Company will market treatment for chorea linked to Huntington’s in Canada and supply the compound to Ovation for U.S. commercialization.

Biovail has bought Prestwick Pharmaceuticals for $100 million. The company thus gains Xenazine® for the treatment of chorea associated with Huntington’s disease, which is expected to reach the U.S. market later this year.

Biovail will market the drug in Canada, while Ovation Pharmaceuticals will handle commercialization in the U.S. as per its earlier agreement with Prestwick. The transaction is expected to be accretive to both earnings per share and cash flows in 2009.

Biovail will provide the product to Ovation for a variable percentage of the product’s annual net sales. For net sales up to $125 million, the supply price will be 72% of net sales. Beyond $125 million, the price will be 65% of net sales. At both tiers, Biovail will pay a supply price of 50% of net sales to Cambridge.

Biovail holds an option to copromote Xenazine in the U.S. Should this option be exercised, Biovail has the right to utilize Ovation’s existing infrastructure to assist in the recruitment, training, and operational management of a sales force. For now Ovation will market Xenazine through a sales force of 48 people.

With regard to the Canadian market, Biovail will pay a variable supply price that ranges from 50% to 67% of net sales to Cambridge Laboratories, the worldwide license holder of the compound. The drug is marketed under the brand name Nitoman and has been available since 1996.

In addition, Biovail holds an option to develop related products with Ovation and Cambridge for the U.S. market.

Beyond Xenazine, Biovail obtains a Phase III compound Lisuride Sub Q for advanced Parkinson’s disease and a Phase II candidate Lisuride patch for Parkinson’s. The company also adds two preclinical compounds to its pipeline for schizophrenia and sleep apnea.

Xenazine has been available in Europe for more than 30 years. The precise mechanism by which Xenazine exerts its antichorea effects is unknown but it is believed to be related to its effects as a reversible depletor of monoamines by inhibiting a molecule known as vesicular monoamine transporter 2, according to Prestwick.

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