Alliance Pharma PLC (LON:APH) is handing back the UK and EU licensing rights to Xonvea, a treatment for pregnant women with nausea.
Some £2mln in milestone payments made to Duchesnay of Canada will be returned, starting with £250,000 before the end of the year.
Inventory provisions and “associated restructuring costs” will amount to £1.9mln.
The uptake of Xonvea in the UK had been slower than anticipated, in part due to the ongoing delay in the issuing of updated clinical guidelines for the drug, Alliance Pharma said in a statement.
At the same time the competitive landscape in Europe has changed, making an EU rollout less attractive for the group, it added.
Alliance chief executive Peter Butterfield said: "Given the current market conditions, we feel that returning the rights to Xonvea to Duchesnay is the right decision for Alliance.
“It reduces uncertainty and eliminates the need for further investment in the product whilst allowing us to focus our investment on our growing OTC portfolio and the expansion of our international operations.”