Takeda will be responsible for future development and commercialization of the drug, soticlestat, worldwide and Ovid will no longer have any financial obligation, the companies said in a statement.
Ovid will receive an upfront payment of $196 million at the close of the agreement, expected by the end of March, and is eligible to receive up to an additional $660 million in milestone payments.
The Japanese drugmaker entered into a collaboration agreement in 2017 with Ovid to develop and market soticlestat, which aims to treat children and adults with Dravet Syndrome and Lennox-Gastaut syndrome.
The companies in August reported results from a mid-stage study showing soticlestat met the main goal of reduction in seizure frequency.
Jazz Pharmaceuticals Plc last month agreed to buy GW Pharmaceuticals Plc in a $7.2 bln deal for its FDA-approved drug, Epidiolex, to treat seizures associated with the two syndromes.
Takeda said it plans to start late-stage studies of soticlestat in children and young adults with the two epileptic syndromes in the second quarter.
Ovid will also receive tiered royalties beginning in the low double-digits and up to 20% on sales of the drug, Takeda said.
(Reporting by Amruta Khandekar in Bengaluru; Editing by Maju Samuel)