BERLIN (Reuters) -Roche has entered an exclusive collaboration and licensing agreement with Danish obesity drug maker Zealand Pharma to co-develop petrelintide as an obesity therapy drug, the Swiss company said on Wednesday.

Under the terms of the agreement, Zealand Pharma will receive upfront cash payments of $1.65 billion, with the possibility of milestone payments of up to $5.3 billion based on a phase 3 trial and sales development, Roche said.

Zealand is currently testing petrelintide in overweight or obese individuals without type 2 diabetes in a mid-stage study.

Petrelintide belongs to a class of drugs known as the long-acting amylin analog, which mimics a hormone called amylin that is co-secreted with insulin in response to ingested nutrients.

Zealand and Roche will jointly commercialize petrelintide in the United States and Europe, and the Swiss company will obtain exclusive commercialisation rights in the rest of the world.

Profits and losses for petrelintide, as well as a fixed-dose combination with Roche's CT-388, will be shared on a 50/50 basis in the U.S. and Europe, said Roche.

The transaction is expected to close in the second quarter.

(Writing by Miranda Murray, Editing by Rachel More)