inc. (VRX.T) and has instead granted the license to Danish firm LEO Pharma A/S, in a bid to further broaden the launch market for the experimental drug.

The British pharmaceutical giant said Friday that it had mutually agreed to terminate the European licensing pact for brodalumab with an affiliate of Valeant.

It, however, added that Valeant will continue to lead the development and commercialization of the drug in the U.S. and certain other markets as per the initial agreement entered in September 2015.

Brodalumab, which is currently under regulatory review, is used for treating plaque psoriasis, a skin disease that causes red patches covered with silvery scales, and for inflammation of the joints associated with psoriasis.

AstraZeneca doesn't expect the European termination to impact its financial guidance for 2016.

Valeant, which is currently being probed by multiple U.S. regulators in connection with drug pricing and dealings with distributors, said separately that the termination will help the company to focus on the U.S. market.

It also said AstraZeneca will pay an undisclosed upfront payment and certain milestone-related payments as a consideration for the termination.

"We are pleased with this new licensing arrangement for brodalumab, which enables us to more sharply focus our efforts on delivering this important treatment to patients in the U.S. and other key markets, while providing us with immediate value and significant ongoing exposure to the treatment's commercialization in Europe," Valeant Chairman and Chief Executive Officer Joseph Papa said.

At 0945 GMT, shares of AstraZeneca traded 0.6% lower at 4,443 pence each.

Write to Tapan Panchal at tapan.panchal@wsj.com

(END) Dow Jones Newswires

July 01, 2016 06:13 ET (10:13 GMT)