Santarus gains broadened rights and responsibility, and Depomed will receive royalties.

Santarus and Depomed entered into a new commercialization agreement for type 2 diabetes drug Glumetza (metformin hydrochloride extended-release tablets). Santarus will now assume broad commercial, manufacturing, and regulatory responsibilities. The deal replaces the promotion agreement between the companies, which was inked in July 2008.

“This transaction allows our commercial, regulatory, and manufacturing teams to focus energies on the successful launch of Gralise™ (gabapentin), our once-daily formulation of gabapentin for the management of postherpetic neuralgia, while also providing us the option to promote Glumetza with our new sales force,” notes Depomed president and CEO Jim Schoeneck.

Under the terms of the new arrangement, Santarus will pay Depomed royalties on net sales of 26.5% in 2011, 29.5% in 2012, 32.0% in 2013 and 2014, and 34.5% in 2015 and beyond. Santarus will pay no additional sales milestones to Depomed, which were required under the prior promotion agreement.

The new deal also provides for a reduced minimum spend obligation for Santarus for promotional expenses and streamlines the oversight of the brand. In addition, Santarus will reimburse Depomed for 70% of its future costs in ongoing Paragraph IV litigation for Glumetza.

Depomed has an option for expanded co-promotion rights covering physicians not called on by Santarus. If Depomed elects to co-promote the drug, Santarus will be obligated to pay a royalty of 70% of the net sales attributable to prescriptions generated by Depomed’s called-on physicians over a pre-established baseline.

Over the next few months Depomed will transition most U.S. commercial activities to Santarus, including managed-care contracting, pricing, certain manufacturing activities, and distribution. Santarus will record revenue from Glumetza sales in the U.S. effective September 1, 2011. In addition, Depomed will transfer the NDA to Santarus, which will be responsible for the product’s pharmacovigilance activities in the U.S.

Santarus reports earning $11.1 million in promotion revenue for Glumetza during the second quarter of this year. In the same quarter last year, the firm made $8.1 million. Glumetza 500 mg had been the subject of a voluntary recall and supply interruption, which resulted in this dosage strength being unavailable from June 2010 through early January 2011. Shipments of Glumetza 500 mg resumed in January 2011.

“After promoting Glumetza for almost three years, our commercial organization is eager to manage contracting and pricing to maximize the potential for the brand,” comments Santarus president and CEO Gerald T. Proehl. “Given our focus on the Glumetza brand and the internal resources we have allocated to its promotion, it makes good business sense to transition certain manufacturing activities, distribution, and ownership of the NDA for Glumetza to our organization.

“We are moving forward with new eVoucher and savings card programs for Glumetza, which we plan to introduce in the coming months,” Proehl continues. “We believe these new programs will significantly increase patient access to our products for adult patients with type 2 diabetes by reducing the out-of-pocket cost for Glumetza to a level roughly equivalent to a tier 1 co-pay for patients with commercial insurance.”

Santarus’ commercial efforts also include Cycloset® (bromocriptine mesylate) tablets, which, similar to Glumetza, are indicated as adjuncts to diet and exercise to improve glycemic control in adults with type 2 diabetes.

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