Swiss drugmaker Novartis AG (NOVN.VX) boosted its presence in pain management on Monday by agreeing to buy U.S.-Australian biotech firm Spinifex Pharmaceuticals, the companies said in separate statements on Monday.

Spinifex said Novartis was paying $200 million upfront and Spinifex shareholders could get further payments based on clinical development and regulatory milestones. The transaction is expected to close in the second half of this year, pending regulatory approval.

The deal gives Novartis access to Spinifex's experimental neuropathic pain drug EMA401, which showed positive mid-stage Phase II clinical trial results in the treating post-herpetic neuralgia (PHN), a painful condition some people get after shingles.

Importantly, the results published in The Lancet medical journal last year showed no central nervous system side effects or any serious adverse events.

Chronic neuropathic pain, caused by nerve problems, is a relatively common condition, afflicting up to 7-8 percent of the adult population, but current treatment options are limited and can be problematic.

Because EMA401 acts outside the blood-brain barrier it can avoid common side effects such as dizziness or confusion seen with painkillers affecting the central nervous system.

Novartis plans to continue the development of EMA401 and intends to start Phase IIb clinical trials in patients with PHN or another condition called painful diabetic neuropathy, which is caused by diabetes.

"Neuropathic pain is a chronic and debilitating condition with high unmet need. EMA401 could provide a novel, differentiated treatment approach," said David Epstein, head of Novartis Pharmaceuticals.

The acquisition is small by the standards of Novartis but it highlights the Swiss group's drive to expand its pipeline of new medicines at a time of growing investor confidence in the potential of new medicines across the drugs sector.

The Basel-based drugmaker is in a strong position relative to its peers thanks to recent advances with new drugs, including the widely anticipated heart failure medicine LCZ696 and a recently launched psoriasis injection called Cosentyx.

These should buffer it from cheaper copycat competition to older drugs.

Established in 2005 and based in Stamford, Connecticut and Melbourne, Australia, Spinifex is backed by venture capital groups including Novo A/S, Canaan Partners, GBS Venture Partners, Brandon Capital Partners, Uniseed and the University of Queensland.

Deutsche Bank advised Spinifex on the sale.