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Santarus to take over Type 2 diabetes drug from Depomed

Published: 16:27 22 Aug 2011 BST

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Santarus (NASDAQ:SNTS) announced Monday it has taken over the commercialization of the Glumetza drug from Depomed (NASDAQ:DEPO), replacing a promotional agreement from July 2008.

The new agreement will see Santarus assume broad commercial, manufacturing and regulatory responsibilities for the drug, which is intended to treat adult patients with type 2 diabetes.

The initial deal saw Santarus pay Depomed $12 million up front, plus one-time sales milestones totaling up to $16 million, to promote the prescription drug in the U.S., and earn a fee ranging from 75% to 80% of the gross margin associated with the sale of the product.

As a result of the latest agreement, however, Santarus will see a reduction in the minimum-spend obligation for the promotion of the drug, effectively streamlining the oversight of the brand.

Santarus will record revenues from the sale of Glumetza beginning September 1, 2011, and will pay royalties on net sales to Depomed, with rates increasing 2.5% each year. Additional sales milestone payments required under the original deal will no longer be paid, Santarus said.

In addition, Depomed will transfer the new drug application for Glumetza to Santarus, who will become responsible for the product's pharmacovigilance activities in the U.S.

Glumetza is a metformin-hydrochloride extended release tablet, and is available in both 500 mg and 1,000 mg doses. Intended for treatment in adult patients with type 2 diabetes, the drug works complimentarily with diet and exercise to control blood sugar levels.

"After promoting GLUMETZA for almost three years, our commercial organization is eager to manage contracting and pricing to maximize the potential for the brand," said Santarus president and CEO, Gerald T. Proehl.

Should Depomed elect to co-promote the product, Santarus will pay 70% in royalties of the net sales attributed to the prescriptions generated by Depomed's called-on physicians.

"This is a good deal for both companies," said Depomed president and CEO, Jim Schoeneck.

"For Depomed, it should add meaningfully to our bottom line and should lead to further growth in revenues for Depomed as Santarus grows the franchise.

"We have a great deal of confidence in the Santarus team and their ability to take on expanded commercial activities for GLUMETZA."

Depomed will also be reimbursed for 70% of its future costs in the ongoing litigation regarding the drug, as the company filed a lawsuit against Lupin and its subsidiary, Lupin Pharmaceutical, in November 2009 for infringement on the patent for Glumetza.

Lupin had filed an abbreviated new drug application (ANDA) to market a generic version of the drug in 500 milligram (mg) and 1,000 mg tablets, before Depomed's asserted patents had expired.

Both Santarus and Depomed shares on the Nasdaq Exchange rose, 1.94% to $2.55 per share, and 3.16% to $5.16 per share, respectively, as of 10:27 am EDT.

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