DepoMed Inc. (DEPO) announced Friday that the U.S. Food and Drug Administration approved its Gralise Tablets for once-daily treatment of post-herpetic neuralgia. The approval triggers a milestone payment of $48 million from Abbott Laboratories (ABT) to Depomed.
Post-herpetic neuralgia or PHN is a persistent neuropathic pain condition caused by nerve damage after a shingles or herpes zoster viral infection and afflicts approximately one in five patients diagnosed with shingles in the United States.
DepoMed said the approval of the Orphan Drug designated drug was a major step toward achieving its key strategic objective of sustainable profitability in 2011 and beyond.
GRALISE was developed by Depomed under the code name DM-1796 and is licensed to Abbott Products, Inc. in the U.S., Canada and Mexico. Depomed entered into a license agreement for Gralise with Solvay Pharmaceuticals in November 2008.
Abbott Products assumed the license agreement and Solvay's obligations under it as a result of the acquisition of Solvay's pharmaceutical business by Abbott Laboratories, which was completed in February 2010.
GRALISE was approved on the basis of two phase 3 trials involving 359 patients treated with Gralise and 364 treated with placebo.
In addition to the $48 million milestone payment for approval of Gralise, the license agreement calls for royalties of 14 to 20 percent on product sales, and sales milestone payments of up to $300 million.
Depomed announced on January 18, 2011, that the company had initiated mediation with Abbott Laboratories, the parent company of Abbott Products, regarding Abbott's commercialization obligations under the license agreement.
DEPO closed Friday's regular trading at $6.24, up $0.06 or 0.97% on the Nasdaq. Over the past year, it traded in a range of $2.32 - $7.25. In after hours, the stock is trading at $6.60, up $0.36 or 5.77%.
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