Santarus paid $5 million up front for Cycloset and will pay a 35% royalty on the gross margin.

Santarus is paying $5 million to S2 Therapeutics and VeroScience for Cycloset, a recently approved medication for type 2 diabetes. Santarus expects to commercially launch the drug in the U.S. in November. Santarus will record all sales of Cycloset and will pay a royalty to S2 Therapeutics and VeroScience of 35% of the gross margin associated with net sales up to $100 million, increasing to 40% thereafter.

Under the distribution and license agreement, Santarus gains exclusive rights to manufacture and commercialize Cycloset in the U.S. It is approved as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus both as monotherapy and in combination with other oral antidiabetic agents.

S2 Therapeutics and VeroScience are responsible for all third-party royalties and FDA postapproval commitments including pharmacovigilance and development. A joint steering committee consisting of representatives from the three companies has been formed to share information concerning the strategic direction of Cycloset development, manufacturing, and promotion efforts in the U.S.

Cycloset targets dopamine, but the exact mechanism by which Cycloset improves glycemic control is unknown. Studies have suggested that the active agent in Cycloset acts to reset aberrant central neurometabolic control of peripheral metabolism toward normal in diabetic patients resulting in a reduction in insulin resistance. In clinical studies, once-daily morning administration of Cycloset improved glycemic control, as demonstrated by a reduction in mean HbA1c and improved postprandial glucose levels without increased plasma insulin concentrations in patients with type 2 diabetes.

It also reportedly improves glycemic control without increasing cardiovascular event risk. The safety profile was assessed in a one-year, Phase III study that included 2,054 patients in the Cycloset arm and 1,016 patients receiving placebo. The prespecified composite cardiovascular endpoint for Cycloset-treated patients was significantly reduced by 42% when compared to patients receiving placebo, according to Santarus.

The firm points out that Cycloset was the first drug, and to date the only drug, to be approved for the treatment of type 2 diabetes subsequent to FDA’s guidance titled, “Diabetes Mellitus—evaluating cardiovascular risk in new antidiabetic therapies to treat type 2 diabetes.” FDA issued these guidelines in December 2008. At the time of approving Cycloset, the agency did not require a postapproval cardiovascular safety study.

“Given its novel biological activity, positive impact on glucose control, and cardiovascular safety profile, we believe Cycloset represents an attractive new option for the treatment of patients with type 2 diabetes,” says Gerald T. Proehl, president and CEO of Santarus. “We view Cycloset as an excellent product to leverage our sales organization, with complete overlap of the endocrinologists and primary care physicians we call on for Glumetza.”

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