Up to $64M in milestone payments could be realized.

Covidien has licensed worldwide rights to utilize Depomed’s AcuForm™ gastric retentive drug delivery technology for the exclusive development of four undisclosed products. The products will target a key strategic focus of Covidien’s pharmaceutical business and address major medical needs.

Under the license agreement between Depomed and Mallinckrodt, a subsidiary of Covidien, Depomed will receive a one-time upfront payment of $4 million, and could receive up to $64 million in additional development milestone payments over the next several years. In addition, Covidien will pay Depomed a royalty on sales of products developed under this license agreement. Covidien will be responsible for all development other than certain initial formulation work. Covidien will pre-pay Depomed for the initial formulation work performed by Depomed under the collaboration.

Depomed will retain the exclusive option to promote the products developed under this license agreement within the OB/GYN specialty field. Once Depomed begins to promote these products, Covidien will pay Depomed a significantly higher royalty on the resulting net sales in this specialty.

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